Clubbing of rental income after a Hiba gift to minor sons applies under income tax law despite Mohammedan law transfer

Rental income from immovable properties gifted by an assessee to his minor sons by Hiba under Mohammedan law was includible in the assessee's total income under section 64(1)(v) of the Income-tax Act, 1961. The transfer was an admitted gift without adequate consideration and therefore a transfer within section 2(47), so the clubbing provision applied to income arising from the transferred assets. The fact that the gift was made under Mohammedan law did not exclude the Act's operation, and exemptions or distinctions under gift-tax or wealth-tax provisions did not control the result.

---

---

Issues: Whether rental income arising from properties gifted by the assessee to his minor sons by way of Hiba under Mohammedan law was liable to be included in the assessee's total income under section 64(1)(v) of the Income-tax Act, 1961.

Analysis: The gift of immovable properties to the minor sons was an admitted transfer without adequate consideration. Such a gift constituted a transfer within the meaning of section 2(47) of the Income-tax Act, 1961, and the income arising from the transferred assets during the relevant years squarely attracted the clubbing provision in section 64(1)(v). The fact that the transfer was effected under Mohammedan law as Hiba did not exclude the application of the Income-tax Act. The exemption available in gift-tax or wealth-tax proceedings could not control the operation of section 64(1)(v), and the absence of any proviso comparable to the wealth-tax provision made the assessee's reliance on those enactments unavailing.

Conclusion: The rental income from the gifted properties was rightly includible in the assessee's total income under section 64(1)(v) and the answer was against the assessee.

---