The rebate under Section 88 will in all other cases be only if the investment is in the name of the individual claiming the rebate. The reader cannot, therefore, invest in bonds of the ICICI in the name of his wife and claim the rebate in his tax return.

Query

The Finance Act, 2003 has amended Section 88 to provide for a rebate on the tuition fee paid at the time of admission or thereafter to any University, College, School or Educational Institution in India for the full time education of two children of an individual. Kindly clarify whether the tuition fee paid before March 31, 2003 will qualify for the rebate. Kindly note that most of the fees is paid for the academic year 2003-04 prior to March 31, 2003 and if the fee paid before will not qualify for rebate it will cause hardship to many assessees.

Anonymous

Reply

The rebate in respect of such tuition fee will be available only in the previous year in which it is paid. Therefore, any sum paid prior to March 31, 2003 will not qualify for the rebate in the assessment year 2004-05 which is the first year in which the rebate is available. No hardship can be claimed as caused as if Section 88 had not been amended the rebate by itself would not be available. It may also be further noted that the fee paid for the subsequent year before March 31, 2004 will qualify for rebate in assessment year 2004-05.

Query

Which of the following expenses paid for the education of the child, will qualify for rebate under Section 88:

Annual charge, development fund, school pool fund, tuition fees, pupil fund, computer fees and charges for books and note books.

Brij Lal Diman

Reply

The rebate under Section 88 is available for tuition fees excluding any payment towards development fees or donation or payments of a similar nature. Out of the list of expenses given by the reader, it appears that only tuition fees and computer fees will be eligible for the rebate.

Query

Will any sums received under a voluntary retirement scheme qualify for the exemption under section 10(10C) and the excess over such exemption for relief under Section 89(1)? There appears to be some controversy in this regard. If the answer is in the affirmative, I request that you guide me on the course of action I should take in the following case.

I have filed a return for the assessment year 2002-03 (previous year 2001-02) without claiming the relief. How should I now claim the benefit of relief under Section 89(1)?

H. N. Hemanna

Reply

The relief under Section 89(1) read with Rule 21A(1)(c) is available in respect of compensation received in connection with termination of employment after a continuous service of more than three years and where the unexpired portion of the term of employment is three years or more. The point in question is whether the second proviso to Section 10(10C) which reads as follows will disentitle an assessee to the relief under Section 89(1).

"Provided further that where an exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year".

What is denied under the second proviso to Section 10(10C) is only an "exemption" in any other year.

What is to be noted is that neither is Section 89(1) an "exemption" but a relief from tax nor is it claimed in any "other assessment year". The objective of the second proviso to section 10(10C) is to disentitle an assessee from claiming an exemption more than once under the said section.

If a person has filed a return under Section 139(1) or in response to a notice under Section 142(1) he can file a revised return if he finds an omission or wrong statement in such return. A revised return can be filed at any time before the expiry of one year from the end of the relevant assessment year or before completion of assessment whichever is earlier. Therefore, if the reader has filed his return for the assessment year 2002-03 before the due date for filing the same, he can now file a revised return claiming the relief.

A revised return in the reader's case can be filed before March 31, 2004 provided an assessment has not been completed.

Query

The post office monthly income scheme offers a monthly interest and also a bonus of 10 per cent at the end of the six-year period.

While I understand that the monthly interest will be taxable on a year to year basis, I would like to know when the bonus of 10 per cent is taxable.

Barani Kumar

Reply

The bonus will be treated as an income under the head income from other sources. Income under this head will be taxed based on the method of accounting regularly employed by the assessee being the cash or mercantile system of accounting in accordance with Section 145 of the Act. If the cash system of accounting is followed the bonus will be taxable in the year of receipt. On the other hand, if the mercantile system of accounting is followed the bonus will be taxable when it accrues to the reader.

The bonus will accrue only at the end of the six-year period and will, therefore, be taxable only at the end of the said period even where the mercantile system of accounting is followed.

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