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Tuesday, November 24, 2015

INCOME TAX: RK VISWANATHAN'S QUERY

INCOME TAX ON INTERIM RELIEF
Referring to the post of Mr R K Viswanathan,I do not think that the provisions of Sec 89 of I-T Act  will apply as the amount  paid by LIC is in the form of interim relief in compliance with the order of the Supreme Court. 
The amount does not constitute arrears of pension for the past periods in the strict sense of the term. 
It is premature to presume  their representing arrears of past pension when the pension amount has not been revised. 
The amount will just be treated as an additional  cash payment for the financial year and clubbed with the income of the year.
Perhaps if the final judgment goes in favour of the pensioners,when the arrears are paid  for identified past periods, it has to be ascertained whether the amount of interim relief already received  can  be deducted from the taxable income in  the financial year in which the arrears are paid.
In that event, Sec 89 benefit can be availed of for the  past financial years for the arrears paid in that year if the retiree  so desires.The views of our chartered accountant fellow pensioners will be welcome.
Greetings.
C H Mahadevan