Income from other sources.
Vaibhav N Banjan
Basis of Charge- U/s 56
General Provision- Section 56 (1)
Income of every kind which is not to be excluded
from the total income under this Act shall be
chargeable to income-tax under the head Income
from other sources, if it is not chargeable to
income-tax under any other of the heads such as
1) Salaries
2) House Property
3) Profit/ Gains from Business
4) Capital Gains
Basis of Charge- U/s 56
Special Provision- Section 56 (2)
i) Dividends
ii) Winning of Lotteries, crossword puzzles, races or card
games or any sort of gambling & betting
iii) Sum Received by Assessee from his employees as
contribution to Staff welfare scheme
iv) income by way of interest on securities (Debentures,
Bonds & Government Securities)
v) Rental Income of Machinery or furniture let on hire
Basis of Charge- U/s 56
vi) Rental Income of Letting out of Plant, Machinery or
furniture along with letting out of building and the tow
lettings are not separable.
vii) Any sum received under a Keyman Insurance Policy
including bonus if not taxable as Salary or Business
Income
viii) Gifts (Receipts without/unadequate consideration/)
i) Any sum of money total exceeding Rs 50,000 is
received by Individual/ HUF. Then Entire Amount
ii) Any immovable property exceeding Rs 50,000
iii) Any Movable property exceeding Rs 50,000
Deduction u/s 57
i) In the case of dividends, [other than dividends referred to
in section 115-O,] [or interest on securities], any reasonable
sum paid by way of commission or remuneration to a
banker or any other person for the purpose of realising such
dividend
ii) Deduction in respect of Employee’s contribution towards
Staff welfare scheme towards any welfare fund of such
employees is allowable only if such sum is credited to the
tax payer account before the due date
iii) Repairs Depreciation in case of Letting of plant
machinery & furniture
Deduction u/s 57
iv) In the case of income in the nature of family
pension, a deduction of a sum equal to 33 1/3 % of
such income or Rs 15,000 whichever is less
v) any other expenditure (not being in the nature of
capital expenditure) laid out or expended wholly
and exclusively for the purpose of making or
earning such income.
Amount not Deductible u/s 58
(a)in the case of any assessee,
(i) any personal expenses of the assessee ;
ii) any interest which is payable outside India on which
tax has not been paid or deducted
(iii) any Salaries, if it is payable outside India, unless tax
has been paid thereon or deducted
iv) The provisions of section 40A shall, so far as may be,
apply in computing the income chargeable under the head
Income from other sources as they apply in computing the
income chargeable under the head Profits and gains of
business or profession.
Amount not Deductible u/s 58
v) In the case of an assessee, being a foreign company, the
provisions of section 44D shall, so far as may be, apply in
computing the income chargeable under the head Income
from other sources as they apply in computing the income
chargeable under the head Profits and gains of business or
profession.]
vi) no deduction in respect of any expenditure or allowance
in connection with such income shall be allowed under any
provision of this Act in computing the income by way of
any winnings from lotteries, crossword puzzles, races
including horse races, card games and other games of any
sort or from gambling or betting of any form or nature,
whatsoever :
Gifts- Exceptions
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i) Gifts from Relatives
ii) Gifts on the occasion of marriage of the individual
iii) Gifts under a will or by way of inheritance,
iv) Gifts in contemplation of death of the payer
v) Amount received from any local authority
vi) Amount received from any fund or foundation or
university or other educational institution or hospital or
other medical institution or any trust or institution referred
to in clause (23C) of section 10
 vii) Any amount received from any trust or institution
registered u/s 12AA.
Relatives
 i) spouse of the individual,
 ii)brother or sister of the individual,
 iii) brother or sister of the spouse of the individual,
 iv) brother or sister of either of the parents of the
individual,
 v)any lineal ascendant or descendants of the individual,
 vi)any lineal ascendants or descendants of the spouse of the
individual,
 vii) and spouse of the persons referred to ii) to vi) above
 CLUBBING OF INCOME
SECTION 60 :Transfer of Income
without transfer of Assets.
 CLUBBED IN THE HANDS OF
Transferor who transfers the income.
SECTION 61:Revocable transfer of
Assets.
 CLUBBED IN THE HANDS OF
Transferor who transfers the Asset.
SECTION 64 1 (ii):Salary, Commission, Fees or
remuneration paid to spouse from a concern in which an
individual has a substantial* interest.
 CLUBBED IN THE HANDS OF
Spouse whose total income (excluding income
to be clubbed) is greater.
Clubbing not applicable if:
Spouse possesses technical or professional
qualification and remuneration is solely
attributable to application of that
knowledge/qualification.

SECTION 64 1 (iv):Income from assets
transferred directly or indirectly to the spouse
without adequate consideration
 CLUBBED IN THE HANDS OF
Individual transferring the asset.
Clubbing not applicable if:
 The assets are transferred;
1. With an agreement to live apart.
 2. Before marriage.
 3. Income earned when relation does not exist.
SECTION 64 1 (vi):Income from the assets
transferred to son’s wife.
 CLUBBED IN THE HANDS OF
Individual transferring the asset.
Clubbing applicable if:
 The assets are transferred without adequate
consideration.
SECTION 64 1 : Transfer of assets by an individual to a
person or AOP for the immediate or deferred benefit of his:
(vii) - Spouse.
(viii) - Son’s wife.
 CLUBBED IN THE HANDS OF
Individual transferring the asset.
Clubbing applicable if:
 The assets are transferred without adequate
consideration.
SECTION 64 1A : Income of a minor child
 CLUBBED IN THE HANDS OF
 1. If the marriage subsists, in the hands of the parent
whose total income is greater; or;
 2. If the marriage does not subsist, in the hands of the
person who maintains the minor child.
 3. Income once included in the total income of either of
parents, it shall continue to be included in the hands of
some parent in the subsequent year unless AO is
satisfied that it is necessary to do so (after giving that
parent opportunity of being heard)
Clubbing not applicable for:—
 1. Income of a minor child suffering any
disability specified u/s. 80U.
 2. Income on account of manual work done by
the minor child.
 3. Income on account of any activity involving
application of skills, talent or specialized
knowledge and experience.
 The parent in whose hands the minor’s income
is clubbed is entitled to an exemption up to Rs.
1,500 per child.
Section : 64 (2) Income of HUF from
property converted by the individual into
HUF property
 CLUBBED IN THE HANDS OF
 Income is included in the hands of
individual & not in the hands of HUF.
 Clubbing applicable even if:
The converted property is subsequently
partitioned; income derived by the
spouse from such converted property
will be taxable in the hands of
individual.
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