Section 100 — Liability of person in respect of income included in income of another person. Successor to s.65 of the 1961 Act.
Section 100 is in Chapter V — Income of Other Persons Included in Total Income of Assessee, which runs from section 96 to section 100.
The section makes a third party pay part of another person's tax. Where income of a person other than the assessee, arising from an asset or from membership of a firm, is included in the assessee's total income under Chapter V or under section 25(a), then irrespective of anything to the contrary in any other law in force: clause (a) makes the person in whose name the asset stands, or who is the member of the firm, liable to pay that portion of the tax levied on the assessee which is attributable to the income so included, once the Assessing Officer serves a notice of demand on him; clause (b) makes joint holders of such an asset jointly and severally liable for that tax; and clause (c) applies Chapter XIX-D accordingly.
Clubbing taxes income in the hands of someone who never received it, so the Act gives the Department a route to the money where it actually sits. Without this section the assessee alone would be answerable for tax on income that another person holds, and the asset standing in that other person's name would be out of reach.
Liability under this section does not arise on its own — it needs a notice of demand served by the Assessing Officer on the person in whose name the asset stands, and it is limited to the portion of the assessee's tax attributable to the clubbed income, not the whole demand. Where the asset is held jointly, sub-clause (b) makes the holders jointly and severally liable, so the Department may recover the whole of that portion from any one of them. The opening non obstante clause overrides any other law in force, so an arrangement or a state law protecting the nominal owner does not answer the demand, and clause (c) brings in the recovery machinery of Chapter XIX-D.
An individual transfers a deposit to his spouse and the interest is clubbed in his hands under Chapter V, adding Rs. 4 lakh of tax to his assessment. The Assessing Officer may serve a notice of demand on the spouse, in whose name the deposit stands, for that Rs. 4 lakh — not for the individual's whole tax liability. If the deposit stands in the joint names of the spouse and another person, clause (b) makes both of them jointly and severally liable for it.
The person in whose name the asset stands meets this section only when a notice of demand under it arrives from the Assessing Officer, often long after the assessment of someone else's return; it does not appear on that person's own return at all.
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
where any such asset is held jointly by more than one person, they shall be jointly and severally liable to pay such tax
See the full 1961 to 2025 concordance.
See the notifications index.
