Sec 10(13) - No deduction of Tax in case of transfer of equitable interest from one approved fund to another. - Income Tax - 1446/CBDT

INSTRUCTION NO. 1446/CBDT Dated: January 13, 1982 A question has been raised as to whether transfer of equitable interest from one approved fund to another approved fund would constitute constructive payment to an employee as to attract taxation as provided u/s.10(13) of the I.T. Act read with rule 6 of part B of the 4th schedule to the I.T. Act on the footing that the transfer is in the case of an employee leaving service voluntarily. 2. Rule 6 of part B to the 4th schedule does not contain a provision similar to rule 8(iii) of part A the said schedule. The basic point however to be considered is whether in the event of any change of service, can the transfer of equitable interest from one approved superannuation fund to another approved superannuation fund, be said to be a case of contributions paid to an employee during his life time in circumstances other than those referred to in clause 13 to sec.10. The board have been advised that such a transfer cannot be appropriately treated as a case of payment direct or indirect to an employee. In this view, the question of deduction of tax on contributions so transferred in the superannuation fund does not arise. 3. The above clarification may kindly be brought to the notice of all the officers working in your charge.