9911796707
TMI Blog1985 (8) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1667/Mds./1981, dt. 6th July 1982, for the asst. yr. 1978-79. The assessments in the present cases as in the earlier year were made on the trustees. The status adopted this year is that of an AOP. Each of the assessee had claimed deduction under s. 80L and reliance was placed on the order of the Tribunal referred to above for the asst. yr. 1978-79. The ITO, however, stated that there was an observation the order of the Tribunal that the decision would be confined to that year and further the decision of the Tribunal for that year was not accepted and an application for reference had been filed. He, therefore, denied the benefit under s. 80L for each of the years. 2. Each of the assessee appealed and the AAC held that after amendment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to be allowed at that stage. Thereafter, when the rate was applied, the maximum marginal rate, viz., the maximum rate applicable to AOP, was to be applied. It was, therefore, submitted that no change was called for. 4. The ld. Departmental Representative, on the other hands, referred us to the Circulars on the Finance Act, 1980 (1981) 131 ITR Statutes at pages 34 to 36 and it was his submission that the deduction under s. 80-L was not admissible since tax had to be levied at the highest rate applicable to an AOP. 5. We have considered the rival submissions, For the asst. yr. 1978-79 the provisions of s. 164(1) read as under: "Subject to the provisions of sub-ss.(2) and (3), where any income in respect of which the persons mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively), tax shall be charged on and the relevant income or part of relevant income at the maximum marginal rate. "Explanation 2: In this section 'maximum marginal rate' means the rate of income-tax (including surcharge of income-tax, if any) applicable in relation to the highest slab of income in the case of AOP as specified in the Finance Act of the relevant year)." In the asst. yr. 1978-79, the Tribunal in its order referred had come to the conclusion that the status of the assessee was that of an individual. The Tribunal further stated that since the rate of 65 per cent had been applied for that year, the deeming provision of considering the income as the total income of an AOP did not also arise. Thus even by a function of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, as elucidated above, would be subject to the maximum rate applicable to an AOP. The application of rate comes into play only after the total income is determined. Deductions under s. 80L are allowed prior to determining the total income. Therefore, since the status is that of individual, deductions under s. 80L would be applied and application made later of the maximum rate applicable to an AOP. (In this case, on the whole of such income tax in other cases it may be only on part of such income, the rest being taxed at normal rates) would make no difference in the allowability of deduction under s. 80L. In each of the cases, the ITO will allow appropriate deduction under s. 80L. 6. In the result, the appeals are allowed. - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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