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TMI Blog1998 (3) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Bank, Sector - 22, Chandigarh. The assessee had raised interest-free loan of Rs. 85,000 from his wife Smt. Kanchan Bala vide cheque No. 575087, dated 20-3-1993 drawn on Punjab National Bank, Sector-22, Chandigarh. The withdrawal of Rs. 49,000 made by the assessee for deposit with the PPF A/c was directly attributable to the loan raised by the assessee. Since the deposit in the PPF A/c had not been made by the assessee out of 'income chargeable to tax', the Assessing Officer rejected the claim of rebate under section 88. 3. The assessee carried the matter in appeal before the DCIT(A). The DCIT(A) took note of the fact that the assessee had opening debit balance of Rs. 1,82,271.50 with his employer firm M/s. Cloth Palace, Sector - 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Finance Act, 1965 and Finance (No. 2) Act, 1965 whereby a new section 80A was introduced in the Income-tax Act replacing the provisions contained in section 87. The Id. counsel further placed reliance on the following decisions of the Tribunal : (i) Dineshchandra Vig v. ITO [1992] 42 TTJ (Ahd.) 223 ; (ii) Asstt. CIT v. Dr. Smt. Ujjawala Sharma [1997] 57 TTJ (Ind.) 532. 5. We have carefully considered that rival submissions and have perused the orders of the lower tax authorities. The short point which falls for consideration is as to whether investment or deposit made out of borrowed funds in the Public Provident Fund A/c etc. would qualify for rebate under the provisions of section 88. Sub-section (2) of section 88 specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statute. The courts, while interpreting the statutes, always presume that legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should be given effect to. The legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the legislature will not be accepted for a compelling reason. 7. It must also be borne in mind that section 88 is an exemption section and would necessarily be construed in conformity with the object and purpose of exemption. The exemption has been granted with a view to provide incentive for promoting savings and encourage thrift. The stipulation contained in section 88(2) that the investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee towards life insurance premium out of funds in his savings bank account where the balance to his credit was available before the commencement of the accounting year. This case renders no assistance to the assessee inasmuch as there was no credit balance of the assessee available in his bank account or in his account with the employer firm. With regard to the decision in the case of Dineshchandra Vig (supra), it has been held that when investments are made out of the funds in which savings of current year as well as past years are accumulated, it cannot be said that a particular amount did not represent income chargeable to tax. This decision does not advance the assessee's case. With regard to the decision in Dr. Smt. Ujjawala Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 88 in respect of deposit in the PPF A/c out of borrowed funds. 11. The same controversy is involved in the case of the other assessee, ie. Shri Adarsh Kumar Jain, in ITA No. 960/Chandi./94, the only difference being in the amount of deposit which is Rs. 48,900 invested in the PPF A/c out of loans raised by the assessee from his sons. The Assessing Officer held that the claim of rebate under section 88 was not admissible as the investment made in the PPF A/c was not out of the income chargeable to tax. In view of our discussion above in the case of Shri Arun Kumar Jain, we hold that the assessee is not entitled to rebate under section 88 in respect of deposit in the PPF A/c out of borrowed funds. 12. In the result, the two app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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