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Income from gift to your spouse is liable to be clubbed with your income but you can surely plan lawful circumvention!

    Section 64(1) of the Income-tax Act provides that in computing the total income of an individual, the income arising to the spouse from assets gifted by an individual would be clubbed with the total income of the individual. Similarly Section 4 of the Wealth-tax Act also provides for inclusion of such gifted assets by the individual to the spouse in the computation of net wealth.

Are there any practical and lawful ways to overcome the clubbing provisions? This is a common question that would naturally arise in the context of the provisions of Section 64 of the Income-tax Act and Section 4 of the Wealth-tax Act referred to above. Discussed below are some thoughts which focus attention on scrubbing the clubbing provisions. (more…)


Can interest on housing loan allowed as a deduction u/s. 24 be treated as part of cost of acquisition on sale of the house

      The Income-tax Appellate Tribunal (ITAT), Chennai was recently called upon to decide a tricky issue as to whether interest on housing loan, already claimed by the taxpayer as deduction under Section 24(b) in computing his income from house property, could again be deducted by him under Section 48 of the Income-tax Act, treating the same as part of its cost of acquisition while computing the taxable capital gains on sale of the house.

    The Assessing Officer had disallowed the taxpayer’s claim on the ground that he had already claimed deduction of such interest under Section 24(b) and hence the same could not be allowed to be deducted under Section 48 for purposes of computation of capital gains. The Commissioner Appeals allowed the taxpayer’s appeal against which the Revenue preferred second appeal before the ITAT.

    Deciding the appeal in the case of ‘ACIT v/s. C. Ramabrahmam (2012) 27 104,’ the Tribunal held that the deduction under Section 24(b) is claimed when the concerned taxpayer declares ‘income from house property,’ whereas, the cost of the same asset is taken into consideration when it is sold and ‘income from capital gains’ is computed under Section 48. A perusal of both the provisions makes it unambiguous that none of them excludes operation of the other. (more…)


ITAT holds expenses for worshipping Shiva & Hanuman or organizing Ganesh festival is not for any religious purposes!

              “Expenses incurred for worshipping of Lord Shiva, Hanuman, and Goddess Durga and for celebration of festivals like Shivratri, Hanuman Jayanti, Ganesh Utsav and Makar Sankranti cannot be regarded to be for ‘religious purpose.’ Upholding this contention in a landmark decision, which is bound to shake up a lot of conventional thinking on the subject, the Nagpur Bench of the Income-tax Appellate Tribunal (ITAT) has very recently held that, “Hinduism is not a religion, but a way of life of a civilized society.” The ITAT, thus directed the Commissioner of Income-tax (CIT) to grant approval u/s. 80G of the Income-tax Act in respect of the donations received by the appellant trust ‘Shiv Mandir Devsthan Panch Committee Sansthan, Nagpur.’ (more…)


Salaried employees should plan to enjoy conveyance, telephone, entertainment & medical reimbursements!

Under Section 17(2) of the Income-tax Act read with Rule 3 of the Income-tax Rules, any reimbursement granted by an employer to his employee for telephone expenses (including a mobile phone), actually incurred by an employee is treated as an exempt perquisite (perk). It is pertinent to note that there is no monetary ceiling prescribed in regard to this reimbursement.


            Under Section 17(2) of the Income-tax Act, reimbursement made by an employer of upto Rs.15,000 of medical expenses in a year, actually incurred by an employee on his medical treatment or the treatment of any member of his family, is treated as an exempt perk.  (more…)

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