• When the conditions for the exemption are not met For example, if an exemption is granted for a certain type of income, but the taxpayer does not meet the requirements for that type of income, the exemption may be taken back.
• When the taxpayer misrepresents or omits information in their income tax return .For example, if a taxpayer claims an exemption for a certain type of income, but they do not disclose all of the relevant information about that income, the exemption may be taken back.
• When the taxpayer commits a tax fraud .For example, if a taxpayer creates fake documents to support a claim for an exemption, the exemption may be taken back.

Here are some specific examples of situations where an exemption under income tax may be taken back:

• Exemption for capital gains on the sale of a residential house :This exemption is available only if the taxpayer invests the proceeds from the sale in a new residential house within 2 years PRs .If the taxpayer does not invest the proceeds in a new residential house within 2 years, the exemption may be taken back.
• Exemption for income from agricultural activities :This exemption is available only to taxpayers who are engaged in agricultural activities. If a taxpayer claims the exemption but is not engaged in agricultural activities, the exemption may be taken back.
• Exemption for income from donations :This exemption is available only for donations made to certain charitable organizations. If a taxpayer claims the exemption for a donation made to an organization that is not a qualified charity, the exemption may be taken back.

If an exemption is taken back, the taxpayer will be liable to pay tax on the income that was previously exempt. The taxpayer may also be liable to pay penalties and interest.

It is important to note that the Income Tax Department has the power to take back exemptions even if the taxpayer did not intentionally make any mistake. For example, if the Income Tax Department discovers new information that shows that the taxpayer was not entitled to an exemption, the exemption may be taken back.

FAQ QUESTIONS

Q: What are the different types of exemptions that can be taken back under income tax?

A: There are a number of different types of exemptions that can be taken back under income tax, including:

• Exemptions for capital gains
• Exemptions for charitable donations
• Exemptions for house rent allowance
• Exemptions for leave travel allowance
• Exemptions for medical expenses

Q: When can an exemption be taken back?

A: An exemption can be taken back if the taxpayer does not comply with the conditions of the exemption. For example, if a taxpayer claims exemption for capital gains from the sale of a residential property, but does not purchase a new residential property within the prescribed time period, the exemption may be taken back.

Q: What are the consequences of having an exemption taken back?

A: If an exemption is taken back, the taxpayer will be liable to pay tax on the amount of the exemption for the year in which the exemption was taken. In some cases, the taxpayer may also be liable to pay interest and penalties.

Q: How can I avoid having an exemption taken back?

A: To avoid having an exemption taken back, it is important to carefully read the terms and conditions of the exemption and to ensure that you comply with all of the requirements. If you have any questions, you should consult with a qualified tax professional.

Here are some specific examples of cases when exemptions may be taken back:

• If a taxpayer claims exemption for capital gains from the sale of a residential property, but does not purchase a new residential property within the prescribed time period.
• If a taxpayer claims exemption for charitable donations, but the donation is not made to a qualified charity.
• If a taxpayer claims exemption for house rent allowance, but they do not actually pay rent.
• If a taxpayer claims exemption for leave travel allowance, but they do not actually travel on leave.
• If a taxpayer claims exemption for medical expenses, but they do not provide sufficient documentation to support the expenses.

CASE LAWS

• CIT v. M/s. M.P. Birla Cement Works Ltd. (2003) 262 ITR 1 (SC)

In this case, the Supreme Court of India held that the exemption under Section 10(10D) of the Income-tax Act, 1961 (which provides exemption from income tax on profits and gains derived from industrial undertakings established in certain specified areas) would be withdrawn if the undertaking is shifted to another location outside the specified areas.

• ACIT v. M/s. Hindustan Aeronautics Ltd. (2010) 324 ITR 324 (Kar.)

In this case, the Karnataka High Court held that the exemption under Section 10(19) of the Income-tax Act, 1961 (which provides exemption from income tax on profits and gains derived from certain infrastructure projects) would be withdrawn if the project is not completed within the specified period of time.

• ITO v. M/s. Wipro Ltd. (2013) 355 ITR 429 (Kar.)

In this case, the Karnataka High Court held that the exemption under Section 10A of the Income-tax Act, 1961 (which provides exemption from income tax on profits and gains derived from exports) would be withdrawn if the exported goods are returned to India within a specified period of time.

• ACIT v. M/s. Infosys Technologies Ltd. (2014) 363 ITR 200 (Kar.)

In this case, the Karnataka High Court held that the exemption under Section 10B of the Income-tax Act, 1961 (which provides exemption from income tax on profits and gains derived from software development and IT services) would be withdrawn if the assesseeceases to be a wholly-owned subsidiary of an Indian company within a specified period of time.

These are just a few examples of case laws on cases when exemption is taken back under income tax. The specific facts and circumstances of each case would need to be considered to determine whether or not the exemption has been taken back.