Income of individual to include income of spouse from a concern in which individual has substantial interest - (New) Section 99(1)(a)(i) (Old) Section 64(1)(ii)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....on Received by Spouse The spouse must receive income in the form of: • Salary • Commission • Fees • Bonus • Perquisites • Any other remuneration in cash or kind The provision is broad enough to cover almost every form of compensation from the concern. 3. Substantial Interest in the Concern The other spouse must have a substantial interest in the concern paying the remuneration. Under Section 99(5), substantial interest exists when: • In a company, the individual (alone or with relatives) beneficially owns shares carrying 20% or more voting power; or • In any other concern (firm, LLP, proprietary business, etc.), the individ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....g such remuneration is greater. • Once included in hand of either person cannot be changed in subsequent year, unless A.O. is satisfied after giving that spouse an opportunity of being heard. Condition to be satisfied: • The relationship of husband and wife must subsist at the time of accrual of the income.  • Income other than salary, commission, fees or remuneration is not clubbed under this clause. Important Case Laws • Possession of a mere academic degree is not automatically dispositive; the qualification must relate to the nature of the employment or work performed. Even where the spouse possesses the requisite qualification, the extent of income excluded is limited to tha....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Tax 1984 (10) TMI 36 - Andhra Pradesh High Court ] • The proviso is an exception to clause (ii) of section 64(1). It must, therefore, be strictly construed. The proviso contemplates two conditions: (1) the spouse must possess technical or professional qualifications; and (2) the income derived by him or her must be attributable to the application of such technical or professional knowledge and experience. [ Commissioner of Income-Tax, Karnataka Versus D. Rajagopal 1983 (12) TMI 22 - Karnataka High Court ] • The words "technical or professional", therefore, must receive a liberal construction as that term is not defined in the section itself or elsewhere in the Act. The word "technical" is a term of w....