9911796707
TMI Blog2004 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, Allahabad, has referred the following question of law under section 256(1) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), for the opinion of this court: "Whether, on the facts and circumstances of the case, the Appellate Tribunal erred in law in holding that the deduction under section 80C was claimable by the assessee in respect of NSCs purchased out of sale proceeds of motor cycle and out of loan secured on the basis of the NSCs purchased in the same financial year?" The reference relates to the assessment year 1985-86. Briefly stated the facts giving rise to the present reference are as follows: The respondent-assessee who earned income as an individual is employed with the Punjab National Bank, Dares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 16, 1984, NSC worth Rs. 10,000 purchased on November 2,1984 and NSC worth Rs. 5,000 purchased on January 14, 1985. It was done obviously on the basis that these were the only investments in NSCs which could be said to have been made by the respondent out of his income chargeable to tax. Feeling aggrieved by the assessment order the respondent preferred an appeal before the Appellate Assistant Commissioner, who took the view that since the total salary of the respondent from the Punjab National Bank was Rs. 47,877.50 the benefit for purchase of NSC amounting to Rs. 37,000 could not be denied to the respondent simply because he had purchased some NSCs out of the sale proceeds of his old motor cycle and by pledging the NSCs already purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been made out of the income chargeable to tax and as in the present case the respondent had made investment in the NSCs not out of his income but from the sale proceeds of his old motor cycle and by pledging the NSCs the respondent-assessee was not at all entitled for deduction in respect of the NSC. He submitted that the order of the Income-tax Officer was perfectly justified and required no interference. He has relied upon the following two decisions: (1) CIT v. Dr. Usharani Panda [1995] 212 ITR 119 (Orissa); and (2) CIT v. Ram Mohan Rawat [2002] 255 ITR 555 (Raj). Having heard learned standing counsel we find that the facts are not in dispute. The respondent-assessee is an employee of the Punjab National Bank and has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Haryana High Court has relied upon the decision of the apex court in the case of Chandulal Harjiwandas [1967] 63 ITR 627 and has held that section 15(1) of the Indian Income-tax Act, 1922, which came up for consideration before the apex court in the aforesaid case is corresponding to section 80C of the Act. In the case of CIT v. N. Benugopal Choudhury [1991] 187 ITR 614 (Orissa), the Orissa High Court has held that it is a normal behaviour in an individual's private life that all incomes are amalgamated and spent and we can safely draw the conclusion that the assessee who is a salaried person was putting amounts received by him to the common fund. It cannot be ruled out that the money received from fixed deposits was being spent by him a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the NSC, the assessee was entitled to special deduction under section 80C on his contribution for purchase of NSC. In the aforesaid case the Tribunal had found that the assessee had an income of Rs. 30,750 which was more than the amount invested in the NSC. In the case of CIT v. Ram Mohan Rawat [2002] 255 ITR 555 the Rajas than High Court has held that if we go by the plain language of the provision of section 80C(2)(h) of the Act, the assessee is entitled for deduction only if he invests in NSCs out of the income "chargeable to tax". Under the aforesaid provision chargeable to tax means the income of the current year and not the income of any other years. As held by the apex court in the case of Chandulal Harjiwandas v. CIT [1967] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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