Clubbing

Hi,

- Gift does not have a character like a loan. Gift is given voluntarily and out of love and affection. Returning of gift will not effect the clubbing provisions.  To stop clubbing, wife should create assets from the income.

Thanks

Please call to discuss in length.

Income generated out of the income of the gift is not clubbed.

In provisions there are no proper steps mentioned to stop clubbing as Gift is irrevocable i.e. it cant be reversed but since in your case you can try to repay the amount and try to explain the AO that you were not aware about the clubbing provision and now since wife also doesnt require such amount she is paying back to me and therefore no clubbing should be made as the investment made by me in the business is over.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Hello,

This clubbing cannot be ended. 

If such money or business income is reinvested, further income will not be clubbed.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

Hi,

No, even if your wife return gift of same amount to you, clubbing cannot be ended.

For future, instead of gifting which again clubbed into your head, you can give a loan to your wife with the nominal interest rate (there is no such rule that to specify the interest rate).

Then all such income should be your wife’s income. It will not be clubbed with your income.

The only caution here is that she has to repay the loan and interest to you (OFFICIALLY). But you must have a documentary proof of Loan.

Hi,

In my opinion, if your wife's gifts you back the original money, you can take an argument that your money has been received back and there should not be any clubbing as now wife is doing business from her own money.

However, department may try to disregard this approach and can say that the gift now received by you from your wife is liable for clubbing and income you generate from that money will be clubbed in her hand and income which your wife generate from original money will be clubbed in your hand.