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TMI Blog2002 (2) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Tribunal was justified in allowing full deduction under section 80C in respect of NSCs which were purchased in the previous year not out of the income chargeable to tax for the relevant assessment year?" The relevant assessment year is 1985-86. The assessee has declared the income of Rs. 18,700. Revised return was filed on March 31, 1987, declaring additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable to the tax sufficient enough to cover the figure out of which the NSCs were purchased and it allowed the claim of the assessee following the decision of the Punjab and Haryana High Court in the case of Ravi Kumar Mehra v. CIT [1988] 172 ITR 108. On a reference, Mr. Mathur argued that the provisions of clause (h) of subsection (2) of section 80C provides that if the NSCs are purchased "ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the provisions of section 80C has been omitted with effect from April 1, 1991. If we read combinedly both the provisions of section 80C(2)(h) and section 88, it appears that the Legislature has the benefit of investment under section 80C in NSCS, etc., is given only in case if investment in NSCs out of the income "chargeable to tax". But the similar benefit has been given in section 88. But i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has made the investment in the National Saving Certificates out of the amount of the FDRs, i.e., accumulated income of earlier years and not of the income of the current year. Considering the facts in the case of the assessee and relevant provision in the Income-tax Act in the year 1985-86, in our opinion, the Tribunal has wrongly allowed the claim of the assessee under section 80C, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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