Income Tax Act

Official PDF pages 166–170

SOURCE PDF PAGE 166
( a )   “transfer” includes any settlement, trust, covenant, agreement or
arrangement;
( b )   a transfer shall be deemed to be revocable, if—
( i )   it contains any provision for the direct or indirect re-transfer of the
whole or any part of the income or assets to the transferor; or
( ii )   it, in any way, gives the transferor a right to re-assume power directly
or indirectly over the whole or any part of the income or assets.
Income of individual to include income of spouse, minor child, etc.
99.   (1) The total income of any individual, for a tax year, shall include the income
arising directly or indirectly,—
( a )   to the spouse of such individual,—
( i )   by way of salary, commission, fees or any other form of remu -
neration, whether in cash or kind, from a concern in which such
individual has a substantial interest but shall not include income
solely attributable to the application of technical or professional
knowledge, experience and technical or professional qualification
of the spouse;
( ii )   from assets transferred directly or indirectly to him or her by such
individual otherwise than for adequate consideration or in connec -
tion with an agreement to live apart, subject to the provisions of
section 25( a );
( b )   to the son’s wife of such individual from assets transferred directly or
indirectly on or after the 1st June, 1973, to her by such individual, oth -
erwise than for adequate consideration;
( c )   to the minor child of the such individual, but shall not include income
accruing or arising—
( i )   on account of work done by such child; or
( ii )   from activities where his skill, talent, specialised knowledge or
experience is applied; or
( iii )   where such minor child is suffering from disability of the nature
specified in section 154;
( d )   to any person or association of persons from assets transferred directly
or indirectly, otherwise than for adequate consideration to the person
or association of persons by such individual, to the extent to which the
income from such assets is for the immediate or deferred benefit of his
or her spouse or his son’s wife, as the case may be, other than the assets
transferred before 1st June 1973, to the extent to which the income from
such assets is for the immediate or deferred benefit of his son’s wife.
(2) If the asset transferred under  
11
[ sub-section (1)( a )( ii ) or ( b ) ]   is invested by the
spouse or son’s wife, in any business or in the nature of capital contributed as a
11.   Substituted for “sub-section (1)( a )( i ) or ( b )” by the Finance Act, 2026, w.e.f.   1-4-2026 .

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partner in a firm, or, as the case may be, for being admitted to the benefits of part -
nership in a firm, then, the income to be included in the hands of the individual for
the tax year shall be as follows:—
A = B  
C
D
× 




where ,—
A = Income to be included in the hands of individual for the tax year;
B = Income and interest or both, arising to the spouse or son’s wife from
the business or the firm, as applicable during the tax year;
C = Value of such assets invested, or contributed as capital by the spouse
or son’s wife as on the first day of the tax year;
D = Total investment or total capital contribution, as the case may be, by
the spouse or son’s wife as on the first day of the tax year.
(3) Where a property owned by an individual is converted into property belonging
to the Hindu undivided family of which he is a member, through—
( a )   the act of impressing such separate property with the character of pro-
perty belonging to the family; or
( b )   throwing it into the common stock of the family; or
( c )   transfer, directly or indirectly to the family,
without adequate consideration, then, irrespective of any other provision of this
Act or any other law in force for computing the total income of such individual,—
( i )   the individual shall be deemed to have transferred such property, through
the family, to the members of such family for being held jointly, and the
income derived from such property or part thereof, shall be deemed to
be income of the individual;
( ii )   where the property so converted has been the subject-matter of partition
(whether partial or total) amongst the member of the family, the income
derived from such property as is received by the spouse of the individual
on partition, shall be deemed to arise to the spouse from assets trans -
ferred indirectly to the spouse and the provisions of sub-section (1)( a )
shall apply,
and the income referred to in clauses ( i ) and ( ii ) shall, on being included in the
total income of the individual, be excluded from the total income of the family or
the spouse.
(4) The provisions of sub-section (3) shall not apply where the property of the
individual has been converted into property belonging to the family on or before
the 31st December, 1969.
(5) For the purposes of this section,—
( a )   for sub-section (1)( a )( i ),—
( i )   the income referred to in that clause shall be included in the hands
of either of the spouse whose total income before such inclusion is
greater; and

