Clubbing of income from gifted assets under Section 64(1)(vi) did not extend to daughter-in-law's share of firm profits.

Section 64(1)(vi) was considered for clubbing income arising from a gift of an asset to an assessee's daughter-in-law. The Tribunal held that the provision could apply to income directly or indirectly arising from the transferred asset, but Explanation 3 did not extend to clause (vi) and was confined to clauses (iv) and (v). On that construction, the daughter-in-law's share of firm profits was not includible in the assessee's total income, and exclusion of that income was upheld.

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Issues: Whether the share of profits received by the assessee's daughter-in-law from the firm, attributable to a gift made by the assessee, was includible in the assessee's total income under Section 64(1)(vi) of the Income-tax Act, 1961.

Analysis: Section 64(1)(vi) was applied to contend that income arising directly or indirectly from the asset transferred by way of gift to the assessee's daughter-in-law had to be clubbed in the assessee's hands. The decisive question was whether Explanation 3 to Section 64 extended the scope of clause (vi). The Tribunal held that Explanation 3 was confined to clauses (iv) and (v) and was not made applicable to clause (vi). On that construction, the daughter-in-law's share income could not be treated as income includible in the assessee's total income.

Conclusion: The share income of the daughter-in-law was not includible in the assessee's total income under Section 64(1)(vi); the order excluding it was upheld.

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