Section 98 — “Transfer” and “revocable transfer” defined
Old Act equivalent: Section 63 of IT Act 1961 Sub-part: Chapter V — Income of Other Persons Included in Total Income
Statutory Text
For the purposes of sections 96 and 97, and this section,—
(a) “transfer” includes any settlement, trust, covenant, agreement or arrangement;
(b) a transfer shall be deemed to be revocable, if—
(i) it contains any provision for the direct or indirect re-transfer of the whole or any part of the income or assets to the transferor; or
(ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets.
Sub-sections
This section has no sub-sections — it is a single definition clause with items (a) and (b).
Provisos
None.
Explanations
None.
Tables
None.
Key Structure
- Applies to: Sections 96, 97, and this section (all clubbing provisions for transferred income/assets)
- “Transfer” definition (clause (a)): Inclusive — includes settlement, trust, covenant, agreement, or arrangement
- “Revocable transfer” (clause (b)): Deemed revocable if: (i) provision for re-transfer of income or assets to transferor, OR (ii) transferor has right to re-assume power over income or assets (directly or indirectly)
Cross-References
- s096-transfer-income — Section 96: transfer of income without transfer of assets (uses this definition)
- s097-revocable-transfer — Section 97: revocable transfer of assets (uses this definition)
- s099-clubbing-spouse-minor — Section 99: clubbing of spouse/minor child income
Amendment Notes
None noted from the extracted pages.
Practical Notes
- The definition of “transfer” is extremely broad — it covers any arrangement, not just formal legal transfers. Oral agreements, informal family arrangements, and trust deeds all qualify.
- “Revocable” is also broadly defined: any provision for re-transfer (even indirect) or any retained power (even indirect) makes the transfer revocable.
- A trust with a provision allowing the settlor to change beneficiaries is “revocable” under clause (b)(ii) — even if the trust deed calls itself irrevocable.
- This definition supports the anti-avoidance intent of Chapter V: any arrangement that diverts income while retaining control or the ability to get assets back is caught.