Deduction us 80c query

Mr.Vijay Bhasker Kondapally

You have raised a good question.  In some governement offices the method as explained in your question is being followed.  In the case of those assessees the previous year is consisting of 12 months.  In this case strictly speking the deduction under section 80C can be claimed for the amounts deposited in the said period of twelve mnths only. Many people are facing trouble because of this method.

Best Wishes

Sathikonda

Deduction under section 80C would be eligible for deduction of amount which is paid in the financial year and it is clear for the pupose of deduction under section 80C only payments from 1st april to 31st april would be eligible for such deduction and it is clarified by the department but i presently i did not provide you basis and notification but sure.

OM SAI SRI SAI JAI JAI SAI

Mr.Dintakurthi Tirumala

Please read your reply once again.

Best Wishes

Sathikonda

As per me deduction can be claimed because Income Tax Act takes Year as Financial Year ie. from April to March irrespective of what accounting year Assesse follows.

Ms.Pooja Jindal

If the assessee has to avail the deduction he has to offer the income of the same period.

Best Wishes

Sathikonda

Deduction can be claimed for investment made u/s 80C on 15.03.2012 for FY 2011-12 only.  Income tax Act follows AY and FY system and the same is not concerned with accounting period of the employer where the asseesee is working.

Mr. Sathikonda your view is wrong if you feels it is correct reply with the proof of evidence and where it you see or read but i am sure your view is wrong i don't know what is the basis to your view Chapter VIA it clears very perfect.

OM SAI SRI SAI JAI JAI SAI

Mr.Dintakurthi Tirumala

Thank you very much for sincerely pointing out that I am in a wrong notion.  I honestly request you to correct me where I am wrong and adivise me by providing relevant portion of section, rule and copy of CBDT Circular issued in this aspect if any.

I will be really indebted to you if you kindly provide me the above and request you once again to correct me by providing the relevant material.

Best Wishes

Sathikonda

Please reply my query

Value of House Property

in 1988 - Rs. 31110      Index 131

in 2010 - Rs. 1150000  Index 632

What is Capital Gain and Interest there on ?

Ms.Monika Gupta

You have mentioned that the Inflation Index for the year 1988 is 131. If it is assumed that the Financial year is 1987-88 the Inflation Index is 150 and if it assumed the Financial year is 1988-89, the inflation index is 161.

Similary you have mentioned inflation index for 2010 is 632.  If it is assumed that the financial year is 2009-10, the inflation index is 632 and if it is assumed that the financial year is 2010-11 the inflation index is 711.

In your question you have not mentioned the date of sale.  Date of sale is important for calculation of interest u/s 234C.

You have also not mentined the staus of the asseee - Individual-HUF, AOP, Trust, Firm or Company.

Ms.Monika in the near future you will be a full fledged chartered accountant.  A professional person must gather from the assessee all the information that is required to advise him correctly.  If a chartered accountant ingnores to collect all the information from the assessee he/she is not doing justice to the profession.

Please be precise in your question and frame your question again keeping all the requirements in mind.

Best Wishes

Sathikonda

The Previous Year as defined in the Act is taken for Income Computation irrespective of the Year followed by the Employer.Therefore the Deduction under section 80C can be taken for the financial year 2011-12.

I have a point in support of my answer:

For eg: An employee worked under an employer upto 25 th september of 2011. later he resigned from the job. Now if he invests certain sum in 80c on 15th Dec, will he can't claim the deduction. The point is as simple as that.

The Act orders us to show the income which is received from 1st April to 31st March of next year. That's it.. What accounting year you follow is just rubbish and irrelevant.

Mr.Dintakurthi Tirumala

After reading your message I have thoroughly read section 80C.  For your easy and ready reference I am hereunder reproducing the relevant portion of section 80C.

"Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscripttion to certain equity shares or debentures, etc.,

80C.(1) In computing the total income of an assessee, being an individual or a Hindu Undivided Family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited i the previous year, being the aggregate of the sums referred to in subsection (2), as does not exceed one lakh rupees"

A plain reading of sub-setion (1) of sectin 80C reveals that the deductions are admissible in computing the total income.

Now let's see what is total income.  I am hereunder reproducing relevant porion of section 5 for your easy and ready reference.

"Scope of total income.

5(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which-

(a) is received or is deemed to be received in India is such year by or on behalf of such person; or

(b) accrues or arises or is deemed to accrue or arise to him in India during such year; or

(c) accrues or arises to him out side India during such year;

Provided----

(2)---

Expln 1. ---

Explanation 2___For removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included o the basis that it is received or deemed to be received by him in India.

Here the question raised by Mr.Vijay Bhaker Kondapally is that the income considered in the case of the assessee is for the period from the month of March of earlier year to the month of February of current year. But the investment made by the assessee which is eligible for deduction u/s 80C is on 15-03-2012. The assessee is not offering the incme of March 2012 for the assessment year 2012-13.  As per the method of accounting being followed by him he is offering the income of March 2012 in the next assesment year.

Now read the opening portion of section 80C-

80C.(1) In computing the total income of an assessee, being an individual or a Hindu Undivided Family---

Here the assessee has not considered the income for the month of March, 2012 for the assessment year 2012-13.

Now read the relevant portin of section 5-

5(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which-

(a) is received or is deemed to be received in India is such year by or on behalf of such person; or

(b) accrues or arises or is deemed to accrue or arise to him in India during such year; or

(c) accrues or arises to him out side India during such year;

The total income of the assessee regarding whom we are discussing does not include the income of March 2012 earned by him.

Hence the investment made on 15-03-2012, is not eligible for deduction u/s 80C for the assessement year 2012-13 as per the method of accounting followed by the assessee.

Pleae provide me the relevant portions of the statute, circulars and case laws if any.

Mr.Dintakurthi Tirumala please correct me if I am wrong. My education qualification is only B.Com whereas you are a prospective chartered accountant.

Best Wishes

Sathikonda

As per my suggetion Exemption u/s 80C To 80U can be claimed for previous year 1st April To 31st March.

financial year 2011-12.  100% sure . no arguements required