Deemed interest on provident fund withdrawal rejected in principle, with employer contribution portion left for verification

Deemed interest on withdrawal from an assessee's own provident fund was treated as interest to self and therefore outside section 24(1)(vi) of the Income-tax Act, so the deduction was rejected in principle. However, the record suggested that part of the provident fund may have represented employer contribution, which could not be treated as the assessee's own amount. That portion required verification by the assessing authority, and any allowable deduction had to be examined only to that extent.

---

---

Issues: Whether the assessee was entitled to deduction for deemed interest on withdrawal from his provident fund under section 24(1)(vi) of the Income-tax Act, 1961, and whether any part attributable to employer contribution could nevertheless be allowed.

Analysis: The claimed loss of interest on withdrawal from the assessee's own provident fund was held not to be deductible in principle because the notional interest was treated as interest to self and, therefore, outside the scope of section 24(1)(vi). At the same time, the material showed that part of the provident fund might have been contributed by the employer and, to that extent, the amount could not be treated as belonging to the assessee himself. That factual aspect required verification by the assessing authority.

Conclusion: The claim for deduction was rejected in principle, but the matter was remitted for fresh consideration of the portion, if any, relatable to employer contribution and allowable to the assessee.

---