Income From the Accretion to Assets

Clubbing of income: income from transferred property taxed to transferor, but accretion-derived income taxed to transferee.

Clubbing of income treats income arising directly from transferred property as taxable in the hands of the transferor, while income accruing to the transferee from accretion or from reinvestment of accumulated income of that property is not includible in the transferor's total income. Accretion denotes asset value growth or income produced by reinvestment, and subsequent earnings on such reinvested sums are taxable to the transferee, not to the transferor.