{"id":719,"date":"2026-07-27T13:15:40","date_gmt":"2026-07-27T13:15:40","guid":{"rendered":"https:\/\/itradvisor.in\/wpblogs\/?p=719"},"modified":"2026-07-27T13:15:43","modified_gmt":"2026-07-27T13:15:43","slug":"clubbing-of-losses-under-section-641iv","status":"publish","type":"post","link":"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/","title":{"rendered":"Clubbing of Losses Under Section 64(1)(iv): The Landmark ITAT Ruling Every Taxpayer Must Know"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#Section_641iv\" >Section 64(1)(iv)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#What_Is_Clubbing_of_Income_Under_Section_641iv\" >What Is Clubbing of Income Under Section 64(1)(iv)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#The_Case_A_Gift_an_F_O_Trade_and_a_Tax_Dispute\" >The Case: A Gift, an F&amp;O Trade, and a Tax Dispute<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#ITATs_View_Profit_and_Loss_Cannot_Be_Treated_Differently\" >ITAT&#8217;s View: Profit and Loss Cannot Be Treated Differently<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#A_Practical_Example\" >A Practical Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#Key_Takeaways_on_Clubbing_of_Losses_Under_Section_641iv\" >Key Takeaways on Clubbing of Losses Under Section 64(1)(iv)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#Frequently_Asked_Questions_on_Clubbing_of_Losses_Under_Section_641iv\" >Frequently Asked Questions on Clubbing of Losses Under Section 64(1)(iv)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#1Can_losses_on_money_gifted_to_a_spouse_be_clubbed_under_Section_641iv\" >1.Can losses on money gifted to a spouse be clubbed under Section 64(1)(iv)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#2What_evidence_is_needed_to_claim_clubbing_of_a_loss\" >2.What evidence is needed to claim clubbing of a loss?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#3Does_clubbing_of_income_apply_only_to_F_O_and_equity_losses\" >3.Does clubbing of income apply only to F&amp;O and equity losses?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#4Can_clubbed_F_O_losses_still_be_set_off_against_other_income\" >4.Can clubbed F&amp;O losses still be set off against other income?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/itradvisor.in\/wpblogs\/clubbing-of-losses-under-section-641iv\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Section_641iv\"><\/span><strong>Section 64(1)(iv)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Income Tax Department is quick to tax profits earned on money gifted within a family. But what happens when those same gifted funds end up in a loss instead of a gain? A recent ruling from the Income Tax Appellate Tribunal, Lucknow Bench, answers this question, and it matters to every household that moves money between spouses for investment.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"723\" src=\"https:\/\/itradvisor.in\/wpblogs\/wp-content\/uploads\/2026\/07\/image-24.png\" alt=\"\" class=\"wp-image-721\" srcset=\"https:\/\/itradvisor.in\/wpblogs\/wp-content\/uploads\/2026\/07\/image-24.png 1024w, https:\/\/itradvisor.in\/wpblogs\/wp-content\/uploads\/2026\/07\/image-24-300x212.png 300w, https:\/\/itradvisor.in\/wpblogs\/wp-content\/uploads\/2026\/07\/image-24-768x542.png 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_Clubbing_of_Income_Under_Section_641iv\"><\/span>What Is Clubbing of Income Under Section 64(1)(iv)?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under Section 64(1)(iv) of the Income Tax Act, 1961, income arising from an asset transferred without adequate consideration to a spouse is added back to the income of the person who made the transfer. If a husband gifts money to his wife and she earns interest, dividends, or capital gains on it, that income is taxed in the husband&#8217;s hands, not hers. This <strong>clubbing of income<\/strong> rule exists to stop families from splitting income purely to reduce tax, and it is enforced consistently by the<a href=\"http:\/\/incometax.gov.in\" data-type=\"link\" data-id=\"incometax.gov.in\" target=\"_blank\" rel=\"noopener\"> Income Tax Department <\/a>during scrutiny of family investment transfers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Case_A_Gift_an_F_O_Trade_and_a_Tax_Dispute\"><\/span>The Case: A Gift, an F&amp;O Trade, and a Tax Dispute<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In Vipin Yadav vs. ITO, a husband transferred funds to his wife as a gift. She used the money to trade in equity and futures and options, and the trades resulted in a loss. The taxpayer argued that since profits from gifted funds are taxable in the donor&#8217;s hands, losses from the same funds should logically be allowed in the donor&#8217;s hands too. The Assessing Officer disagreed, and the matter reached the ITAT.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ITATs_View_Profit_and_Loss_Cannot_Be_Treated_Differently\"><\/span>ITAT&#8217;s View: Profit and Loss Cannot Be Treated Differently<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The Tribunal examined a core question<\/strong>: can tax law follow the gain but disown the loss arising from the same source? The <a href=\"https:\/\/itat.gov.in\" target=\"_blank\" rel=\"noopener\">ITAT<\/a> held that where income from a gifted asset is liable to be clubbed, a loss from that source cannot be ignored merely because it is a loss. The taxpayer, however, must establish a clear, documented link between the gifted funds and the loss claimed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Practical_Example\"><\/span>A Practical Example<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Suppose a husband gifts \u20b910 lakh to his wife, who trades it in F&amp;O and incurs a loss of \u20b91.5 lakh. Under this clubbing of income and loss principle, that loss may be considered in the husband&#8217;s hands rather than the wife&#8217;s, provided he can prove the funds traded were the gifted amount. The loss then follows the normal set-off and carry-forward rules for F&amp;O losses.<\/p>\n\n\n\n<p>Tax professionals, including Dr. Haresh Adwani, often note that clubbing disputes turn less on legal principle and more on documentation discipline, since the burden of proving the nexus between a gift and the resulting income or loss always rests with the taxpayer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Takeaways_on_Clubbing_of_Losses_Under_Section_641iv\"><\/span>Key Takeaways on<strong> <\/strong>Clubbing of Losses Under Section 64(1)(iv)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>At a Glance<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Clubbing under Section 64(1)(iv) is not a one-way street that only catches profits.