income tax
aman kumar
(Querist) 18 January 2010
This query is : Resolved
A person get some money 40% as arrere of 6th pay comm, & cross the tax limit & pay tax last year , now this year he get 60% of arrear & now DDO OF EMPLOYER reimpose the tax , can he file return for refund ?
what is form 10-E ,HOW CAN HE USE IT PLZ ,
A V Vishal
(Expert) 18 January 2010
1. Section 89(1) authorises grant of relief in a case where an employee receives salary in arrears or in advance or has received in any financial year salary for more than twelve months, a payment which under the provisions of section 17(3)(ii) is a profit in lieu of salary. The effect of such increase is that the income will be assessed at a higher rate than it otherwise would have been assessed and it is for this reason that section 89(1) authorises relief to be allowed. The relief is to be allowed in terms of rule 21A of the Income-tax Rules, 1962.
2. Rule 21A(1) enumerates the following five different situations wherein the assessees will be entitled to relief (four of these are specific situations while the fifth is a residuary one) :
a. salary being received in arrears or advance;
b. where the payment is in the nature of gratuity in respect of past services extending over a period of not less than five years is received;
c. where the payment is in the nature of compensation received by the employee from his employer or former employer at or in connection with termination of his employment after continuous service of not less than three years and where the unexpired portion of the term of employment is also not less than three years;
d. where the payment is in the nature of commutation of pension;
e. where the payment is not covered by the description given in (a) to (d) above.
The relief is to be worked out in the first four situations in accordance with the specific modes described in rule 21A (2)(a) to (d).
3. The authority to grant relief in the four specific cases is the Income-tax Officer assessing the employee. In the residuary case, it is Central Board of Direct Taxes.
4. The relief under section 89(1) is to be given in the assessment in which the extra payment by way of arrears, advance, etc., is taxed. The mode of granting relief spelt out in rule 21A(2) to 21A(5) would show that in all the four different cases the exercise of giving relief is initiated by bringing to tax the whole of the extra amount in the assessment for the assessment year relevant to the year of receipt. Basically, the relief under section 89(1) is arithmetical. It involves finding out of two rates of tax. The first is the rate of tax applicable to the total income including the extra amount in the year of receipt. The second is finding out the rate by adding the arrears to the total income of the years to which they relate. For this purpose the assessee should be asked for a true and authentic statement of the total income of the earlier years to which the arrears pertain There is no warrant for issuing a notice under section 148 or calling for returns of income of the earlier years.
IF YOU UNDERSTAND THIS WE CAN PROCEED TO THE NEXT QUERY.
Kumar Thadhani
(Expert) 19 January 2010
It is simple every the laws regarding totaxation changes during the financial years and hence there also similiar changes in rates in taxation or slabs in taxation it is then the sec 89(1) aplies as to why the assessee should suffer inrates of taxation or slabs when such the assesse when they receive salaryor arrears or advance of salary in any financial year in respect of more than twelve month or gratuity received of more than twelve months for past services upto five years or any compensation recd in the nature of salary or in case assesse has comutated his salary for more than twelve months it is then sect89(1) is applied seeking for relief to charge rates of taxation pertaining to financial year in question why should suffer or be charge at higher rates since employer is responsible and liability falls on the employer or else face heavy penalty or prosceution in this matter.Hence every individual or assesee who falls within the scope of sect89(1) has to make separate applicaion uner FORM 10E for seeking inthis matters stated as above.I hope everything is clear.
