• Tax relief under section 89(1)

My mother (age 79) is a retired teacher in WB. She retired on 31 July 2004. She opted for CPF scheme and got a one-time payment during retirement for the Employer’s share of CPF & Gratuity. She didn't get any monthly pension.

After winning a court case, she converted to monthly pension by paying back the one-time payment with interest to the Govt of WB in 2014. From the next day (21 Aug 2014), Govt started paying her monthly pension.

However, the Govt refused to pay the arrear pension from 1 Aug 2004 to 20 Aug 2014. After winning another court case, the Govt paid the arrear pension on 03 Jan 2024.

As my understanding, my mother is eligible for the Tax Relief under Section 89(1) for the arrear pension.

However, a tax consultant told me that she would be eligible for Tax Relief under Section 89(1) only if she filed IT returns every year from 1 Aug 2004 to 20 Aug 2014. Is it true?

By logging in to the e-filing portal, I see she filed ITR from A.Y. 2011-12 to current A.Y. By searching files at home, I see ITR was filed since A.Y. 2009-10. Either she didn’t file ITR from A.Y. 2005-06 to 2008-09, or the paper was lost from her file. She can’t remember it. My father handled these matters, who is no more.

Under this situation, is she eligible to get the Tax Relief for the arrear pension under Section 89(1) from A.Y. 2005-06 to 2008-09?

I found issues in the ITR of every year from A.Y. 2009-10 to 2013-14. She had no salary, pension, or business income. She had only some interest income from bank accounts and FD, which is far below the basic exemption limit. However, the ITRs reported too much higher income than she actually had (below the basic exemption limit).

For example, in the ITR-1 of A.Y. 2012-13:

Income from Salary / Pension- Rs. 1,49,075
Income from Other Sources- Rs. 54,000
Gross Total Income- Rs. 2,03,075
Total Income- Rs. 2,03,080

[This mistake was possible due to the tax consultant who filed the ITRs. He used to report higher income when the actual income was very low. I know this from my own ITR experience with him.]

Arrear pension received for A.Y. 2012-13: Rs. 2,01,732

In both court cases, it is documented that she didn’t receive any pension for the period 1 Aug 2004 to 20 Aug 2014.

In Annexure 1 - TABLE "A" of FORM NO. 10E in the “Total income of the relevant previous year” column, what amount should we write for A.Y. 2012-13? Is there any provision to calculate the ‘Income from Salary / Pension’ as 0 (zero) in such a situation?

If she is eligible to get the Tax Relief from A.Y. 2005-06 to 2008-09 (either she didn’t file ITR or the paper was lost from her file), what amount should we write in the above-mentioned column for all the respective A.Y.?

Will we file Form 10E after 31 March 2024?

How many days before filing the ITR of A.Y. 2024-25 we’ll file the Form 10E?

Do we need approval from the Income Tax department for the filed Form 10E before filing the ITR?
Asked 5 months ago in Income Tax

In the case of individuals, filing tax returns is mandatory only if there is taxable income or if the conditions realting to payments towards credit cards etc are applicable . Non filing of returns is, in my opinion, not an isssue for claiming rebate u/s 89(1).

If the arrears include the years for which you declared pension income, then take the same amount as received during those years for the purpose of computation of rebate u/s 89(1) and make suitable adjustments in the subsequent years. Then work out the rebate u/s 89(1). Now work out the rebate by taking correct amount. Claim the rebate which is less under both these scenarios. This is to err in favour of revenue as there may not be signifcant difference in claiming the rebate claimable and claimed. 

Please submit 10E to the Pension office to consider the rebate while deducting tax on pension amount.  If its not considered by the Pension Office for any reason, you may file it on or before filing your IT Return by the due date. 

10E will be considered while processing the return by the CPC. 

B Vijaya Kumar
CA, Hyderabad
1007 Answers
124 Consultations

5.0 on 5.0

You may file form 10E for claiming the relief in the year of receipt. Since you have received the entire amount in FY 2023-24, you may claim the relief for that year. You may compute the reliefs year wise in the form.

Siddharthh Jain
CA, Gurgaon
65 Answers
1 Consultation

5.0 on 5.0

She can claim benefit of relief u/s 89(1) even though ITR was not filed for the arrear period. You can claim it while filing her ITR for A.Y. 2024-25. File Form 10E before filing of ITR

 

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4885 Answers
1069 Consultations

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To address the situation regarding your mother's eligibility for tax relief under Section 89(1) for the arrear pension received, here's a more detailed plan:

1. Eligibility for Tax Relief under Section 89(1):

  • Your mother is eligible to claim tax relief under Section 89(1) for the arrear pension received, despite not having filed ITRs for certain assessment years from A.Y. 2005-06 to 2008-09. The relief is applicable because it's designed to mitigate the tax burden due to lump-sum arrear payments that pertain to multiple years.

2. Filing Form 10E:

  • Form 10E must be filed to claim relief under Section 89(1) before filing the income tax return for A.Y. 2024-25. This form is filed through the Income Tax Department's e-filing portal.
  • It's crucial to accurately report the income for the relevant years in Form 10E. Given the court documentation confirming no pension receipt from 1 Aug 2004 to 20 Aug 2014, adjust the reported pension income accordingly.

3. Addressing Past Inaccuracies:

  • For the assessment years where income was inaccurately reported (e.g., A.Y. 2012-13), ensure that Form 10E reflects the actual situation. If pension income was not received during those years, it should be reported as such, even if this means indicating zero pension income for those periods.
  • Correcting these inaccuracies is essential for an accurate computation of tax relief under Section 89(1).

4. No Prior Approval Needed:

  • There's no requirement for prior approval from the Income Tax Department for the relief claimed via Form 10E. The form's submission is part of the tax filing process, and the claim for relief will be automatically considered during the assessment of the ITR.

By carefully addressing these steps, you can navigate the process of claiming tax relief under Section 89(1) for your mother's arrear pension in a manner that is both compliant and beneficial.

 

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
269 Answers
4 Consultations

5.0 on 5.0

If you file Form 10E reporting zero pension income for A.Y. 2012-13, despite prior ITRs showing pension income, it could indeed trigger a tax notice due to the mismatch. However, if a notice is received, you can respond with the court order proving no pension was received during that period. This evidence should help resolve the notice in your favor.

 

Best regards,

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
269 Answers
4 Consultations

5.0 on 5.0

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