Income Tax Act, 1961
Sch. IV Part A Rule 11. TREATMENT OF BALANCE IN NEWLY RECOGNISED PROVIDENT FUND.
(1) Where recognition is accorded to a provident fund with existing balances, an account shall be made of the fund upto the day immediately preceding the day on which the recognition takes effect, showing the balance to the credit of each employee on such day, and containing such further particulars as the Board may prescribe. 2346
(2) The account shall also show in respect of the balance to the credit of each employee the amount thereof which is to be transferred to that employee’s account in the recognised provident fund, and such amount (hereinafter called his transferred balance) shall be shown as the balance to his credit in the recognised provident fund on the date on which the recognition of the fund takes effect, and sub-rule (4) of this rule and sub-rule (5) of rule 5 shall apply thereto.
(3) Any portion of the balance to the credit of an employee in the existing fund which is not transferred to the recognised fund shall be excluded from the accounts of the recognised fund and shall be liable to income-tax in accordance with the provisions of thisAct, other than this Part.
(4) Subject to such rules as the Board may make in this behalf, the Assessing Officer shall make a calculation of the aggregate of all sums comprised in a transferred balance which would have been liable to income-tax if this Part had been in force from the date of theinstitution of the fund without regard to any tax which may have been paid on any sum, and such aggregate (if any) shall be deemed to be income received by the employee in the previous year in which the recognition of the fund takes effect and shall be included in the employee’s total income for that previous year, and, for the purposes of assessment, the remainder of the transferred balance shall be disregarded, but no other exemption or relief, by way of refund or otherwise, shall be granted in respect of any sum comprised in such transferred balance :
Provided that, in cases of serious accounting difficulty, the Chief Commissioner or Commissioner may, subject to the said rules, make a summary calculation of such aggregate.
(5) Nothing in this rule shall affect the rights of the persons, administering an unrecognised provident fund or dealing with it, or with the balance to the credit of any individual employee before recognition is accorded, in any manner which may be lawful.
