Loss under head income from other sources

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subash

Student MBA

30 Points Posted on 20 March 2014

Someone asked about how to mention about the carrying forward of loss in fixed deposit income

/experts/premature-termination-of-fixed-deposit-848475.asp#.Ux7IwM55bvA

I need this information. Someone is facing this problem. The person was having a very old Fixed deposit. He used to take interest every quater from the fixed deposit and the TDS was being booked agianst those interest. However, this year he realized that his deposit was at lower interest rate and he broke the deposit prematurely and created a new fixed deposit out of it. But he was surprised to learn that not only the entire interest for the running quater was taken by the bank but also a huge amount from the principal was also deducted, before reinvesting in the new fixed deposit. The bank people explained him that if a fixed deposit is prematurely broken then a penalty of 1% is charged, and also the interest rate of the applicable running time is used.

All that implied that the bank had already paid more interest due on the FD than it should have paid!!! and hence they deducted those amounts from the last interest and the principal. Now the tax was already paid in the earlier years.

Then in this year from the newly created fixed deposit the bank again deducted TDS (at the fixed 10% rate) as if no loss was incurred in the previous fixed deposit. Now can the loss money be reclaimed in the return as loss?

Replies (2)

subash

Student MBA

30 Points Posted on 13 May 2014

Originally posted by : subash
	Someone asked about how to mention about the carrying forward of loss in fixed deposit income /experts/premature-termination-of-fixed-deposit-848475.asp#.Ux7IwM55bvA I need this information. Someone is facing this problem. The person was having a very old Fixed deposit. He used to take interest every quater from the fixed deposit and the TDS was being booked agianst those interest. However, this year he realized that his deposit was at lower interest rate and he broke the deposit prematurely and created a new fixed deposit out of it. But he was surprised to learn that not only the entire interest for the running quater was taken by the bank but also a huge amount from the principal was also deducted, before reinvesting in the new fixed deposit. The bank people explained him that if a fixed deposit is prematurely broken then a penalty of 1% is charged, and also the interest rate of the applicable running time is used. All that implied that the bank had already paid more interest due on the FD than it should have paid!!! and hence they deducted those amounts from the last interest and the principal. Now the tax was already paid in the earlier years. Then in this year from the newly created fixed deposit the bank again deducted TDS (at the fixed 10% rate) as if no loss was incurred in the previous fixed deposit. Now can the loss money be reclaimed in the return as loss?

I read section 70 and 71. I feel that these sections are applicable in setting off losses from the income with profits from other income (Also it is not a capital gain loss). Any advices/comments/discussions are welcome.

subash

Student MBA

30 Points Posted on 18 May 2014

Please someone tell me if I have understood correctly.

Please tell that section 70 is correct to be applied in this case,

Income had been booked and taxed in the previous years and in this assessment year, the income has been taken back - so it should be treated as a loss - since the income has been taken back by the income giver.