L I C of India v Section 89 of the Income Tax Act, 1961.FROM SHRI P. RAMANATHAN

( Website : www.incometaxindia.gov.in
Central Board of Direct Taxes :
Postal address : ARA Centre, E-2, Jhandewalan Extn., New Delhi - 55   110 055.
Contact Telephone Number 011 - 2309 2648
E-mail ID : chairmancbdt@nic.in)

To
     The Chairman of the Central Board of Direct Taxes, New Delhi :

Sir,
     [ Background : When revising salaries sometime in 2000 but with effect from 1st August 1997, Life Insurance Corporation of India (LIC)  divided its pensioners into (1) those who retired BEFORE August 01, 1997 and (2) those who retired AFTER that date ARBITRARILY (and therefore unconstitutionally), meting out discriminatory treatment to (1) and a writ petition in connection with this and many related intervening applications under the consideration of the Hon'ble Supreme Court of India came up again for hearing on March 31, 2016.
     In an insincere attempt to satisfy the Hon'ble apex court that it has complied with its (the apex court's) order first dated May 07, 2015 and then dated sometime in September 2015, L I C of India disbursed what it takes to be "20% of the amount payable to the employees" (--Supreme Court) some time in September 2015.
     L I C of India credited this directly to the bank accounts of the pensioners concerned but HAS NOT FURNISHED THEM WITH DETAILED CALCULATION SHEETS OF WHAT THE AMOUNT IS FOR, HOW  HAS IT BEEN ARRIVED AT, WHAT ARE THE YEARS TO WHICH IT RELATES, ETC., IN SPITE OF REPEATED REQUESTS but advises the recipients that they are to include the whole of this payment in their Income Tax returns for the Financial Year 2015-2016; Assessment Year : 2016-2017.

     The Hon'ble Supreme Court of India has AGAIN ordered L I C of India on 31st March 2016 to pay 40% as Interim Relief to all affected pensioners and it has to be ensured that L I C of India furnishes the payees with detailed calculation sheets for this 40% also, please. ]

     I am a pensioner of L I C of India, a senior citizen going on 77+ and a layman in matters connected with Income Tax but am told that Section 89 of the Income Tax Act, 1961, gives an assessee the option of EITHER including THE WHOLE of such payments in the return for the Financial Year concerned OR spread them over in the respective Financial Years in which they were receivable to either minimize his/her income tax liability or to get it exempted altogether, as the case may be and the said ADVICE of L I C of India flies in the face of this statutory provision extending a considerate relief to taxpayers.
     In the light of the refusal of L I C of India to provide me (and others similarly situated) with detailed calculation sheets and its advice to the payees to INCLUDE THE WHOLE of the SUM OF " 20% ' PAID IN THE INCOME TAX RETURNS FOR FINANCIAL YEAR 2015-2016 ( A Y : 2016 - 2017), I should like to know :
     (i)  whether L I C of India has the authority to override the statute, viz., the Income Tax Act, 1961 (Section 89 of it);
     (ii) how should I file my Income Tax returns for the Financial Year 2015-206; Assessment Year 2016-2017 in the absence of detailed calculation sheets provided by L I C of India despite repeated pleas individually and collectively, please;

     (iii) whether CBDT can not direct LIC to furnish those pensioners who have been / will be  paid the said sum of 20% / 40%, as may be, with detailed calculations for the said amount spread over the respective years in which they were receivable to enable them to avail of the benefit of Section 89 of the Income Tax Act, 1961

     Thanks for your time and patience.
     Regards.
P. Ramanathan.
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    Relief when salary, etc., is paid in arrears or in advance.

    "89. Where an assessee is in receipt of a sum in the nature of salary 89a, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed

    Provided that no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i) of clause (10C) of section 10, a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under clause (10C) of section 10 in respect of such, or any other, assessment year."

     [An employee’s tax liability can increase when he/she receives arrears. However, one can get some amount of relief under section 89 of the Income-tax Act, 1961. Here is a look at what is covered under this section and how one can avail oneself of the relief.

WHAT IS SECTION 89?

The receipt of arrears can lead to a higher tax incidence in the hands of the employee as the amount gets taxed in the year of receipt. Had the employee received this amount in the year(s) that it pertained to, the additional tax would have been staggered over the years, instead of being paid as a lump sum. This is where section 89 comes in.

This section, titled “relief when salary, etc., is paid in arrears or in advance”, comes under chapter VIII (Rebates and Reliefs) of the income-tax Act. According to it, if you get salary in arrears or advance in a financial year due to which your total income for the year increases, which in turn increases your taxable income, you can claim for relief under section 89. According to this section, arrears includes salary/family pension paid in arrears/advance (additional salary), certain part of gratuity, compensation received on termination of employment, and commuted pension. The rules apply to both government and private sector employees.]