Although clubbing provision is applicable and income is taxable in the hands of transferor still notice of demand can be served on the transferee and amount recovered from him.

The transferee is liable to pay the portion of tax which is attributable to the clubbed income. 

 

Example:-

Suppose A transferred his asset to B for 10 years. Income from asset will be received by B but it will be clubbed in A’s hands as it is revocable transfer.

Hence, primary responsibility to pay tax on this income is of A. But if A, doesn’t pay Income tax on it then, Income Tax Department can recover it from B also as per provisions of Section 65

  1. Income Tax
  2. Clubbing of Income of Other Persons
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Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.