Pre-marriage gift income not clubbed under spouse income provision where the donee was not yet a spouse

Section 64(1)(ii) of the Income-tax Act, 1961 applies only where income arises to a spouse. An amount gifted before marriage cannot be treated as a gift to a spouse because the donee had not yet acquired that status on the date of transfer. Income generated from such pre-marriage gift was therefore not liable to clubbing in the assessee's hands under the provision.

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Issues: Whether income arising from an amount gifted by an assessee before marriage to the person who later became his spouse was liable to be included in the assessee's total income under section 64 of the Income-tax Act, 1961.

Analysis: Section 64(1)(ii) applies where income arises to the spouse of an individual. The gift in question was made before the marriage and therefore before the donee had acquired the status of spouse. On that date, the amount could not be treated as a gift to the spouse, and the income derived from it could not be clubbed in the assessee's hands under the statutory provision.

Conclusion: The income from the gifted amount was not includible in the assessee's income under section 64 of the Income-tax Act, 1961, and the question was answered in favour of the assessee and against the Revenue.

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