An individual transfers 2,000 debentures of ₹100 face value each to their spouse for ₹90,000 when the total fair market value is ₹1,80,000. The debentures pay 14% annual interest, no agreement to…
Question and options
An individual transfers 2,000 debentures of ₹100 face value each to their spouse for ₹90,000 when the total fair market value is ₹1,80,000. The debentures pay 14% annual interest, no agreement to live apart applies, and the interest is apportioned by the fraction transferred without adequate consideration. How much annual interest is clubbed in the transferor’s income?
₹14,000
₹12,600
₹28,000
₹25,200
Answer and explanation
Annual interest is 2,000 × ₹100 × 14% = ₹28,000. The spouse paid half the market value, so half the interest, ₹14,000, arises from the part transferred without adequate consideration and is included in the transferor’s income under section 99(1)(a)(ii) of the Income-tax Act, 2025.
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