Relief under section 89(1)

Please guide regarding relief under section 89(1) of Income Tax Act for paying arrears of revision of pay-scales by employer for more than about 10 years--

1) If arrears are for the year 2001-02 to 2012-13 then whether it should be split for the relevant years by pick and choose method or not ? For example if by showing arrear for all the year including the F.Y. 2004-05, 2007-08 and 2008-09 my liability increases and I have to pay more tax and if I show only arrears for the F.Y. 2001-02 to 2003-04 and 2009-10 to 2012-13 and arrears for F.Y. 2004-05, 2007-08 and 2008-09 show in this current F.Y. 2014-15 my liability decreases then can I show in Form 10E only arrears of those financial years of which I could be benefitted and rest of the arrears can be shown in current financial year. Is this pick and choose method acceptable in the eyes of assessing officer or not ?

Replies (1)

By virtue of S. 15 arrears [OF ALL YEARS] will be treated as the income from salary when such arrears are paid or allowed to be paid

"S.15 (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year."

 

Also read rule 21A regarding computation of the relief

 

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