Income Tax Appellate Tribunal - Delhi
Smt. Premla Vohra vs Income-Tax Officer on 11 March, 1988
Equivalent citations: [1988]27ITD167(DELHI)
ORDER
S.P. Kapur, Accountant Member
1. Facts giving rise to the present appeal, which has been filed by the assessee, a resident-individual, involving assessment year 1985-86, with previous year ending on 31-3-1985, are:
That at the assessment stage, the assessee claimed deduction under Section 80C of the Income-tax Act, 1961 (hereinafter to be referred to as 'the Act') on account of National Savings Certificates (hereinafter to be referred to as 'NSC') purchased. Photostat copy of the NSC having been produced, the Income-tax Officer noticed the date of the issue as 12-4-1985. He negatived the claim of the assessee for deduction with the reasoning that the purchase does not relate to the year ending 31-3-1985, i.e., the year under consideration. The assessee appealed and before the learned AAC it was contended on behalf of the assessee that the assessee had given a cheque dated 27-3-1985, drawn on the State Bank of India, for a sum of Rs. 40,000 for the purchase of NSC through the Government authorised agent and due to some delay, NSC were issued in April 1985. The assessee produced before the learned first appellate authority, the receipt from the agent and claimed the relief with those facts as the background. Reliance was placed on the decision of the Hon'ble Kerala High Court in the case of CIT v. Nenmony Investments & Agencies Ltd. [1978] 113 ITR 354. The learned AAC, however, observed that the facts of the case, as were before the Hon'ble Kerala High Court, were quite different from that of the facts of the assessee's case, since the case before the Hon'ble Kerala High Court related to payment of income-tax and default on the part of the Department. He further observed that the date of the payment for the NSC is the date on which the proceedings of the cheque are relied (the correct word should have been 'realised') and credited to the Government account. Since the NSCs have been issued only in April 1985, the learned AAC confirmed the action of the ITO in disallowing deduction under Section 80C of the Act.
2. The assessee is as yet aggrieved, hence this appeal and oh my part I have heard the learned authorised representative of the assessee Shri Kanwal Krishan, as also Shri S.P. Goel, the learned D.R. at length. I have perused very carefully the orders of the learned lower authorities along with the contents of assessee's paper book (6 pages), which, inter alia, contains receipt for Rs. 40,000 issued to the assessee by one Shri Sarabjit Singh Bedi, authorised agent of the National Savings Organisation; copy of certificate of agency issued by the Director, National Savings Organisation, Government of India, New Delhi, in favour of the abovenamed Shri Sarabjit Singh Bedi which is dated 9-8-1979. The renewal of the above bearing the date 26-7-1982, has also been placed on the file. The assessee has also placed on file the photostat copy of 'Small Savings Schemes', issued by the National Savings Organisation, Delhi.
3. Section 80C(1) read with Sub-section (2)(h) of the Act, which is relevant for the purpose of the present appeal, reads as under:
80C(1)In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, an amount calculated, with reference to the aggregate of the sums specified in Sub-section (2) at the following rates, namely:
(a) Where such aggregate does not the whole of such aggregate.
exceed Rs. 6,000
(b) Where such aggregate exceeds Rs. 6,000 plus 50 percent of
Rs. 6,000 but does not exceed the amount by which such
Rs. 12,000 aggregate exceeds Rs. 6,000.
(c) Where such aggregate exceeds Rs. 9,000 plus 40 percent of
Rs. 12,000 the amount by which such
aggregate exceeds Rs. 12,000.
(2) The sums referred to in Sub-section (1) shall be the following, namely:
....
....
(h) Where the assessee is an individual or a Hindu undivided family (or, where the assessee is an association of persons or a body of individuals, consisting, in either case, only of) husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu, any sums paid in the previous year by the assessee out of his or its income chargeable to tax, as subscription to any such security of the Central Government as that Government may, by notification in the Official Gazette, specify in this behalf.
4. The assessee (as page one of assessee's paper book, which is a receipt evidencing payment of Rs. 40,000) claims that the amount was paid for purchase of six years NSC, VII Issue.
5. Notification No. GSR-III(A), dated 28-2-1983, reads as under:
307. National Savings Certificates (VI Issue/VII Issue) notified Under Clause (h) of Sub-section (2) for the purposes of deduction of subscription thereto.
In exercise of the powers conferred by Clause (h) of Sub-section (2) of Section 80C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the National Savings Certificates (VI Issue) and the National Savings Certificates (VII Issue) as securities for the purposes of the said clause.
2. This notification shall come into force on the 2nd of April, 1983.
(Extracted from page 484 of the Taxmann's Direct Taxes Circulars Vol. I, Item 307).
6. When we read Section 80C(1) read with Sub-section (2)(h) of the Act, with the above Notification, it follows that 'subscription' by an assessee out of his or its income, chargeable to tax and as relevant for the previous year, relevant to an assessment year to NSC-VII Issue, qualifies for deduction.
