Mr. Abhishek and his wife, Mrs. Neetu has provided following information of some transactions for the previous year 2025-26: (i) Mr. Abhishek gifted…

CA Final · Direct Tax Laws and International Taxation · RTP · November 2026
Mr. Abhishek and his wife, Mrs. Neetu has provided following information of some transactions for the previous year 2025-26: (i) Mr. Abhishek gifted some shares of Red Chillies Pvt. Ltd. (a closely held manufacturing Co.) carrying 11% voting power in the company to Mrs. Neetu on 05/08/2025, On 15/03/2026, a loan of ₹ 4,40,000 was obtained by Mrs. Neetu (a beneficial owner) from the company. The Company has accumulated profit of 34,00,000 on such date. (ii) One plot of land was gifted by Mrs. Neetu to Mr. Abhishek on 19/01/2026. The land was purchased by Mrs. Neetu for ₹ 20,00,000 on 23/05/2025 and stamp duty @12% of ₹ 30,00,000 was also paid. Mr. Abhishek transferred such plot of land to Mr. Saurav on 21/03/2026 for ₹ 44,00,000. On that date stamp duty value of the land was 50,00,000. (iii) On 01/06/2025, Mr. Abhishek gifted a sum of 20,00,000 to his brother's minor son, Master Y. On the same date, his brother also gifted a sum of ₹ 18,00,000 to Mrs. Neetu. Both Mrs. Neetu and Master Y invested the amount in fixed deposit with a scheduled bank at the interest rate of 9% per annum. Apart from the above, Mr. Abhishek earned interest on fixed deposits of 5,40,000 and Mrs. Neetu earned commission income of 7,20,000. Compute gross total income of Mr. Abhishek and Mrs. Neetu for the Α.Υ. 2026-27.

Suggested Answer and Working Notes:

15. Computation of Gross Total income of Mr. Abhishek and Mrs. Neetu for the A.Y. 2026-27 Particulars Mr. Abhishek Mrs. Neetu Capital Gains Net Sales Consideration [Since the Stamp Duty Value exceed 110% of actual sales consideration, SDV is taken as sales consideration] 50,00,000 Less: Cost of Acquisition (30,00,000 + 12% of 30 lakhs) 33,60,000 [As per section 49(4), value considered for section 56(2)(x) would be the cost of acquisition] Short term capital gain on transfer of plot of land [Capital arising on transfer of land by Mr. Abhishek is taxable in the hands of Mrs. Neetu, by virtue of section 64(1)(iv). Since land is held for not more than 24 months, capital gain would be STCG] 16,40,000 Income from Other Source Interest on fixed deposits 5,40,000 Commission income 7,20,000 Deemed Dividend u/s 2(22)(e) [If a closely held company gives a loan or advance to a shareholder (who holds 10% or more equity shares in the company), such loan or advance (to the extent it does not exceed accumulated profit of the company) is treated as deemed dividend u/s 2(22)(e). Accordingly,₹ 4,40,000, being deemed dividend in the hands of Mrs. Neetu would be taxable in the hands of Mr. Abhishek by virtue of section 64(1)(iv)]. 4,40,000 Interest on Fixed Deposits on cross transfers [These transfers are in the nature of cross transfers. In the hands of Mr. Abhishek, interest received by Mrs. Neetu on Fixed Deposits will be included, since the cross transfer is only to the extent of 18 lakhs. Hence, proportionate interest i.e. 18,00,000 x 9% 10/12 = ₹ 1,35,000 will be included in the hands of Mr. Abhishek]. 1,35,000 Income arising on purchase of land for inadequate consideration. Difference between the consideration and Stamp Duty Value at the time of acquisition since such difference is more than the higher of ₹ 50,000 and 2,00,000 (10%) of ₹ 20 lakhs. Thus, 10 lakhs (₹ 20 lakhs – ₹ 30 lakhs) 10,00,000 Gross Total Income 11,15,000 33,60,000

Topics: Income of Other Persons included in assessee`s Total Income

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