The question (6 marks)
On the first day of a tax year Meenal gifts 400000 to her husband Rohit, who adds it to 600000 of his own capital and puts the whole 1000000 into his proprietary business. The business earns 150000 that year. Rohit also owns shares which Meenal had transferred to him before their marriage, on which he receives a dividend. Advise on whose income each amount is, and on who must pay the tax. (6 marks)
MU Module II, clubbing of income; pack ch. 02, problem question.
Plan your answer on paper before you look at the authorities — issue first, then the rule, then apply it to these facts.
It tests Unit 2 · Residence, Heads of Income and Computation of Law of Taxation.
Authorities you will need
- Sections 96 to 100, Chapter V, Income-tax Act
- Section 99(2), Income-tax Act
- Philip John Plasket Thomas v. C.I.T.
How an answer is marked
A full-marks answer names the issue in one line, states the rule with its section, cites the authority, applies it to these facts and concludes — in that order. The app's model answer for this question is written in exactly that shape, with a checklist to mark your own attempt against.