Clubbing of Income provisions (Section 64(1)(iv) of the Income-tax Act, 1961)

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....lubbing of Income provisions (Section 64(1)(iv) of the Income-tax Act, 1961)<br> Query (Issue) Started By: - MAHTAB KHAN Dated:- 22-8-2025 Last Reply Date:- 19-12-2025 Income Tax<br>Got 1 Reply<br>Income Tax<br>As per section 64(1)(iv), if an individual transfers (directly or indirectly) his/her asset (other than house property) to his or her spouse otherwise than for adequate consideration, then ....

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....income from such asset will be clubbed with the income of the individual (i.e., transferor).&nbsp; Situation: * Husband gifts money (asset) ? wife invests in mutual fund units. * Wife earns capital gains (short-term or long-term) on redemption/sale of units. * Will such capital gains be clubbed with the husband's income under Section 64(1)(iv) of the Income-tax Act, or will it be taxa....

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....ble in the wife's hands? Reply By Ryan Vaz: The Reply: Applicable Law / Judicial Position * Section 64(1)(iv), Income-tax Act, 1961 - Clubbing of income arising directly or indirectly from assets transferred to spouse without adequate consideration. * Explanation 1 to Section 64(1) - Income includes loss; clubbing applies to income arising from the transferred asset. * Judicial preced....

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....ents (settled law): * CIT v. Prem Bhai Parekh (1970) 77 ITR 27 (SC) -&nbsp;1970 (4) TMI 8 - Supreme Court * CIT v. Smt. Nirmala Devi -&nbsp;1986 (7) TMI 32 - MADHYA PRADESH High Court (various HC rulings on accretion/conversion of asset) Short Practical Answer Yes, the capital gains will be clubbed with the husband's income. Where a husband gifts money to his wife (without adequate cons....

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....ideration) and the wife invests that money in mutual fund units, capital gains arising on redemption/sale of those units are regarded as income arising indirectly from the transferred asset (money) and are taxable in the hands of the husband under section 64(1)(iv).<br> Discussion Forum - Knowledge Sharing ....