Deduction u/s 80tta in case of interest sweep deposits
This query is : Resolved
20 June 2013
Section 80 TTA provides for deduction of interest on deposits in saving account upto Rs 10,000 and explicitly provide for exclusion of interest on "time deposits" from this deduction.
My question : Whether 'time deposit' shall include deposits in Sweep or Flexi Account?
Though, Deposit in Flexi/Sweep Account is undoubtedly a king of term deposit and logically not eligible for deduction under this section.
But explanation to 80 TTA states that "for the purpose this section, 'time deposit' means deposit repayable on expiry of fixed period"
An argument could be that Sweep Transfers are never repayable on expiry of fixed period. They are repayable on demand. There may be a fixed period for crediting interest, but no fixed period after expiry of which, which the assessee's funds are returned back to him.
In fact, these deposits are nothing but an extension of assessee's saving account as assessee need not break these deposits before making any payment. He simply has to draw a cheque from his saving account and these deposits are automatically broken to the extent required to make such payment.
My question : Whether 'time deposit' shall include deposits in Sweep or Flexi Account?
Though, Deposit in Flexi/Sweep Account is undoubtedly a king of term deposit and logically not eligible for deduction under this section.
But explanation to 80 TTA states that "for the purpose this section, 'time deposit' means deposit repayable on expiry of fixed period"
An argument could be that Sweep Transfers are never repayable on expiry of fixed period. They are repayable on demand. There may be a fixed period for crediting interest, but no fixed period after expiry of which, which the assessee's funds are returned back to him.
In fact, these deposits are nothing but an extension of assessee's saving account as assessee need not break these deposits before making any payment. He simply has to draw a cheque from his saving account and these deposits are automatically broken to the extent required to make such payment.
20 June 2013
it deductable u/s 80TTA
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