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    Question

    Mr. A transfers fixed deposit of ₹5 lakh to his wife

    without consideration. Interest of ₹50,000 is earned in her name. How will it be taxed?
    A In hands of wife Correct Answer Incorrect Answer
    B Exempt income Correct Answer Incorrect Answer
    C In hands of Mr. A Correct Answer Incorrect Answer
    D Clubbed in minor child’s income Correct Answer Incorrect Answer

    Solution

    Under Section 64(1), income from assets transferred to spouse without consideration is clubbed with transferor’s income.

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