India, March 22 -- Arjun Mehta, a 42-year-old salaried professional from Mumbai, gifted a residential property to his wife, Kavya Mehta, aged 39, without any monetary consideration. Although Kavya became the legal owner and later sold the property at a profit, the long-term capital gains (LTCG) were not taxed in her hands.

Under Section 64(1)(iv) of the Income-tax Act, income arising from assets transferred without adequate consideration to a spouse is clubbed with the transferor's income. Therefore, despite Kavya executing the sale, the LTCG was taxed in Arjun's hands.

To avoid disputes, Arjun maintained a properly executed gift deed and clear documentation. However, a minor mismatch in dates between the gift deed and property registra...