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CA Intermediate · Taxation · Income of Other Persons included in Total Income of Assessee

Rohit, a resident individual, gifted a flat to his major son Karan without any consideration. Karan let it out and received rent of Rs 2,40,000 during the tax year 2026-27, with no deductions other than the standard deduction. Rohit was not involved in the arrangement afterwards. In whose total income will the rental income be taxed?

The rental income is taxed in Karan's total income. Clubbing rules for transfers without adequate consideration cover transfers to a spouse and to a son's wife, but not to a major son, so Karan as the transferee-owner is taxed on the rent.

  1. ARohit, since the flat was gifted by him
  2. BKaran, since the clubbing rule does not apply to a gift to a major sonCorrect
  3. CRohit and Karan equally
  4. DKaran, but only after Rohit pays tax on the gift

Explanation

Clubbing on transfer without adequate consideration applies for transfers to spouse (not in connection with an agreement to live apart) and to a son's wife, not to a major son directly. The income from the asset is therefore taxed in Karan's hands as the owner. Taxing Rohit is wrong because there is no clubbing provision for a gift to a major son.

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