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TMI Blog2017 (11) TMI 1734X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to the actual amount spent on construction after due verification. Short Credit of TDS - assessee contends that the ld CIT(A) has not disposed off the ground raised for directing the AO to grant the assessee full credit for TDS - Held that:- As submitted that the assessee had claimed TDS credit of ₹ 25,67,776/- in the return of income and the assessee’s grievance is that it has been allowed TDS credit of only ₹ 25,09,137/- by the AO. We, therefore, restore this issue to the file of the AO with direction for examination and verification of the assessee’s claim and to grant the assessee the TDS credit entitled to as per law - ITA No.858/Bang/2016 And CO No.28/Bang/2017 - - - Dated:- 10-11-2017 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER For The Revenue : Smt. Padmameenakshi, JCIT For The Assessee : Shri H.N Khincha, C.A ORDER PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER This appeal by Revenue is directed against the order of the CIT(A)-1, Bangalore dated 28/1/2016 for asst. year 2012-13. The assessee has also filed cross objections in this regard. 2. Briefly stated, the facts of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees retirement are not intended to be exempt unless specifically stated in the Act. 3. The CIT(Appeals) erred in directing the Assessing Officer to allow exemption u/s.10(12) of the Act on the accumulated PF withdrawn after a period of nine years, without appreciating that the assessee had not made any claim of exemption u/s,10(12), in the return of income. Also, the CIT(A) erred in placing reliance on sub-rule 3 of Rule 5 to Schedule - IV of Recognised Provident Fund, without appreciating that they are the rules applicable to the Fund and Trust to be followed so as to get the recognition as Recognised Provident Funds. 4. The CIT(Appeals) erred in deleting the addition made under the head 'income from other sources, of the interest received on accumulated balance of PF, without considering clause (f) of Rule 2 in Part-A of Schedule IV, wherein it is clarified that the accumulated balance due to an employee will be only till the date of his cessation to be an employee of the employer, maintaining the fund and as no interest income has been offered by the assessee in any of the assessment years from 2003-04 to 2012- 13, the interest portion on the maturity amount w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee s C.O. are disposed hereunder. In the course of hearing, the ld AR filed a paper book (pgs 1 to 207) and case law compilation (pgs 208 to 289) which have been perused and considered. 5. Grounds No: 1, 7 and 8 Revenue s appeal 5.1 The grounds 1,7 and 8 of Revenue s appeal (Supra), being general in nature, no adjudication is called for thereon. 6. Ground Nos. 2 to 4 Revenue s appeal ) Accumulated Cross Objections No: 3 Assessee s C.O ) Balance in ) Provident Fund 6.1 In grounds 2 to 4 (Supra), Revenue contends that the ld CIT(A) erred in granting relief to the assessee with respect to the withdrawal of the accumulated balance in the PF account as the benefit u/s 10(12) of the Act; which is available to employees only and that too only upto the date of his cessation to be employee of the employer as per clause (f) of Rule 2 in part A of schedule IV. The assessee in the case on hand had ceased to be an employee of Wipro Ltd., in the April, 2002 itself and the accumulated PF amount was withdrawn after a period of 9 years i.e., on 11/4/2011. The assessee had also not made any claim for exemption u/s 10(12) of the Act in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant had withdrawn the sum of ₹ 82,00,783/- from EPF account on 11.04.2011. 3.6 The amount so withdrawn was credited to capital account of the appellant and no income was offered to tax by the appellant on this credit in the capital account. 3.7 In the course of assessment proceedings the appellant was asked about the credit in capital account of ₹ 82,00,783/-. 3.8 The appellant submitted in course of assessment proceedings that he served as an employee of Wipro Ltd. till March,2002 and that amount was withdrawn from EPF account on 11.04.2011. The appellant further submitted that the amount so withdrawn was exempt u/s.1O (12) of the Act. 3.9 The appellant submitted that the Wipro EPF was a recognized Provident Fund. The appellant took support of Rule 4 and Rule 5 of Part A of Schedule 4 to Income-tax Act, to buttress his point. 3.10 The Assessing Officer however, added the amount of ₹ 37,93,588/- to the income on the ground that the claim for exemption u/s. 10(12) is a new claim and since the claim was not made in the return of income, the same cannot be now done in the course of assessment proceedings. 3.11 The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Rule 8' would mean the period of service referred to in Rule 8. This is supported by Circular No. 138 dated 17.06.1974 from which the relevant extract is as under: Under rule 8 of Part A of the Fourth Schedule, the amount of the accumulated balance due and becoming payable to an employee on the termination of his employment is excluded from the computation of his taxable income if the employee has rendered continuous service with his employer for a period of 5 years or more, or if the service of the employee are terminated by reason of his ill health or by the contraction or discontinuance of the employer's business or any other cause beyond the control of the employee. If the accumulated balance due to an employee participating in a recognized provident fund is paid to him otherwise than in the circumstances referred to above, as for instance, in cases where the employee voluntarily resigns from his post before the completion of 5 years' service with the employer, the amount paid to the employee is brought within the ambit of taxation. In such cases, the employee is required to pay, in addition to the normal tax payable by him, an amount equal to the diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be an employee is retained in the fund in accordance with the preceding clause, the fund may consist also of interest in respect of such accumulated balance. 