Indirect transfer clubbing provisions may apply where reciprocal gifts are linked as one transaction in substance.

The clubbing provisions on indirect transfers may apply where gifts are arranged as interconnected parts of the same transaction. On the stated facts, the assessee's transfer to his father's wife followed closely after gifts by the father to the assessee's wife and minor child, with identical amounts and reciprocal sequencing. Those features indicated that the transfers were linked rather than independent, and that the interest arising to the wife and minor child could fall within income arising from assets transferred indirectly by the assessee. The commentary emphasises that the governing test is the real substance of the arrangement, not its formal split into separate transfers.

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Issues: Whether the interest arising to the assessee's wife and minor child was assessable in the assessee's hands as income arising from assets transferred indirectly by the assessee within the meaning of the relevant clubbing provisions.

Analysis: The transfer by the assessee to his father's wife followed closely after the earlier gifts made by the father to the assessee's wife and minor child. The temporal sequence, identical amounts, and reciprocal nature of the gifts showed that the two transfers were inter-connected and formed parts of the same transaction. The governing principle is that the expression

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