Vineet Sethi, Bangalore V. Income-Tax, Ward-6(2)(4), Bangalore

MA 126/BANG/2023

AI Insights

The case revolves around a miscellaneous petition by Vineeth Sethi, challenging the taxability of amounts withdrawn from his Provident Fund account upon termination from TBM Consultants India Pvt. Ltd. The assessee argued that the amount received from his own contribution and the interest thereon should be exempt from tax, citing Rule 9(1) of the Fourth Schedule and previous Tribunal decisions. The Income Tax Department, represented by the D.R., contended that there was no apparent mistake in the original assessment, leading to the dismissal of the petition. The Tribunal's decision acknowledged the potential exemption of the assessee's own contributions under specific conditions but did not address the double taxation issue due to its novelty in the proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129974 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 15-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 14-05-2023
• Other Referred Cases: Nallamathu Vijaya Lakshmi Vs. ITO (2023) Taxpub(DT)1364 (Visakha-Trib.)
• Laws Referred To: Income Tax Act, Fourth Schedule 'Part A' Recognised Provident Funds
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHINI BESAGANNI
• Assessee Lawyers: SATHYANARAYANA G.
• Keywords: Salary income; TDS; FORM 26AS
• Section: 80C; 143(1); 9(1); 9(1); 9(1)

Judgement Text

MP No.126/Bang/2023 Vineet Sethi, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER MP No.126/Bang/2023 (Arising out of ITA No.24/Bang/2023) Assessment Year: 2017-18 Vineeth Sethi F.No.2-B, Landford Groov Apartments 25, Langford Garden Road Bangalore 560 025 PAN NO : AMAPS8007K Vs. ITO Ward-6(2)(4) Bangalore APPELLANT RESPONDENT Appellant by : Shri Sathyanarayana G., A.R. Respondent by : Smt. Priyadarshini Besaganni, D.R. Date of Hearing : 16.06.2023 Date of Pronouncement : 16.06.2023 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: By this miscellaneous petition, the ld. A.R. is seeking rectification order of the Tribunal in ITA No.24/Bang/2023 dated 14.3.2023 stating that assessee has received a sum of Rs.35,02,307/- being withdrawal from Provident fund which was duly reflected in Form No.26AS and on which TDS has been deducted at Rs.3,50,231/-. This amount of Rs.35,02,307/- consists of assessee’s own contribution and interest thereon and it has been exempted as per the provisions of Fourth Schedule “Part A” Recognised Provident Funds {See sections 2(38), 10(12), 10(25), 36(1)(iv), 87(1)(d), 111, 192(4)} under Rule 9(1) and he drew our attention to the Rule 9(1) as follows:- MP No.126/Bang/2023 Vineet Sethi, Bangalore Page 2 of 5 “Tax on accumulated balance. 9(1) where the accumulated balance due to an employee participating in a recognized provident fund is included in his total income owing to the provisions of rule 8 not being applicable, the (Assessing) Officer shall calculate the total of the various sums of (tax) which would have been payable by the employee in respect of his total income for each of the years concerned if the fund had not been a recognized provident fund, and the amount by which such total exceeds the total of all sums paid by or on behalf of such employee by way of tax for such years shall be payable by the employee in addition to any other (tax) for which he may be liable for the previous year in which the accumulated balance due to him becomes payable.” 2. Further, he submitted that the said amount of Rs.35,02,307/- consist of following amounts as below: Summary Amount (Rs.) Taxability Employee Contribution (Own) 13,83,586 Exempt under Rule 9, Part A, Fourth Schedule Interest on Employee Contribution 2,60,308 Exempt under Rule 9, Part A, Fourth Schedule Total A 16,43,894 Accumulated Employee Contribution – Exempt Employer Contribution 13,43,401 Offered as income from salary Interest on Employer Contribution 2,53,582 Offered as income from salary Total B 15,96,983 Accumulated Employer Contribution – Offered for tax as salary Grand Total (A+B) 32,40,877 Interest for 2016-17 2,61,430 Offered as income from Other sources for AY 2017-18 Total amount withdrawn 35,02,307 Reflected in Form 26AS MP No.126/Bang/2023 Vineet Sethi, Bangalore Page 3 of 5 2.1 Without prejudice to the above, he submitted that when the assessee declared the taxable portion of Provident fund, on accumulated balance, the own contribution portion out of already tax suffered salary be eligible for exemption on withdrawal. Adding the difference between returned income and income reflected in Form 26AS, income by the Central Processing Centre (CPC) without considering the declared income and exemption available become double taxation. For this purpose, he relied on the order of the Tribunal in the case of Nallamathu Vijaya Lakshmi Vs. ITO (2023) Taxpub(DT)1364 (Visakha-Trib.). 3. On the other hand, ld. D.R. submitted that there is no mistake apparent on record so as to rectify the same and this miscellaneous petition of the assessee to be dismissed. 4. We have heard the rival submissions and perused the materials available on record. In this case, assessee has been terminated from service within 5 years from TBM Consultants India Pvt. Ltd. on 23.2.2016 due to misconduct of the assessee. The contention of the assessee’s counsel is that the amount received from his own contribution from EPF account is not taxable. The point needs to remember is that the amount received from such recognized EPF account is not exempt from tax in all case. Only under the circumstances listed below will the amount withdrawn from EPF account be eligible for such exemption from tax: • If the employee has rendered continuous service with the employer for five years or more. Again, if the balance includes amount transferred from the individual’s PF account maintained by previous employer (s), then the years of continuous service rendered to the former employer (s) would be included for the purpose of computing the five-year period. • If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee’s ill health or discontinuance of the employer’s business or MP No.126/Bang/2023 Vineet Sethi, Bangalore Page 4 of 5 reasons beyond the control of th employee, the amount will be tax-exempt. • Another tax-exempt case is when, on the cessation of the employment, the employee finds another job and the accumulated PF balance is transferred to his individual PF account maintained by the new employer. 4.1 In the present case, the assessee pressed the assistance of Rule 9(1) as reproduced herein above. In our opinion, the AO has to consider the provisions of Rule 9(1) as reproduced above and there- after if the assessee has not availed the benefit u/s 80C of the Act in respect his contribution of PF in earlier assessment years, then employees’ own contribution and interest thereon cannot be taxable in the hands of the assessee i.e. as mentioned in the table in para 2 above. 4.2 With regard to placing reliance on the order of the Tribunal in the case of Nallamathu Vijaya Lakshmi cited (supra) for the proposition of addition u/s 143(1) of the Act cannot be made while processing the return by CPC on the disputed amount, this argument is a fresh argument before us. There was no such ground neither before First Appellate Authority (NFAC) nor on earlier occasion before us. Hence, at this point of time, we refrain to address this issue. Ordered accordingly. 5. In the result, the MP filed by the assessee is partly allowed. Order pronounced in the open court on 16 th June, 2023 Sd/- (George George K.) Judicial Member Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 16 th June, 2023. VG/SPS MP No.126/Bang/2023 Vineet Sethi, Bangalore Page 5 of 5 Copy to: By order Asst. Registrar, ITAT, Bangalore. 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(Judicial) 5. The DR, ITAT, Bangalore. 6. Guard file