1989 (11) TMI 77 - AT - Income Tax

Summary

Issues:
1. Benefit under section 10(10-AA)
2. Deduction under section 80C for investments in National Savings Certificates

Analysis:

Issue 1: Benefit under section 10(10-AA)
The appeal involved the denial of benefit under section 10(10-AA) to the assessee, who retired from service and received leave encashment. The assessing officer and Dy. C.I.T.(A) contended that the benefit could not be exempt under section 10(10-AA) as the encashment was not received on retirement or superannuation. However, the authorized representative argued that the assessee had actually retired on a specific date and provided certificates supporting the claim. The ITAT member reviewed the certificates and found that the assessee's claim should have been allowed, as the encashment was related to retirement and met the conditions of section 10(10-AA).

Issue 2: Deduction under section 80C
The second dispute revolved around the denial of deduction under section 80C for investments in National Savings Certificates. The assessing officer observed that the investment was made from the provident fund received by the assessee, without considering other resources. The Dy. C.I.T(A) upheld this decision. However, the authorized representative presented evidence showing that the investment was made from various sources, including bank accounts and cash. The ITAT member referred to a Punjab & Haryana High Court decision to support the assessee's case, emphasizing that the source of funds for investments should not be a determining factor for claiming deduction under section 80C. The member concluded that the assessee's investments were eligible for deduction under section 80C, and the appeal was allowed.

In conclusion, the ITAT Bombay-E allowed the appeal, granting the assessee the benefit under section 10(10-AA) for leave encashment and deduction under section 80C for investments in National Savings Certificates. The judgment highlighted the importance of considering the specific circumstances and legal provisions while determining tax benefits for retirees and investors.