Good morning, good evening, good afternoon, how are you
all, friends?
It's just a matter of a few days and then our topic of
income tax, the whole class of income tax will be over.
It will get stuck like a bag of leaves, sir.
How are you all? How are you all?
Have fun outside. It should always be like this, sir.
I want to say one thing.
Look, now our lectures are already at the stage of getting
over.
After that, I don't know when you will meet me or when you
will meet me.
I just want to say one thing to you, that friends, to
achieve anything in life, it is very important to dream.
If you don't have the ability to dream, the courage to
dream, the capacity to dream, you will not be able to
achieve anything in life.
And dreams are not like this.
Dreams are not like you are born in a good family and you
are dreaming of buying a Scorpio car.
That is not a dream.
You will be able to do that.
The dream is that you are born in a slum, you are driving a
rickshaw, one day you say, I will become the owner of an
airline company.
That is called a dream.
Sir, because to see such a big dream, you need courage.
A person dreams according to his capacity.
But there is no income tax on dreams.
God has given you an imagination.
And a study says that the way you think, the path also
becomes the same.
Your destiny also takes you there.
So it is very important to think.
It is very important to dream.
Dreams are true.
Many of my dreams have come true.
I had a dream of becoming a CA.
It all came true.
At one time, I felt it was impossible.
Today, I am standing in front of you in a suit.
It seems possible.
Sir, do dream.
Don't take permission from anyone.
Dream according to yourself.
Do whatever you want to do in life.
Don't listen to anyone.
Walk according to yourself.
Shall we?
Friends, we were reading the chapter on clubbing.
What did clubbing mean?
Clubbing didn't mean partying or clubbing.
Clubbing meant
clubbing someone else's income into your income.
That's what I meant.
Clubbing. Adding.
It didn't mean partying.
Clubbing means if someone else has an income, it will be
added to your income.
Sir, why will it be added to my income?
What sin have I committed that it will be added to my
income?
That too, someone else's income.
Sir, you didn't commit any sin.
You tried to change the transactions.
Remember my example 2-3 lectures ago.
I gave the example of Big B.
For example, he had an income of 100 crores.
He used to come in the slab rate of 30%.
So, he thought that some rental income is coming from my
house property.
Rental income is coming.
For example, a rental of 5 lakhs is coming.
If I make that cheque in my own hands, as Amitabh Bachchan
made that cheque, then my income of 100 crores, where I am
coming in the slab rate of 30%, will be taxed 30% more than
5 lakhs.
So, why not transfer this income in the hands of a person
from my own house?
I mean, I will tell my tenant that you will make this
cheque in the name of my son, Abhishek.
What will happen with that?
Abhishek's income is zero.
He has already got an exemption of 5 lakhs.
The exemption limit of 2.5 lakhs and the remaining 2.5
lakhs will be adjusted in rebate.
So, 5 lakhs will come to Abhishek.
His income of 5 lakhs will not be taxed.
Here, Mr. Bachchan saved his 30% tax.
This was the point.
So, he basically diverted the income.
In this case, there were many such transactions coming in
the eyes of the government.
So, the government said, don't do this.
Whoever is planning to divert the income, the 5 lakhs that
Abhishek is receiving, whether you believe it or not, it
will be assumed that this 5 lakhs is Big B's income.
And in Big B's 100 crore income, this 5 lakhs will be added.
In Abhishek's hands, this income will not be taxable.
In Big B's hands, this income will be taxable.
This was the first point.
Then we talked about revocable and non-revocable
transactions.
Revocable and irrevocable transfers.
What is revocable?
There are some conditions.
After those conditions, the transfer will come back.
So, in that case also, the income will go to Big B's hands.
But there is an irrevocable transfer.
You have transferred the property.
Big B has transferred the property to Abhishek permanently.
And will never take it back.
It is an irrevocable transfer.
So, in that case, if Abhishek pays the property on rent,
this property will never go back to Big B.
Who will get the ownership of the property?
Abhishek.
So, in this case, it will be taxable in Abhishek's hands.
We read this.
Let's go to the next point.
What did we discuss in the next point?
You divert your income to your wife.
You are receiving income from somewhere.
You divert it to your wife.
Clubbing of the spouse's income.
What were the transactions in that case?
We saw 3-4 transactions there.
First, we saw that you have your own company.
You have a privately owned company.
People make private limited companies.
Or they make a firm.
You have a substantial interest in that.
