Clubbing of spouse's income applies to net salary after statutory deduction, not gross receipts.

For clubbing under section 64(1)(ii) of the Income-tax Act, the spouse's income must be taken as taxable net salary after the statutory deduction under section 16(1), because clubbing applies to actual income and not gross receipts. Denying the deduction merely because the income is included in the other spouse's hands would be inconsistent with the scheme of the Act. Only the net salary income was therefore liable to be clubbed, not the gross salary.

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Issues: Whether, for the purpose of clubbing under section 64(1)(ii) of the Income-tax Act, 1961, the spouse's income is to be taken as gross salary or only net salary after deduction under section 16(1).

Analysis: The income clubbed under section 64(1)(ii) is the spouse's actual income, not the gross receipt. Since the spouse, if assessed separately, would be entitled to the statutory deduction under section 16(1), there is no reason to deny that deduction merely because the income is clubbed in the hands of the other spouse. Excluding deductions before clubbing would be inconsistent with the scheme of the Act.

Conclusion: Only the net salary income after deduction under section 16(1) is liable to be clubbed, and not the gross salary.

Ratio Decidendi: For clubbing provisions, the income to be aggregated is the taxable net income after lawful deductions, unless the statute expressly requires otherwise.

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