3.19 From the reading of the above clause, it is very clear that the above is a Non-obstante clause which overrides Rule 4(e) and 4(g). 3.20 Rule 4(e) defines the composition of the fund which is further accelerated by a reading of Rule 5 (3) a b to include even the interest accumulated after the person ceases to be an employee. Clause 4(g) provides that the accumulated balance due to an employee shall be payable on the day he ceases to be an employee. The clause is also overridden by Sub Rule (3) of Rule 5. 3.21 Reading all the above together it is very clear that the entire amount due in an EPF account whenever drawn is not to be included in the income of the appellant. 3.22 The appellant is entitled for exemption for the reason that he had participated in the fund - There is a provision of continuation of the fund even after he ceases to bean employee - and the total accumulated balance as on date of withdrawal is exempt from tax. 3.23 In a negative way also, it can be proved that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar deduction or not will depend on the provision of Law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. f) Sail DSP YR Employees Association 1998 v. Union of India [20031 262 ITR 638 (Cal) - SLP dismissed on 27.02.2004 1266 ITR (St.) 109] , it was held as under: What is not otherwise taxable cannot become taxable because of admission of the assessee. Nor can there be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission of or waiver, by the assessee. Chargeability is dependent on the charging section, which needs to be strictly construed. g) In Commissioner of Income-tax v. D.K.B. and Co. (2000) 243 ITR 0618 (Ker) it was held as under: It is the settled position in law that there cannot be estoppel against a statute. There is no provision in the statute which permits a compromise assessment. The above position was indicated by the apex court in Union of India v. Banwari Lal Agarwal [1999] 238 ITR 461. h) In Commissioner of Income-tax v. Dharmad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10(12) of the Act. The AO was of the view that since the claim for exemption u/s 10(12) of the Act was not made by the assessee in the return of income, the assessee s claim cannot be considered in assessment proceedings in view of the decision of Goetze (India) Ltd., (284 ITR 323)(SC). 6.3.2 A perusal of the provision of section 10(12) of the Act and the definition of Accumulated Balance in Part A of 4th Schedule clearly indicates that the exemption u/s 10(12) of the Act is available only to a person who being an employee withdraws the accumulated fund from the PF account as on the date of retirement or termination of employment. In these factual and legal circumstances, as laid out above, we are of the considered opinion that the withdrawal to the extent of the accumulated balance (viz., contributions plus interest) upto the retirement of the assessee s i.e., 1/4/2002 of ₹ 37,93,888/- is eligible for exemption u/s 10(12) of the Act . In this view of the matter, to this extent, the impugned order of the ld CIT(A) is upheld. The ld DR had placed reliance on the decision of the Hon ble Apex in the case of Goetze (India) Ltd., (supra) for denial of the assessee s claim, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37,93,588/- 3,60,391/- 9.5% 2003-04 41,53,978/- 3,94,628/- 9.5% 2004-05 45,48,606/- 4,32,118/- 9.5% 2005-06 49,80,724/- 4,23,361/- 8.5% 2006-07 54,04,086/- 4,59,347/- 8.5% 2007-08 58,63,433/- 4,98,392/- 8.5% 2008-09 63,61,825/- 5,40,755/- 8.5% 2009-10 69,02,580/- 5,86,720/- 8.5% 2010-11 74,89,300/- 7,11,484/- 9.5% 2011-12 82,00,783/- Consequently, grounds 2 to 4 of Revenue s appeal and C.O No.3 are disposed off as indicated above. 7. Ground Nos.5 6 of Assessee s appeal ) Cross-objection No.1 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not eligible for exemption u/s 54 of the Act. The ld DR further contended that since the construction of the new house commenced more than one year prior to the date of sale of the old property, the assessee is not eligible for exemption. 7.4.1 The sum and substance of the arguments put forth by the ld AR for the assessee, briefly, are that :- (i)The assessee, after sale of original asset at Pune on 3/11/2011, had entered into a MOU with Chalet Hotels (P) Ltd., for construction/purchase of an apartment No: B-1101 on the 11th floor of a project called Vinarea, Koramangala, Bangalore for a total consideration of ₹ 3,24,52,841/- which the builder was to complete and give possession by June, 2013. (ii) The assessee had invested ₹ 2,26,82,097/- towards the aforesaid flat. (iii) Since the Vinarea project was one of high rise buildings, necessary NOC was obtained from HAL on 28/10/2011 (copy placed at page 122 of paper book) and accordingly the builder had constructed 17 storey s of the building by Oct, 2012. (iv) Thereafter, vide letter dated 16/8/2013, HAL unilaterally and without notice cancelled the NOC (copy of letter at pg 123-124 of the Paper Book). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment but that the event of construction should be completed after the date of sale of the original amount. In support of the proposition, the ld AR placed reliance, inter alia, on the following judicial pronouncements:- (i) CIT v J.R. Subramanya Bhat 28 Taxman 578 (Mys); (ii) CIT v Pradeep Kumar (153 Taxman 138) (Madras); (iii) CIT v H.K. Kapoor (234 ITR 753)(All). 7.5.1 We have heard the rival contentions and perused and carefully considered the material on record. It is apparent from the facts of the case as mentioned (along with copies of corroborative documentary evidence) and discussed above from para 7.1 to 4.4.3 of this order (Supra) that the non completion of the construction the flat by the builder within the stipulated period is beyond the control of the assessee. In our considered opinion, in view of the decision of the Hon ble Jurisdictional High Court in the case of Smt. B.S. Shantakumari (Supra) and Sambandam Udaykumar (Supra) the assessee cannot be denied exemption u/s 54 of the Act to the extent of investment in the new property, even though the construction of the new asset is not completed within the eligible period of 3 years for the date of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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