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( ii )   such income, once included in the total income of either spouse,
for a tax year, shall not be included in the income of the other
spouse for any succeeding tax year, unless the Assessing Officer is
so satisfied, after giving the other spouse an opportunity of being
heard;
( iii )   an individual shall be deemed to have a substantial interest in a
concern,—
( A )   in case where the concern is a company, if its shares (not
being shares entitled to a fixed rate of dividend whether with
or without a further right to participate in profits) carrying
not less than 20% of the voting power are, at any time during
the tax year, owned beneficially by the individual or jointly
with one or more of his relatives;
( B )   in any other case, if such person is entitled, or such person
and one or more of his relatives are jointly entitled, to at least
20% of the profits of such concern at any time during the tax
year;
( b )   for sub-section (1)( c ), income of minor child shall be included—
( i )   in the income of that parent whose total income before such inclu -
sion is greater, in case where the marriage of his parents subsists;
or
( ii )   in the income of the parent who maintains such child during the
tax year, in case where marriage of his parents does not subsist,
and such income, once included in the total income of either of the parent,
for a tax year, shall not be included in the income of the other parent for
any succeeding tax year, unless the Assessing Officer is so satisfied, after
giving the other parent an opportunity of being heard;
( c )   for sub-section (3), “property” includes—
( i )   interest in property; or
( ii )   movable or immovable property; or
( iii )   proceeds of sale of such property and any money, property or
investment representing such proceeds; or
( iv )   where property is converted into any other property by any method,
such other property;
( d )   for this section, “income” includes loss.
Liability of person in respect of income included in income of another person.
100.   Where, income of a person, other than the assessee, arising from any
asset, or income from membership of a firm, is included in the total income of
the assessee under this Chapter or under section 25( a ), then, irrespective of anything
to the contrary contained in any other law in force,—
( a )   such person, in whose name such asset stands, or who is a member of the
firm, shall be liable to pay, that portion of the tax levied on the assessee
which is attributable to the income so included, upon service of notice
of demand by the Assessing Officer in this behalf;

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( b )   where any such asset is held jointly by more than one person, they shall
be jointly and severally liable to pay such tax; and
( c )   the provisions of Chapter XIX-D shall apply accordingly.
CHAPTER VI
AGGREGATION OF INCOME
Total income.
101.   In computing the total income of an assessee, there shall be included all income
on which no income-tax is payable under Chapter   XVII - A 4.
Unexplained credits.
102.   (1)   Where   any   sum   is   found   credited   in   the   books   of   an   assessee
maintained for any tax year, and—
( a )   the assessee offers no explanation about the nature and source of such
credit; or
( b )   the explanation offered about the nature and source of such credit by
assessee is not satisfactory in the opinion of the Assessing Officer,
then, the sum so credited shall be charged to income-tax as income of the assessee
of that tax year.
(2) For the purposes of sub-section (1), where the sum so credited consists of loan
or borrowing or any such amount, by whatever name called, the explanation offered
by such assessee shall be deemed to be not satisfactory, unless,—
( a )   the person in whose name such credit is recorded in the books of such
assessee also offers an explanation about the nature and source of such
sum so credited; and
( b )   such explanation in the opinion of the Assessing Officer has been found
to be satisfactory.
(3) For the purposes of sub-section (1), where the assessee is a company (not
being a company in which the public are substantially interested), and the sum so
credited consists of share application money, share capital, share premium or any
such amount, by whatever name called, the explanation offered by such assessee
company shall be deemed to be not satisfactory, unless—
( a )   the person, being a resident in whose name such credit is recorded in
the books of such company also offers an explanation about the nature
and source of such sum so credited; and
( b )   such explanation, in the opinion of the Assessing Officer has been found
to be satisfactory.
(4) Nothing contained in sub-section (2) or (3) shall apply if the person, in whose
name the sum referred to in those sub-sections is recorded, is a venture capital
fund or a venture capital company as referred to in Schedule   V   (Table: Sl. No. 6).

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Unexplained investment.
103.   Where in any tax year, any investment has been made by the assessee
which is not recorded in the books of account, if any, maintained by such
assessee for any source of income, or, the Assessing Officer finds that the amount
of such investment exceeds the amount recorded in such books of account and—
( a )   the assessee offers no explanation about the nature and source of such
investment, or such excess amount, as the case may be; or
( b )   the explanation offered about the nature and source of such investment
by the assessee, is not satisfactory in the opinion of the Assessing Officer,
then, the value of such investment, or such excess amount, as the case may be, shall
be deemed to be the income of the assessee of that tax year.
Unexplained asset.
104.   (1) Where in any tax year, any asset has been found to be owned by or belong-
ing to the assessee which is not recorded in the books of account, if any, main -
tained by such assessee for any source of income, or the Assessing Officer finds that
the amount expended in acquiring such asset exceeds the amount recorded in such
books of account and—
( a )   the assessee offers no explanation about the nature and source of acqui -
sition of such asset, or such excess amount, as the case may be; or
( b )   the explanation offered about the nature and source of acquisition of such
asset by the assessee, is not satisfactory in the opinion of the Assessing
Officer,
then, the value of such asset, or such excess amount, as the case may be, shall be
deemed to be the income of the assessee of the tax year in which such asset has
been found to be owned by, or belonging to, the assessee.
(2) For the purposes of this section, “asset” includes money, bullion, jewellery, virtual
digital asset or other valuable article.
Unexplained expenditure.
105.   (1) Where any expenditure has been incurred by the assessee in any tax
year, and—
( a )   the assessee offers no explanation about the source of such expenditure
or part thereof; or
( b )   the explanation offered about the source of such expenditure by the
assessee is not satisfactory in the opinion of the Assessing Officer,
then, the amount covered by such expenditure or part thereof, shall be deemed to
be the income of the assessee for that tax year.
(2) Irrespective of any other provision of this Act, the amount deemed as income in
sub-section (1) shall not be allowed as a deduction under this Act.
Amount borrowed or repaid through negotiable instrument,   hundi , etc.
106.   (1) Where any amount (including interest thereof) is borrowed or repaid
through a negotiable instrument or on a   hundi , otherwise than an account