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TMI BlogBenefits of approved superannuation funds.X X X X Extracts X X X X X X X X Extracts X X X X ..... tion funds in contravention of rule 86 of the Income-tax Rules, 1962 were allowed deductions under section 80C on their contributions. This matter has been examined in consultation with the Ministry of Law. 2. According to rule 86 of the Income-tax Rules, 1962, a director of a company can be admitted to the benefits of an approved superannuation fund only if (i) he is a 'whole time bona-fide emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on paper. Thus a person who is an employee-director of more than one company cannot be held to be a whole-time bonafide employee of any one of the companies within the meaning of rule 86 and as such is not entitled to participate in the superannuation funds of any of these companies. However, a director who is a whole-time bonafide employee of a company, can be a director of another company in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the director, and (b) in the hands of the company. As regards (a), such contributions cannot be considered as income of the year in the hands of the director because he does not acquire any vested right in the amount. However, the amounts as and when they fall due shall be treated as income liable to tax and no exemption u/s. 10(13) will be available. Regarding (b), such contributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from such segregated amount. Commissioners should invariably examine this aspect while according approval to the funds for the first time. 6. Remedial measures may be taken in cases of directors and companies where deductions have been allowed wrongly under section 80C and 36(1)(iv) respectively. - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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