<\/li>\n\n\n\n<li>Losses arising from gifted funds may also be clubbed in the donor&#8217;s hands, subject to proof.<\/li>\n\n\n\n<li>A clear trail of the gift deed, bank transfer, and trading statement is essential.<\/li>\n<\/ul>\n\n\n\n<p>F&amp;O losses, once clubbed, follow standard set-off and carry-forward rules.<\/p>\n\n\n\n<p>Read our detailed guide on<a href=\"https:\/\/itradvisor.in\/blog\/tax-saving-tips-before-july-31-ay-2026-27\" data-type=\"link\" data-id=\"https:\/\/itradvisor.in\/blog\/tax-saving-tips-before-july-31-ay-2026-27\"> Urgent &amp; Powerful Tax Saving Tips Before July 31 for AY 2026-27 : Don\u2019t Miss the Deadline!<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_on_Clubbing_of_Losses_Under_Section_641iv\"><\/span>Frequently Asked Questions on Clubbing of Losses Under Section 64(1)(iv)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1785155147989\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"1Can_losses_on_money_gifted_to_a_spouse_be_clubbed_under_Section_641iv\"><\/span>1.Can losses on money gifted to a spouse be clubbed under Section 64(1)(iv)?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Yes. Per the ITAT Lucknow ruling, if income from gifted funds is clubbable, losses from the same source may also be considered in the donor&#8217;s hands, subject to proof.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1785155149364\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"2What_evidence_is_needed_to_claim_clubbing_of_a_loss\"><\/span>2.What evidence is needed to claim clubbing of a loss?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Taxpayers must show a clear link between the gifted funds and the loss, typically through a gift deed, bank records, and trading statements.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1785157363273\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"3Does_clubbing_of_income_apply_only_to_F_O_and_equity_losses\"><\/span>3.Does clubbing of income apply only to F&amp;O and equity losses?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>No. Section 64(1)(iv) covers income or loss from any asset gifted to a spouse without adequate consideration, not trading alone.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1785157453072\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"4Can_clubbed_F_O_losses_still_be_set_off_against_other_income\"><\/span>4.Can clubbed F&amp;O losses still be set off against other income?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Yes, once clubbed, F&amp;O losses follow the normal set-off and carry-forward provisions, including the eight-year carry-forward for non-speculative losses.3.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Clubbing of Losses Under Section 64(1)(iv)<\/strong><\/p>\n\n\n\n<p>This ruling is a reminder that clubbing of income provisions cut both ways. If gains from gifted funds are taxed in the donor&#8217;s hands, fairness and tribunal precedent now demand that losses from the same funds be treated consistently. The real lesson is record-keeping: gift deeds, bank trails, and trading statements can decide whether a clubbing claim succeeds or fails.<\/p>\n\n\n\n<p>Author<\/p>\n\n\n\n<p><a href=\"https:\/\/www.adwaniandco.com\/about\/leadership\/dipesh-gurubakshani\" target=\"_blank\" rel=\"noreferrer noopener\">CA. Dipesh Gurubakshani<\/a>. He is a Chartered Accountant with professional experience in audit, direct taxation, and accounting advisory services.<\/p>\n\n\n\n<p>Whether you have already received a credit card income tax notice or want to ensure you never do Adwani and Company is your trusted partner. Led by&nbsp;<a href=\"https:\/\/www.adwaniandco.com\/about\/leadership\/dr-haresh-adwani\" target=\"_blank\" rel=\"noreferrer noopener\">Dr. Haresh Adwani<\/a>&nbsp;and a seasoned team of Chartered Accountants, Adwani and Company provides end-to-end income tax compliance, notice response, and financial planning services.<\/p>\n\n\n\n<p><strong>Disclaimer<\/strong><\/p>\n\n\n\n<p><em>ITRAdvisor.in is an educational and informational platform focused on tax awareness and compliance updates. Nothing contained herein should be construed as solicitation or advertisement of professional services. Professional services, where applicable, are rendered in accordance with ICAI guidelines. This article is published on ITRAdvisor.in, a tax and compliance knowledge platform.<\/em><em>The content has been reviewed for technical accuracy by professionals associated with Adwani &amp; Co LLP<\/em><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>If you have gifted funds to your spouse for investment and are unsure how clubbing of income or loss provisions apply to you, connect with itradvisor.in today for expert guidance.<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Section 64(1)(iv) The Income Tax Department is quick to tax profits earned on money gifted within a family. But what happens when those same gifted funds end up in a loss instead of a gain? A recent ruling from the Income Tax Appellate Tribunal, Lucknow Bench, answers this question, and it matters to every household [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":722,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[217,10,218,216],"class_list":["post-719","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-clubbing-of-losses","tag-income-tax","tag-itat","tag-section-641"],"_links":{"self":[{"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/posts\/719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/comments?post=719"}],"version-history":[{"count":2,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/posts\/719\/revisions"}],"predecessor-version":[{"id":723,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/posts\/719\/revisions\/723"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/media\/722"}],"wp:attachment":[{"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/media?parent=719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/categories?post=719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itradvisor.in\/wpblogs\/wp-json\/wp\/v2\/tags?post=719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}