Vinod Kapoor gifted ₹ 8,00,000 to his wife Sunita Kapoor on 15th May, 2017. The amount of gift of ₹ 8,00,000 was invested by his wife in debentures of a company on 1st June, 2017 earning interest @ 12% p.a. Will the inco

As per the provisions of section 64(1)(iv) of the Income Tax Act, 1961, In computing the total income of any individual, there shall be included all such income as arises directly or indirectly to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart. The amount of ₹8,00,000 was transferred by Mr. Vinod Kapoor to his spouse Ms. Sunita Kapoor, by way of gifts, without adequate consideration or to live apart, hence, the provisions of section 64(1)(iv) of the Income-tax Act, 1961 will be invoked. The provisions of clubbing of income will apply even if the form of assets is being changed by the transferee (spouse) of the receipt amount of gift which was in cash and converted into debentures. In the present case, assets transferred in money and subsequently the form of assets is changed from money to debentures and therefore amount of interest income i.e. ₹80,000 on debenture will be clubbed with her husband income i.e. Mr. Vinod Kapoor.