SAHIL JAIN B-XIX,431/I-D, COLLEGE ROAD, CIVIL LINES, LUDHIANA,LUDHIANA vs. INCOME TAX OFFICER WARD-7(1), , LUDHIANA

It emerges that the assessee withdrew certain amount from EPF account, the bifurcation of which was as under: - No. Particulars Amount (Rs.) 1. Employees Contribution 6,69,000/- 2. Employers Contribution 17,204/- 3. Interest on Employee Contribution 1,45,422/- 4. Interest on Employer Contribution 2,746/- Total 8,34,372/- The assessee admittedly did not complete qualifying period of 5 years and accordingly, these withdrawals become taxable in the hands of the assessee. So far as item nos. 3 & 4 are concerned, the same have already been offered to tax by the assessee in its return of income. So far as item no.2 is concerned, it is admitted position that the same is taxable in the hands of the assessee and therefore, the adjustment to that extent is justified. The dispute is only with respect to item no.1 for which Ld. AR has drawn our attention to the fact that these contributions were made by the assessee in earlier years and against such contributions, the assessee would be eligible to claim deduction u/s 80C. However, deduction u/s 80C was not, at all, claimed against the contributions which were amply demonstrated from the computation of income of earlier years as placed on record. In such a case, Rule 9 of Part A of Fourth Schedule would apply which provide that income tax has to be calculated by adding such contribution to the respective years in which the same has been received assuming that the said fund was not a recognized provided fund which would mean that deduction u/s 80C as claimed in previous years has to be disallowed in such previous years. Since the assessee never claimed the deduction u/s 80C on these contributions, the adjustment to that extent deserves to be deleted.

The averments of Ld. AR are found to be correct. The assessee has not claimed deduction of these contributions in earlier years. Therefore, in terms of stated Rule-9, the adjustment to the extent of Rs.6.69 Lacs is not justified. Accordingly, the same stand deleted. The Ld. AO is directed to re-compute the income of the assessee.

The appeal stand partly allowed. Order pronounced on 02-06-2025.