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TMI Blog1978 (5) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorities below, may be briefly stated. 2. The assessee is a partner in several firms and has also money lending business. He invested some moneys in fixed deposits in banks. He also borrowed money from the banks on the security of the fixed deposits and utilised them for money lending business. In the relevant previous years the assessee had not only received interest from the banks on the fixed deposits but also paid heavy amounts by way of interest to the banks on the loans taken on the security of the fixed deposits. In the previous year relevant to the asst.yr. 1973-74, the assessee received from the banks interest amounting to Rs. 3,976 on the fixed deposits and also paid interest amounting to Rs. 7,25 on the loans taken fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO, in the assessment for the assessment year 1975-76, disallowed the relief of Rs. 3,000 claimed by the assessee under s. 80 L. 3. Aggrieved by the aforementioned order under s. 154 for the assessment year 1973-74 and by assessment order for the assessment year 1975-76, the assessee preferred appeals before the AAC who disposed of both the appeals by a consolidated order. The action of the ITO in disallowing the allowing the claim for relief under s. 80 in the assessment for the asst. yr. 1975-76 and in rectifying, under s. 154 the assessment order for the assessment year 1973-74 so as to withdraw the relief under s. 80L was challenged by the assessee in these appeals before the AAC. By his consolidated order, disposing of those two appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the language of s. 80L, which, omitting what is not relevant for the present purpose, reads as follows: "80L(1) Where the gross total income of an assessee, being (a) ... ... (b) ... ... (c) ... ... includes any income by way of (vi) Interest on deposits with a banking company to which the Banking Regulation Act, 1949 (X of 1949) applies (including any bank or banking institution referred to in s. 51 of that Act) or a cooperative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank) ; there shall, in accordance with and subject to the provisions of this section, be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of gross total income in s. 2 (45). 5. Sri Bhaskara Rao, learned Departmental Representative, contends that ion a case where the interest payments by the assessee exceeded the interest received by the assessee from bank deposits, there is no inclusion of the interest on bank deposits as such in the gross total income and that in such a case the assessee is not entitled to relief under s. 80L. The object of the legislature in enacting s. 80L is to encourage bank deposits. This object will be defeated if the construction contended for the learned Departmental Representative is accepted. If, in a given year, an assessee had not received any interest at all on bank deposits, it may then be stated that his gross income of that year does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loss in the non-priority business was set off against the profits and gains attributable to the priority industry was erroneous. In Indian Transformers Ltd. vs. CIT (3) the ITO first set off, under s. 72, the carried forward losses of the earlier year against the profits and gains attributable to the priority industry and restricted the relief under s. 80E.to 8 per cent of the balance remaining after such set off. On a reference by the Tribunal, the Kerala High Court held that under s. 80E an assessee was entitled to deduction of 8 per cent of the profits and gains attributable to priority industry and that the benefit under that provision should not be diminished by any other benefits conferred upon the assessee under the Act such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The question as to whether the assessee is not entitled to relief under s. 80L in respect of the interest on bank deposits in a case where the assessee has no positive income by way of interest is a debatable issue on which there can be conceivably be two different views. The allowance of deduction under s. 80L in the original assessment cannot, therefore, be considered as a mistake apparent form record, which could be rectified under s. 154. The ratio of the decision of the of the Supreme Court in the case of T.S. Balaram, ITO vs. Volkart Bros. (4) squarely applies to the present case. The assessee s appeal for the assessment year 1973-74 has to be allowed on that ground also. 8. In the result, the appeal for the asst. yr. 1973-74 is all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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