You have more than 20% holding in that company.
You have more than 20% voting shares.
You have control over that.
You are not taking any salary from there.
For example, you have a salary of 10 lakhs per month.
1 crore has become 20 lakhs per year.
Again, you will be in the 30% bracket.
What will you do?
You will think, why not show 50-60% salary to your wife?
I will take 5 lakhs.
My wife will take 5 lakhs.
So that the exemption limit which is vacant there, in the
wife's account, can be taken advantage of.
5 lakhs won't be taxed anyway.
Do you understand the point?
5%-20% So, there will be some savings up to 10 lakhs.
There will be some savings.
In that case also, the government would have said,
No, it's not like that.
If, without any qualification, your spouse is getting
remuneration, which looks like you have diverted the income
for no reason, to save tax, then that income will be
clubbed in your hands.
Yes, but if they really have a technical qualification,
then it will be accepted that they are being paid that
salary because of their technical qualification.
Second point.
Because the thing is, you are diverting the income without
transferring the property.
This is what is going on.
Mr. Bachchan is our Mr. Bachchan.
What did he do?
In Ms.
Jaya's account, the transaction of Abhishekwala
What did he do?
He transferred the income to Ms. Jaya.
The property documents
were transferred in Ms. Jaya's name.
But what was the problem?
It was transferred without any consideration.
He forgot to take the money from her.
He didn't take the money.
He transferred the property.
And the objective of transferring the property was that Ms.
Jaya should receive the rental.
Our Big B should not receive the rental because the income
has already increased a lot.
Ms. Jaya doesn't have any income.
She will be covered in the exemption limit.
She won't be taxed.
This is why he didn't transfer the property.
So that he gets the ownership.
But in this case, the Act said that if you transfer the
property, then the consideration...
If you are transferring without consideration or for
inadequate consideration, then in that case, these
provisions of clubbing will be applied.
Where is the consideration?
You transferred the property.
Okay. Transfer it.
But take the money from her.
Take the money from her.
You are transferring without consideration.
It is clearly visible that you want to take the rental in
her hands.
And so that you don't get caught, you transferred the
property to her.
She has the ownership.
But, she will get the ownership only when the money is
transferred.
In that case also, the provisions of clubbing will be
applied.
The third point that we discussed in the last lecture, what
was that?
Who am I? Jethalal.
I am Jethalal.
And I transferred the house property to Sundar Veera.
Sundar Veera said,
Brother-in-law, thank you very much.
I said, my dear, it's okay.
The rent that will come from this house, the rent that will
come from this house, you will collect the rent for a year.
And after collecting the rent, you make an FD in the name
of Daya.
Ultimately benefit is going to the spouse.
Benefit is going to the spouse.
But I am taking it from some other channel.
A third person is getting a property transfer without
consideration or due to inadequate consideration.
And ultimately benefit is going to the spouse.
In that case, clubbing provisions will be applied.
This is what we did in the last 2-3 lectures.
I made you revise it in a way that we had studied it till
now.
Let's do some reading so that it becomes clear to you.
If someone has not understood till now, then you will get
clear points if you see today's starting 10-15 minutes.
Come here.
This is the remuneration point.
What is remuneration?
Income by way of remuneration from a concern in which
individual has substantial interest.
For example, who is he?
Jhumejo Pathan.
He is Mr. Pathan.
Shah Rukh Khan.
His film Pathan was a big hit.
Boycott was going on but it became a super hit.
Congratulations to him.
For example, his company is Red Chillies Entertainment.
Actually, his company's name is Red Chillies Entertainment.
Shah Rukh Khan has majority shareholding in this company.
Now, for example, he wants to divert his income.
What did he say?
His wife, what is her name?
Gauri Khan.
He made a cheque in the name of Gauri.
What did he show to Gauri?
That she is the CEO of the company.
She is the CEO of the company.
And her appointment is fixed at the salary of 1 crore per
month.
At the salary of 1 crore per month, Gauri madam's
appointment is fixed.
Give me some quick answers to the questions.
Whose company is it?
Husband's.
Is there substantial interest?
Is there more than 20% holding?
Obviously, yes.
Does it look like he is qualified to be the CEO?
See, I am not saying anything like that.
But the salary of 1 crore per month.
Sir, people who do MBA from IIM.
They also don't have a salary of 1 crore per month.
And his salary is 1 crore per month.
Sir, it is visible that there is no qualification.
