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TMI Blog1988 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 u/s 80C of the Act. 2. The assessee is as yet aggrieved, hence this appeal and on my part I have heard the learned authorised representative of the assessee Shri Kanwal Kri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 sec. 80C(1) read with sub-sec. (2)(h) of the Act, with the above Notification, it follows that 'subscription' by an assessee out of 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 NBC, 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 sec. 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 a matured old certificate duly discharged as follows 'Received payment through issue of fresh certificate vide application at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itra's Legal and Commercial Dictionary, Third Edition, 1979, "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 sec. 80C(1) read with sub-sec. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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