7. Now with the above facts as the background, the issue that merits adjudication is, as to whether on the facts and in the circumstances of the case, specially in view of the receipt placed on the file of the ITAT as page 1 of assessee's paper book, which stands reproduced hereunder, could it be said that the assessee has since 'subscribed' out of her income chargeable to tax as relevant to the previous year, relevant to assessment year under appeal, in the security of the Central Government as stands notified in the Official Gazette; viz. NSC:
Receipt Received with thanks from Mrs. Premla Vohra a cheque No. 0824367 dated 27th Mar. 1985 on State Bank of India for a sum of Rs. 40,000 (forty thousand only) for the purchase of 6-year NSC VII Issue.
Sd/- illegible 1458 (Authorised Agent National Savings Organisation) Dt: 27th Mar. 1985.
8. Now in the face of the facts stated in the above receipt, which admittedly go uncontroverted to insofar as the revenue, as a party, is concerned, the controversy revolves around the word "subscription". Has the assessee subscribed; and if so, when ?
9. Page 6 of the assessee's paper book is the photostat copy of 'standardised agency system' "Certificate of authority to act as authorized agent", issued by National Savings Organisation Government of India and it is in the name of 'Sarabjit Singh Bedi', as agent. This certificate, inter alia, reveals that the person named therein, i.e., in the certificate and whose specimen signatures stand appended thereto, is authorised to collect money from persons who want to purchase small savings securities. The said certificate further speaks of, inter alia, that the certificate win be produced to all persons from whom money is collected. The above 'certificate of authority' has since been renewed up to 21-6-1988 vide letter No. 18667, dated 28-6-1985, issued by the Regional Director, National Savings, Delhi. There is another letter dated 3-2-1981, issued by the Regional Director, National Savings, Delhi (Government of India), addressed to the Post Master, GPO/I.P. Estate, under the caption, "Appointment of authorised agent under Small Savings Scheme". It speaks of the appointment of Sarabjit Singh Bedi as 'authorised agent'. To the same effect is another letter dated 9-5-1979, issued by the Regional Director, National Savings Organisation Delhi Regional Office and addressed to the Post Master, GPO, Delhi/New Delhi and others.
10. The above documents placed on the file reveal the position that Shri Sarabjit Singh Bedi was an 'authorised agent' of the National Savings Organisation, Delhi Regional Office, Government of India and further that the said Shri Sarabjit Singh Bedi received from the assessee Rs. 40,000 by way of cheque dated 27th of March, 1985, on 27th of March, 1985 itself, for the purchase of six years NSC, VII Issue. The National Savings Certificates (VII Issue), Rules, 1981, have been made by the Central Government in exercise of the powers conferred on it by Section 12 of the Government Savings Certificate Act, 1959 (Central Act No. 46 of 1959) and Rules 8 and 9 of the same read as under:
8. Legal tender. Payment for the purchase of a certificate may be made to a post office in any of the following modes, namely:
(i) cash;
(ii) a cheque, pay order or demand draft drawn in favour of the post master;
(iii) duly signed withdrawal form together with the pass book for withdrawal from the post office savings bank account;
(iv) surrender of & matured old certificate duly discharged as follows 'Received payment through issue of fresh certificate vide application attached':
Provided that where the applicant is an individual, being a citizen of India or a person of Indian origin who is a non-resident or, as the case may be, who is not resident in India, he shall, if he desires to avail of the benefits Under Clause (4B) of Section 10 of the Income-tax Act, 1961 (43 of 1961), or Clause (xvic) of Sub-section (1) of Section 5 of the Wealth-tax Act, 1957 (27 of 1957), or Clause (iid) of Sub-section (1) of Section 5 of the Gift-tax Act, 1958 (18 of 1958), as the case may be, make such payment only in any of the following modes, namely:
(a) a cheque in favour of the postmaster drawn by the applicant on his Non-Resident (External) Account with a bank branch in India;
(b) a demand draft or pay order in favour of the postmaster issued by a bank branch in India by debit to the applicant's Non-Resident (External) Account or by withdrawal from his Foreign Currency (Non-Resident) Account together with a certificate from the said bank branch stating that the said demand draft or pay order has been issued by debit to or withdrawal from the said account;
(c) a demand draft drawn in favour of the postmaster by a bank in a country outside India on its branch or correspondent bank in India;
(d) cash, together with foreign inwards remittance certificate or bank certificate indicating conversion of foreign exchange in rupees or bank certificate issued in favour of the applicant stating that the funds have emanated from the applicant's Non-Resident (External) Account or Foreign Currency (Non-Kesident) Account.
Explanation: For the purposes of this rule, a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India.
9. Issue of certificates. (1) On payment being made Under Rule 8 except where payment is made by a cheque, pay order or demand draft, a certificate shall normally be issued immediately, and the date of such certificate shall be the date of payment.
