B CHATTERJEE (Service) 23 July 2013

Form16 & declared income from other sources

Respected Sirs,

I was working in a renowned LTD. Co. Where from I had to resign because of my dept. shifted to other state. The co. provides me a monthly compensation amount and as well I get a Pension the annuity of which was purchased by Co. from LICI.

In the last year I declared my Housing Loan Repayment Figures (deducted from the Co.'s monthly compensation amount) and as well the yearly pension figure. In the recent Form16 I find that Co. has taken the Housing Loan figures but not the Pension figure. The person responsible explained the Matter like this "Now in form 16 we can not show your income from other sources .Form 16 shows the income & TDS details which transacted/paid through that TAN only. Now your pension income is absolutely your personal income and which comes from other sources and not through Co. TAN. Hence, Co. will not show the income in your Form 16."

Now I would like to know if he is lawfully right or not? If he is right then why the row exists in the Investment Declaration form as "Any other income declared by Co.", it is also present in the Form 16 generated through Traces this year. Then what is it meant for?

I request you all to put in your valuable replies quoting the rules or genuine links which I can place before him without any scope of his challenge in the issue.

NOTE: ACTUAL PERSON IS NOT ME. I HAVE MENTIONED MYSELF IN HIS PLACE TO WRITE THE MATTER EASILY. I AM ON BEHALF OF ANOTHER KNOWN MAN. He is an aged man of 55/56yrs or so not a Computer literate and doesn't have an account here as well.

I await your very kind reply to convey him which as per him would be of immense help to take the matter with the co.

Best Regards,

B. Chatterjee

Reply Follow

4 Replies

R RAJAGOPALAN (ADVOCATE) 25 July 2013

For an authoritative reply, the documents have to be gone through.

1. Are you getting your Pension through any Bank?

2. Pension is also included in 'salary' as per the definition of 'salary' in Section 17(1) of the Income Tax Act 1961.

3. What is the true character of the so-called 'monthly compensation amount' the company is paying you? The Order/communication granting you the 'monthly compensation amount' has to be seen.

4. The tax-treatment the TDS Deductor has given to a payment is not final or binding on you / the Assessing Officer.

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B CHATTERJEE (Service) 29 July 2013

Sir,

Thanks a lot to you at first to respond on the issue.

1) He is receving the Pension from LICI and it is getting credited to his savings bank account every month. The company generated a fund to purchase the Annuity for the Pension. So far I understood.

2) Ideally the co. should have included it, so far my and his knowledge goes.

3) What the person spoke out is that the monthly compensation is in lieu of his monthly salary.

4) I am not clear with this point, I would request you to be a bit illustrative, if possible, to understand what you wanted to know.

Expect your very kind reply.

Best Regards,

B. Chatterjee

R RAJAGOPALAN (ADVOCATE) 30 July 2013

"4) I am not clear with this point, I would request you to be a bit illustrative, if possible, to understand what you wanted to know.":

What was replied was, "4. The tax-treatment the TDS Deductor has given to a payment is not final or binding on you / the Assessing Officer."

What was meant was that whether the Deductor deducted tax or not, or treated the payment as exempt from tax or not, is irrelevant for both the tax-payer and the Assessing Officer; They can independently decide the issue in accordance with the law.

In your case,the final problem is "I find that Co. has taken the Housing Loan figures but not the Pension figure", ie; the crux of the matter is whether the erstwhile employer, the LIC Ltd was bound to show in the Form No.16 the pension which was paid to you by a diiferent company. The answer is a clear 'no', as the payment was admittedly by a different entity.

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B CHATTERJEE (Service) 30 July 2013

Thank You Very Much Sir for clarifying the issue. If I have not taken you wrong since the Pension is given by LICI, a saperate co., the Employer cannot take the same in their Form 16 figures.

I had already asked that person if LICI issuing any Form16 or Form16A whatever applicable. He spoke with the relevant LICI person and he denied giving the Form16 quoting that since his yearly income (Pension) is not to the Taxable Limit, LICI would not issue any Form16 to that effect.

Can LICI say so and deny Form16 since his yearly pension figure is below Taxable Income Limit?

Best Regards,

B. Chatterjee