Income Tax Appellate Tribunal - Kolkata
Income-Tax Officer vs Sunil Krishna Ganguly on 10 March, 1988
Equivalent citations: [1988]27ITD137(KOL)
ORDER
N.D. Raghavan, Accountant Member
1. The revenue is the appellant. The assessee is the respondent. Impugned order is of the AAC of Income-tax, Asansol. It was passed on September 3, 1986. The relevant assessment year is 1985-86.
2. The only ground raised is that the AAC of Income-tax erred in law as well as on facts in directing the ITO to allow the assessee's claim of deduction under Section 80C of the Income-tax Act, 1961 in respect of purchase of National Savings Certificates worth Rs. 12,000, although the source of that investment was out of income not chargeable to tax during the year.
3. The learned departmental representative submitted that during the year the assessee purchased National Savings Certificates for Rs. 12,000 out of the recurring deposit that matured, that its source was a known one but out of an income which was not chargeable to tax during the year and that the assessee's claim of the said certificates under Section 80C of the Act could not, therefore, be entertained by the ITO.
4. On the other hand, the learned authorised representative of the assessee submitted that the ITO erred by not considering the point as to whether the amounts were invested within the previous year. He also submitted that making investment out of the income chargeable to tax within the previous year itself was not important and that if the purchase of NSCs was out of the income within the purview of the Income-tax Act, then that itself was sufficient. He relied upon the decision of the Hon'ble Supreme Court in the case of Chandulal Harjiwandas v. C1T [1967] 63 ITR 627 which held that the object of Section 15(1) of the Indian Income-tax Act, 1922 was the encouragement of thrift and that the section should be interpreted in such a manner as not to nullify that object. Further reliance was also placed on the decision of the Hon'ble High Court of Punjab and Haryana in the case of Ravi Kumar Mehra v. CIT [1988] 36 Taxman 21. It was held therein that an assessee might make payment of the life insurance premia out of his savings account with a bank where the balance to his credit was available before the commencement of the accounting year and that this would in no case mean that the payment of premia so made was not to be deducted out of the total income of the assessee in the relevant accounting year and that such a construction on Section 80C would not be proper nor is it intended by the provisions of Section 80C(1). Accordingly the claim of deduction by the assessee was allowed by the AAC properly.
5. We feel that the above decision is squarely fitting into the instant case. Further, we opine that it is not necessary that these payments should be made out of the taxable income of the relevant previous year. It, therefore, follows that the deduction would be available even if these payments are made out of the post-tax accumulated savings of the earlier years. We are, therefore, inclined not to interfere with the finding of the AAC. He is perfectly justified to hold that if a particular assessee deposits his income of the relevant year into a bank account and purchases the NSC out of the accumulated balance of earlier years the claim of the assessee under Section 80C has to be allowed. We, therefore, uphold the order of the AAC.
6. In the result, the appeal of the revenue is dismissed.