For claiming tax relief u/s 89, upload form 10E

SC Vasudeva

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Q. I have claimed tax relief under Section 89 at the time of filing ITR-1 online for the AY 2017-18. But I forgot to upload form 10E in support of my claim. Now my ITR has been processed and I have been denied the relief claimed u/s 89 (though tax relief claimed u/s 80CCD (1B) has been granted). Please clarify the following points:

1. Can I make an appeal to the I-T department for relief by uploading Form 10E now, when my ITR-1 has already been processed and intimation has been sent to me u/s143(1)?

2. If answer to '1' is yes, then please guide me how to proceed further?

— Manav Guleria

A.a) You can upload Form 10E and thereafter file an application under Section 154 of the Income-tax Act 1961 (The Act) for rectification of the intimation. The intimation under Section 143(1) of the Act would be reprocessed on that basis. In case your request for rectification is not accepted, you can file an appeal against the order passed by the Assessing Officer under Section 154 of the Act.

b) An appeal will have to be filed in Form 35 within 30 days of the date of receipt of order under Section 154 of the Act. 

c) An appeal can be filed online.  You have to pay fee for filing of an appeal on the basis of total income computed by the Assessing Officer.  The Form 35 has to be filed in duplicate along with two copies each of the following:

(a) Statement of facts 

(b) Grounds of appeal 

(c) Certified true copy of the order under Section 154 of the Act and 

(d) The proof with regard to the payment of fee for filing of the appeal.

Q. I started a 'committee' with a housewife named Shamma Mahajan and paid her Rs 5,000 per month by NEFT. I paid her this amount from January to December, 2016 on a monthly basis. I took my last 'committee' and she deposited Rs 60,000 in cash in my account.

1) Is this 'committee' legal?

2) Is it unsecured loan?

3) Whether any penalty may arise in future? If yes, to whom and what amount?

— Rakesh Bhardwaj

A. i) There is nothing illegal about the formation of an association where its members contribute monthly and thereafter on the basis of a mutual decision one of them is paid the aggregate amount of the contributions received from all members. As and when next draw is taken, the person who has already taken the money is excluded from such a draw. This being an activity between members of such an association, it does not involve any tax implication provided the contribution  made is out of your taxed income and the names and addresses of persons forming such association are available who gave contributions towards such an activity out of the taxed income.  

b) It is not an unsecured loan. It is a consolidated sum received/receivable by you as and when the draw is taken. 

c) The amount received not being in the nature of income, the question of any tax or penalty should not arise.