Facts:

a) The assessee was an employee of a company and retired from the company on 1-4-2002. As on the date of his retirement there was certain accumulated provident fund balance of contributions plus interest in his account.

b) He did not withdraw the same immediately after retirement, but withdrew the accumulated balance from the EPF account on 11-4-2011, which comprised of the balance on the date of retirement plus interest on the accumulated balance from 1-4-2002 up to 11-4-2011.

c) These details were not disclosed by the assessee but were ascertained by the Assessing Officer in the course of assessment proceedings when he required the assessee to explain the credit of said amount to his capital account. At this juncture, the assessee claimed that the aforesaid amount so withdrawn was exempt under section 10(12).

d) Assessing Officer (AO) denied the claim for exemption under section 10(12). CIT(A) reversed the order of AO. Aggrieved-revenue filed the instant appeal before the ITAT.

The ITAT held in favour of revenue as under:

1) A perusal of the provision of section 10(12) and the definition of ‘Accumulated Balance’ in Part A of 4th Schedule clearly indicates that the exemption under section 10(12) is available only to a person who, being an employee, withdraws the accumulated fund from the PF account as on the date of retirement or termination of employment.

2) The interest from 1-4-2002 to 11-4-2011 on the accumulated balance as on 1-4-2002 had accrued to the assessee after he retired from the company. It couldn’t be said that such accrual of the interest was qua an employee.

3) The exemption under section 10(12) is limited to the accumulated balance due and payable to an employee upto the date of retirement/end of employment. Therefore, the accumulated interest post-retirement of the assessee was not eligible for exemption under section 10(12). – [2018] 98 taxmann.com 362 (Bangalore – Trib.)