inhertence income

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CA Akash Agrawal (Querist)
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22 December 2009 assessee is the Nominee of a Bond held by his mother on 2002 who expired 2004. It’s a long term and locked in at a good interest rate. It’s a 8 Year bond with interest cumulative and delivered on Maturity. TDs is deducted on interest income. My Query is

1.If I hold on to deposit which I would like to then how would the Interest portion be taxed as the Deposit is in the sole name of my Mother & I am the nominee who would receive the proceeds upon maturity?

2. At the time of maturity is the amount totally tax free in my hands?

3. if there are 4 member in family and Bond with interst will be distribute between member.this is possible or not.

Manikanta Raju CA,CWA,(CS)

Manikanta Raju CA,CWA,(CS) (Expert)
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23 December 2009 Dear Akash,
1)You are telling that the deductor deducting the tax as when it is accrued, so on whose name he is giving form-16A you have to see.
Since assessee mother died he has to to inform the same to deductor and get the form-16A in his name.

2) Since the income from the bond is accrued evry year it is assessed in each AY as when it is accrued, it is exempt at the time of its maturity.

3) Yes it is possible but deduction can be cliamed based on form-16A only by the deductee and you have to give proper explanation for AO at the time of assessment for this. If it is supported by a will there are no other issues and objection of AO

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