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2020 (1) TMI 822 - AT - Income TaxClubbing of income - Non-allowing of set off of business loss - computation of total income that the assessee clubbed loss from the business of his spouse - HELD THAT:- Assessee gifted certain Fixed Deposit receipts and other amounts to his wife not only in this year but also in the earlier years. Interest income arising from such FDRs amounting to ₹ 7,21,547/- in addition to Venture capital income of ₹ 1,11,252/- accruing to wife from such gifts has been religiously clubbed by the assessee in his hands and offered for taxation. Two possible situations of utilization of the assets transferred by husband to wife triggering the clubbing provisions. The first, which is covered within the main part of section 64(1)(iv) of the Act, is where the amount of assets received by wife are invested exclusively in an asset attracting clubbing of full income therefrom. Interest income arising from FDRs amounting to ₹ 7,21,547/- is an illustration of such positive income, which has been promptly offered by the assessee. The second, which is covered within section 64(1)(iv) read with the Explanation 3 of the Act, is where the assets received by wife as gift from husband are invested by her in a business, in which she has her own separate investment as well, thereby attracting clubbing of income to the extent it is relatable to the investment of gifts received from husband in the common business. Loss (negative income) of ₹ 31,56,429/- from F&O business is an illustration of such income, which was rightly clubbed by the assessee but wrongly denied partly. Going by the Explanation 3 read in conjunction with section 64(1)(iv) of the Act, the entire amount of loss resulting from the business of F&O started by Mrs. Priti Bhaskarwar with the gifts received from the assessee is liable to be clubbed in the hands of the assessee. Assessee is entitled to club full loss of ₹ 31.53 lakh arising during the year from the business of F&O carried on by Mrs. Priti Bhaskarwar, in his personal income. Appeal allowed.
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