Amount Given to the Widow of a Deceased by his Colleagues by Joint Contributions as Gesture of Goodwill and Regard is not taxable Amount Given to the Widow of a Deceased by his Colleagues by Joint Contributions as Gesture of Goodwill and Regard is not taxable

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The Tax Publishers Amount Given to the Widow of a Deceased by his Colleagues by Joint Contributions as Gesture of Goodwill and Regard is not taxable T.N. Pandey In an economic daily a query was raised that whether the amount gratuitously contributed by colleagues of deceased can be taxed in hands of widow of deceased. The expert in the daily replied that amount is taxable. The learned author declines to concur with this view and opines, with reasoning, that the amount involved is not taxable in hands of wife of deceased. A query was sent to one of the economic dailies by the reader of the paper which reads as under: 1. QUERY (i) My son expired on 25-12-2016. He was employed as a senior architect in a private company. The IT return for assessment year 2017-18 was filed by his wife on the basis of Form 16 received from his office. The return has been assessed and assessment order has been received, along with refund. Now, his office has paid certain amounts on account of gratuity, group insurance policy amount, etc., which I presume is exempted income under tax. In addition, they have also paid an amount of Rs. 7 lakh, which was donated voluntarily by his colleagues from their salaries as a help to his family. All these amounts were paid in September, 2017. (ii) Now, the company has sent us a revised Form 16 for the above assessment year, treating the sum of Rs. 7 lakh as income of my son and deducted the tax and remitted it to the Income Tax Department as of assessment year 2017-18 under my deceased son's PAN. The tax so deducted is reflected in Form 26AS, whereas we have already filed his return for assessment year 2017-18, which has been assessed and the order already passed. (iii) I would like to know: (1) Whether the amount of Rs.7 lakh has to be treated as income? (2) If yes, on whose account -- my late son or my daughter in law? (3) How to file the revised/rectification return in respect of my late son, when his return for the assessment year has already been filed by his widow -- Bal Mukund. The reply given by the tax expert of the paper read as under: 2. REPLY The employer has treated the sum of Rs.7 lakh as a taxable salary and has deducted the tax considering it as taxable income. The employer has issued revised Form 16 and said amount is reflected in Form 26As. Under the provisions of the Income Tax Act, 1961, the legal heir is liable to pay tax on the income of the deceased. In the present case, as the employer has treated the sum of Rs.7 lakh as taxable salary and deducted tax, the revised return will have to be filed and necessary steps will have to be taken after disclosing the sum of Rs.7 lakh in the return of income and claiming credit for the tax deducted at source. You may consult a tax expert to determine whether the sum of Rs.7 lakh received by your son is chargeable to tax or not. It will depend upon more facts and information. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Amount Given to the Widow of a Deceased by his Colleagues by Joint Contributions as Gesture of Goodwill and Regard is not taxable

T.N. Pandey

In an economic daily a query was raised that whether the amount gratuitously contributed by colleagues of deceased can be taxed in hands of widow of deceased. The expert in the daily replied that amount is taxable. The learned author declines to concur with this view and opines, with reasoning, that the amount involved is not taxable in hands of wife of deceased.

A query was sent to one of the economic dailies by the reader of the paper which reads as under:

1. QUERY

(i) My son expired on 25-12-2016. He was employed as a senior architect in a private company. The IT return for assessment year 2017-18 was filed by his wife on the basis of Form 16 received from his office. The return has been assessed and assessment order has been received, along with refund. Now, his office has paid certain amounts on account of gratuity, group insurance policy amount, etc., which I presume is exempted income under tax. In addition, they have also paid an amount of Rs. 7 lakh, which was donated voluntarily by his colleagues from their salaries as a help to his family. All these amounts were paid in September, 2017.

(ii) Now, the company has sent us a revised Form 16 for the above assessment year, treating the sum of Rs. 7 lakh as income of my son and deducted the tax and remitted it to the Income Tax Department as of assessment year 2017-18 under my deceased son's PAN. The tax so deducted is reflected in Form 26AS, whereas we have already filed his return for assessment year 2017-18, which has been assessed and the order already passed.

(iii) I would like to know: (1) Whether the amount of Rs.7 lakh has to be treated as income? (2) If yes, on whose account -- my late son or my daughter in law? (3) How to file the revised/rectification return in respect of my late son, when his return for the assessment year has already been filed by his widow -- Bal Mukund.

The reply given by the tax expert of the paper read as under:

2. REPLY

The employer has treated the sum of Rs.7 lakh as a taxable salary and has deducted the tax considering it as taxable income. The employer has issued revised Form 16 and said amount is reflected in Form 26As. Under the provisions of the Income Tax Act, 1961, the legal heir is liable to pay tax on the income of the deceased. In the present case, as the employer has treated the sum of Rs.7 lakh as taxable salary and deducted tax, the revised return will have to be filed and necessary steps will have to be taken after disclosing the sum of Rs.7 lakh in the return of income and claiming credit for the tax deducted at source. You may consult a tax expert to determine whether the sum of Rs.7 lakh received by your son is chargeable to tax or not. It will depend upon more facts and information.