Salary arrears

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CA Rushikesh Kolhe (Querist)
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25 March 2016 One of my client is Aided Educational Trust. Schools under this trust receives salary for its employee from government in the form of Salary Grant. 100% Salary is received in the form of Grant. About 25 years ago trust ceased the employment of one employee. Hence the amount of grant also reduced to the extent equal to the salary of the employee. That employee registered a case against trust. Today, after 25 years the result of case held against trust. Court ordered trust to pay the salary from its own pocket. Government will not pay through grant. Trust has agreed to pay the amount.
My question is whether it is to be shown as salary in current year? (Accounts of trust is on receipts basis) if salary is not to be shown which expense should be booked?
If salary is to be considered then relief u/s89 can be taken?

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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25 March 2016 In My view, If Employees Received Salary of Previous years in Current Year then It should be shown in Current Financial year but relief u/s 89(1) says accrued and receipt difference. So Employees can claim relief after calculate difference.

CA Rushikesh Kolhe

CA Rushikesh Kolhe (Querist)
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25 March 2016 Thanks Murtaza, but the salary was not acrrued in previous year. Trust is paying to that employee on order of court.

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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25 March 2016 yes agree, but on view point of employees why they can't claim relief only because they have not received their salary in previous years. Relief need to sort as if they received that salary in previous years how much tax they had paid on that particulars assessment years and calculate relief in current year. I think dept. will also consider relief if its based on relief calculation.

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