Whether exempt or not ?

This query is : Resolved

CA Dron Bharadwaj (Querist)
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27 March 2010 CASE :

Client died in Kargil War in 1999, UP State Government gave an Fixed Deposit of RS. 10 lakhs to his son who was just 1 year old at that time and this FD can be broken after the Son attains age of 21.

Clients wife did not disclosed Interest Income on FD in her ITRs.

The case is under scruitny.

I want to Know whether the interest on FD is exempt or not ?
If yes under which section ?

CA Shiv

CA Shiv (Expert)
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27 March 2010 There are 2 ways to claim interest income.. either on accrual basis or on receipt basis.

In this case interest income to be shown in the year of the maturity. ANd also you will get TDS income at the year of maturity.

So you can say tht interest income will be included and claimed ITR in the year of maturity....

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)
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27 March 2010 Yes u r correct, it is one way,
but i want to know that is there any exemption from interest in this case ?

under any section,rule or case law ?

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CA Shiv

CA Shiv (Expert)
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28 March 2010 no there is not..... you have to pay tax on interest at the time of maturity....even TDS will be deducted by bank directlyyyy...

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)
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28 March 2010 Thanks sir