Specify with reason, whether the following acts can be considered as: (A) Tax planning; or (B) Tax management; or (C) Tax evasion. 1. Mr. D has FDR…

1. Tax Planning – Gifting of fixed deposits of 50lakhs by Mr. D to his son who attained the age of 18 years for the purpose of shifting interest income from his hands to his son so that there may be zero tax implication, is a permitted tax planning measure under the provisions of income-tax law. Note - It has been assumed that such transfer is irrevocable and Mr. D does not derive any direct or indirect benefit from such income. In case transfer of fixed deposit is revocable then the interest income on fixed deposits would be included in the hands of Mr. D and hence the same would not be considered as Tax Planning. 2. Tax Evasion - Mr. Ram's annual income is 49.50 lakhs for the Α.Υ. 2024-25. He also earned commission of 6lakhs from ABC Limited. Accordingly, his total income would be - 55.50 lakhs which exceeds 50lakhs and hence surcharge is applicable on tax on total income. However, for the purpose of saving tax, he instructed ABC Ltd. to transfer the commission in his wife's account. This is the case of application of income and not of diversion of income by overriding title, since such transfer of commission is not under any obligation but to evade tax. This is tax evasion.