Mr. Rudra and his wife, Mrs. Shivani, are resident in India for the P.Y. 2025-26. Mr. Rudra has explicitly chosen to file his tax return under the…

7. Computation of total income of Mr. Rudra and Mrs. Shivani for A.Y. 2026-27 Particulars Mr. Rudra [Under default tax regime] ₹ Mrs. Shivani [Under normal provisions] ₹ Income under the head "Salaries " Gross Salary [₹ 50,000 x 12] [Refer Note (i)] 6,00,000 Less: Standard Deduction u/s 16(ia) 50,000 5,50,000 Income from house property Annual Value [Refer Note (ii)] 2,00,000 Less: Deduction @30% of NAV 60,000 1,40,000 Current year loss from House at Delhi [Can be set-off under the head "House Property" even under default tax regime] 1,20,000 Brought forward loss from House at Delhi [Allowed to be set-off to the extent of ₹ 20,000 since he shifted out of the default tax regime for that year] 20,000 Nil Profits and gains of business or profession Salary from partnership firm 8,20,000 Less: As per section 70, set off of current year business loss of new retail boutique business [Refer Note (iii)] 2,10,000 6,10,000 Income from Other Sources Interest on enhanced compensation [Taxable in the year in which it is received. Since the same is received in year 2026-27, the same would not be taxable in P.Y. 2025-26] Gift from grandfather's sister or husband's grandfather sister [Taxable under section 56(2)(x), since grandfather's sister or husband's grandfather sister is not a relative and the amount of gift exceeds ₹ 50,000] 1,35,000 11,00,000 Dividend on shares (gross) 60,000 1,95,000 11,00,000 Taxable Income 8,05,000 16,50,000 Notes - (i) As per section 64(1)(ii), when both spouses have a substantial interest (i.e. shares carrying 20% or more of the voting power, either individually or along with their relatives) in a concern and one receives a salary without any technical or professional qualification, such remuneration must be clubbed in the hands of that spouse whose total income (excluding such remuneration) is higher. In the present case, both Mr. Rudra (holding 22% voting power) and Mrs. Shivani (holding 25% voting power) have substantial interest in Rudra Tech Pvt Ltd. Since Mrs. Shivani's total income (excluding salary income) of ₹ 11,00,000 is higher than Mr. Rudra's total income (excluding salary income) of ₹ 8,05,000, salary received from Rudra Tech Pvt Ltd. will be included in her hands. (ii) If two transactions are inter-connected and are parts of the same transaction in such a way that it can be said that the circuitous method was adopted as a device to evade tax, the implication of clubbing provisions would be attracted. Accordingly, the income arising to Mrs. K from the equity shares should be included in the total income of Mr. Rudra's brother to the extent of value of house i.e., ₹ 60,00,000 and the rental income from building transferred to his wife Shivani by his brother would be taxable in the hands of Rudra. (iii) As per section 64(1)(iv), if an asset is transferred to a spouse without adequate consideration and invested in a business, the proportionate income belongs to the transferor. Further, Explanation 2 to Section 64 clarifies that the term "income" explicitly includes "loss". Hence, the business loss sustained by Mrs. Shivani's boutique is clubbed into Mr. Rudra's income.