(2) Where payment for the purpose of a certificate is made by a cheque, pay order or demand draft, the certificate shall not be issued before the proceeds of the cheque, pay order or demand draft, as the case may be, are realised and the date of such certificate shall be the date of encashment of the cheque, pay order or demand draft, as the case may be:
Provided that where the payment for purchase of certificate/ certificates is made by means of a cheque, pay order or demand draft expressed in a foreign currency and the proceeds thereof are not equivalent to the face value of the certificate or the certificates applied for, a certificate or certificates shall be issued for the maximum aggregate face value possible within the said proceeds but in any case not exceeding the aggregate face value of the certificate or the certificates applied for and any balance amount of the said proceeds shall be refunded to the applicant or to any person authorised by him to receive such amount or credited to the savings account, if any, of the applicant in the post office savings bank:
Provided further that where the payment is made in the manner specified in Clause (a) of the proviso to Rule 8 the certificate shall be issued only after the post office receives an intimation from the drawee bank branch that the cheque has been paid by debit to the applicant's Non-Resident (External) Account with the said drawee bank branch.
(3) If for any reason a certificate cannot be issued immediately, a provisional receipt shall be given to the purchaser which may later be exchanged for a certificate and the date of such certificate shall be as specified in Sub-rule (1) or Sub-rule (2), as the case may be.
(Extracted from pages 498 and 499 of Vol. I Taxmann's Direct Taxes Circulars, 1985 edn.).
11. Now according to Rule 8 (reproduced above), a cheque is a legal tender for the purchase of National Savings Certificates VII Issue and accordingly when the assessee handed over the cheque for Rs. 40,000 for the said purpose to the agent of the National Savings Organisation, it has to be, on those facts, held, that she did make a 'legal tender' or else I can say, that she did subscribe to the issue.
12. "Subscribe" means to write under, to make one self liable for something.
subscribed" means to produce in writing and sign in token of what is written or else putting one self liable to something.
In Black's Law Dictionary, Fifth Edition, on pages 1279-1280, "Subscribe", "Subscriber" and "Subscription" have been defined as under:
Subscribe. Literally to write underneath, as one's name. To sign at the end of a document. Also, to agree in writing no furnish money or its equivalent, or to agree to purchase some initial stock in a corporation.
Subscriber. One who writes his name under a written instrument; one who affixes his signature to any document, whether for the purpose of authenticating or attesting it, of adopting its terms as his own expressions, or of binding himself by an engagement which it contains.
One who becomes bound by a subscription to the capital stock of a corporation. One who has agreed to purchase stock from the corporation on the original issue of such stock. One who agrees to buy securities of a corporation, either bonds or stocks.
Subscription. The act of writing one's name under a written instrument; the affixing one's signature to any document, whether for the purpose of authenticating or attesting it, of adopting its terms as one's own expressions, or of binding one's self by an engagement which it contains.
A written contract by which one engages to take and pay for capital stock of a corporation, or to contribute a sum of money for a designated purpose, either gratuitously, as in the case of subscribing to a charity, or in consideration of an equivalent to be rendered as a subscription to a periodical, a forthcoming book, a series of entertainments, or the like.
In Mitra's Legal and Commercial Dictionary, Third Edition, 1979 (on page 750), "Subscribe" has been defined as "To make actual payment; to agree to contribute; agree in writing to take or have taken shares in a company; proposed or formed; to write or sign under something in accordance with the prescribed regulations where any such exists.
12.1 To the same effect is the definition of "Subscriber", as has been defined in "Guide to the Companies Act" Tenth Edition, 1984 edn., by A. Ramaiya. Reference is to pages 67-76.
Subscription" has been defined in the above Commentary on page 170 to mean- "Taking or agreeing.
13. Now on the facts and in the circumstances of the case with which I am seized of, the safe inference that can be drawn is, that once the assessee handed over a cheque as "Subscription" to a "duly authorised agent" of the National Savings Organisation, she had satisfied the provisions of Section 80C(1) read with Sub-section (2)(h) of the Act, inasmuch as she having paid sums in the previous year out of her income, chargeable to tax, as subscription to a security of the Central Government, in this case NSC-VII Issue.
14. Now the only controversy that remains is, as to whether subscription was made when the cheque was handed over on 27th of March, 1985 or else when the certificates were issued by the Post Office on 12th of April, 1985. Admittedly, with the above documents on record Shri Sarabjit Singh Bedi was an 'authorised agent'. Section 18 of the Evidence Act provides that statements made by an agent expressly or impliedly, are "admissions" and may be proved as against the person who makes them. Statements made by an agent, though not expressly authorised, are admissible, against the Principal, if they have reference to the business on which the agent is employed on behalf of the Principal at the time when they are made, more so when they are made in the ordinary course of the agent's employment.
15. Shri Sarabjit Singh Bedi admittedly was a 'duly authorised agent' of the National Savings Organisation and page 1 of the paper book, which is a receipt issued by him on 27th of March, 1985 (as reproduced above) reveals payment by the assessee as "subscription" for the purchase of six years NSC-VII Issue, in terms of a cheque which according to Rule 8 is a 'legal tender' and at the relevant time, i.e., on 27th of March, 1985, Shri Sarabjit Singh Bedi being a 'duly authorised agent', subscription paid to him for the purpose is subscription paid by the assessee to the National Savings Organisation and in this view of the matter, requirements of Section 80C(1) read with Sub-section (2)(h) stand fulfilled. The assessee is entitled to claim of deduction under the provisions of the Act, namely, Section 80C. The date when the certificates were issued is not relevant to the context. I hold and direct accordingly.
16. The appeal succeeds and stands allowed.