And you are giving so much remuneration.
Just to divert income.
In that case, income will be clubbed in the hands of SRK.
Come, let's try to read.
What is it?
Remuneration in cash or kind to the spouse from a concern,
from a company in which individual has substantial interest.
Who is the individual? In this case, it is SRK.
Let me mark you so that it is easy for you.
Give me a minute.
Remuneration in cash or kind to the spouse.
Who is the spouse? Gauri.
From a concern in which individual has a substantial
interest.
Who is the individual in this case? SRK.
In computing the total income of the individual.
When you calculate the total income of SRK.
All such income which arises directly or indirectly to the
spouse of such individual.
Means Gauri, by way of salary, commission or any other form
of remuneration.
Whether in cash or kind from a company in which individual
has a substantial interest.
That income will also be included in the income of SRK.
Because it will be assumed that you are basically diverting
your income.
Is the point clear?
Come here.
But along with this, there is also a point.
Assume that his qualification is so much.
He has studied from Oxford University.
He has studied from Harvard University.
He has technical qualification.
He is a chartered accountant.
He has technical qualification in that case.
If he has professional qualification with Gauri madam.
Then he deserves to take a salary of 1 crore.
In that case, it is assumed that clubbing provisions are
not applied there.
Because of his ability, he is deserving of that salary.
Come, what is the point?
Clubbing provisions, however, does not apply where the
spouse of the individual possesses technical or
professional qualification.
And the income to the spouse is attributable to the
application of the technical or professional knowledge.
In such an event, income arising to the spouse is to be
assessed in the hands of the spouse only.
The income of the spouse will be taxable in the hands of
the spouse.
Assume that both husband and wife have substantial interest
in the company.
Assume that their shareholding is such that 40% of the
shares are with SRK.
And 40% of the shares are with Gauri madam.
Both have substantial holding.
So, what should be done in that case?
See the answer to that.
Where both husband and wife have substantial interest.
And both are in receipt of income by way of salary.
Both get salaries.
So, in that case, income will be included in the hands of
the spouse whose total income is higher.
What is sir trying to say?
It is a simple thing.
He is trying to say that both have substantial holding.
Both husband and wife have substantial holding.
And both are receiving salary amounts.
For example, SRK has a package of Rs. 12 crores.
And Gauri has a package of Rs. 12 crores.
Both are receiving.
So, in that case, in whose hands should the income be
clubbed?
In that case, the income will be clubbed in the hands of
the person whose income is higher by excluding this.
For example, if SRK's income is Rs. 100 crores after
excluding this.
And Gauri's income is Rs. 1 crore after excluding this.
So, in whose income is higher by excluding this Rs.
12 crores, in whose income is higher by excluding this Rs.
12 crores, this income will be clubbed.
Is the point simple?
Any problem?
Come here.
Let's see the illustration.
Mr. A has 25% voting power in Ex-Pvt. Ltd.
25% means that he has substantial interest.
Mr. A has more than 20% voting power.
Now, Mrs. A, spouse of the individual.
Who is Mrs. A? Spouse of the individual.
And who is the individual who has substantial interest?
Mrs. A, working as a computer software programmer at a
salary of Rs. 30,000 per month.
She is not qualified for the job.
But she has a husband's company.
She has a 25% share in the company.
So, her husband has got her a job at Rs. 30,000 per month.
So, in this case, do you think there are any clubbing
provisions?
So, in this case, do you think there are any clubbing
provisions?
The annual income is Rs. 3,60,000.
Give the standard deduction.
The remaining amount will be clubbed.
Let's see, the other income of Mr. A and Mrs. A is Rs.
7,00,000 and Rs. 4,00,000.
Let's see, the other income of Mr. A and Mrs. A is Rs.
7,00,000 and Rs. 4,00,000.
So, in Mrs. A's income, Rs. 30,000 will be added to her
monthly income.
So, in Mr. A's income, Rs. 30,000 will be added to her
monthly income.
In Mrs. A's income, this will not be added.
You put in anyone's income, right? income is coming, and
why is it coming? Because her husband had a 25% holding in
a company.
Because of this, Mrs.
A got a job there.
Could she get a job? It is written here, she is not
qualified for the job.
She could not get a job.
But despite this, she got a job.
And because of this, she got a job.
And because of this person, she got a job, so club her
income.
Come here.
This is the answer.
Mr. A's income, come here.
What happened to