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TMI Blog1986 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... her of these claims. By taking the gross salary and allowing therefrom standard deduction and deduction under section 80C as per salary certificate or normal year contribution to general provident fund and, deduction under section 80-I of the Act the ITO completed the assessment. The matter was then taken on appeal before the AAC, who agreed with the ITO and, dismissed the assessee's claims as untenable and unmaintainable. Aggrieved by this order a further appeal was filed before the Tribunal, disputing the disallowances of all these three claims but at the time of hearing dispute with regard to contribution to C.G.H.S. was not pressed. The interesting point is, however, not the claim for deduction of city compensatory allowance but the claim for deduction of instalment of repayment of the loan taken from the general provident fund under section 80C. 3. Before we go to the main point we would like to dispose of the claim for city compensatory allowance. This point has come up for consideration before the Delhi High Court in the case of CIT v. Uma Sankar Joshi and the High Court has decided the matter against the assessee and we are told that Delhi Bench ' D ' of the Tribunal in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction at the rates specified in sub-section (1) of section 80C. Apparently, three ingredients have to be satisfied before a deduction under section 80C could be claimed and allowed ; one is the assessee must be an individual and secondly, the sums paid in the previous year must be out of his income chargeable to tax and, thirdly, as a contribution to any provident fund to which the Provident Funds Act applies. There was some debate before us whether the sum paid by the assessee was out of his income chargeable to tax. This argument arose because the repayment of the instalment of loan was at the first blush thought to have been paid not out of the income chargeable to tax but later on when it was known that the amount was deducted from the salary payable to the assessee in the accounting year, which was the income under computation, this controversy ended and this point was given up. We do not now have to dwell on this issue except to state that the instalment towards repayment of loan was paid out of the salary income of the assessee chargeable to tax. The second question is whether the instalment paid towards repayment of loan was a contribution to any provident fund to which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he definition of the expression ' contribution ' as found in that Fourth Schedule could not have any application to the facts of the case and all the arguments built upon that definition should, therefore, fall to the ground. He then submitted that if the instalment of loan is held eligible to the deduction under section 80C, it would amount to giving double benefit on the same contribution because the assessee would have got deduction when the original contribution was made and he would be again getting the deduction when the loan taken was repaid. It was not the legislative intent to give double deduction in this manner. Therefore, this alone would show that the interpretation sought to be placed by the learned counsel for the assessee is incorrect and unintended. He pointed out that merely because deductions were made from salary towards repayment of the loan taken from the provident fund, the character of the repayment of the loan remains repayment of the loan and it cannot take the character of a contribution to a provident fund although the amount of repayment has for the purpose of accounting to be credited to the individual account of the employee. Thus, neither the deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution ' as defined in the Provident Fund Act means any amount credited in a provident fund by way of addition to, subscription to or deposit or balance at the credit of the individual account. Thus, the contribution under the Provident Fund Act contemplates three categories of amounts that could be credited to the provident fund account of an employee, namely, by way of addition to or by way of subscription or by way of deposit. Lastly, balance in the credit of the account of an employee is also contribution. The expression ' by way of addition to ' requires to be understood. To our mind, it simply means amounts added to an existing fund. The amount that could be added to the fund can include amounts added even by repayment of loans because those amounts do add to the provident fund. If the expression ' by way of addition ' is to include only yearly contributions made in the normal course and exclude repayment of loans, then there is no reason why the expression ' subscription to ' was again used. The expression ' subscription ' coming immediately following the expression ' by way of addition to ' should mean that the subscription is the yearly ' subscription '. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Fund Act, namely, deduction from salary and crediting to provident fund account, then, in our view, those requirements are satisfied. There is no question of the contribution made by an assessee being adjusted towards a separate account called repayment of the loan. Therefore, the total amount contributed by the assessee towards contributions to provident fund is not only the yearly contribution of Rs. 2,400 but also the amount contributed towards repayment of loan. It is well to note, that section 80C only speaks of contribution to provident fund. It does not speak of splitting up of the contribution into yearly contribution and repayment of loans. If we interpret the contribution as excluding repayment of loan, we thought, we will be rewriting the section. Thus, the entire amount should qualify for deduction subject to the limits set out in section 80C(1). As regards the argument of the learned departmental representative that the assessee in this process is getting double deduction, we are not able to subscribe to this view because double deduction in the first instance postulates deduction of the same amount twice, which is not the case here. Secondly, what was allowed as a d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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