C.i.T. Vs. Pursottam Sa - Court Judgment

Excerpt:
- - (a) held that the assessee had failed to show that the loan of rs.1. the income tax appellate tribunal, allahabad, has referred the following questions of law under section 256(1) of the income tax act, 1961 (hereinafter referred to as the act) for opinion of this court.whether on the facts and in the circumstances of the case the hon'ble itat is justified in law in holding that the assessee is entitled to deduction under section 80cca and 80ccb of the income tax act?2. the reference relate to the assessment year 1992-93. briefly stated, the facts giving rise to the present reference are as follows:3. the assessee had made an investment of rs. 40,000/- in national savings scheme and another investment of rs. 10,000/- in unit trust of india magnum. his claim for deduction under sub-section 80cca and 80ccb on the above investments was rejected by the a.o. vide his order dated 24.02.1993 on the ground that the investment had not come out of income chargeable to tax. the case of the assessee before the id. c.i.t.(a) was that during the year he had given a loan of rs. 2 lakhs to one m/s. ganesh prasad hira lal and that the withdrawals of rs. 50,000/- invested in the schemes, were made from the said account. the id. c.i.t.(a) held that the assessee had failed to show that the loan of rs. 2 lakhs was given to m/s. ganga prasad hira lal out of his income chargeable to tax. therefore, vide his order dated 14.07.1993, he upheld the a.o.'s finding that the assessee was not entitled to relief under sub-section 80cca and 80ccb of the income tax act.4. in appeal before the tribunal, it was stated on behalf of the assessee that the loan of rs. 2 lakhs was given to m/s. ganesh prasad hira lal out of amounts available in assessee's savings bank a/c. in particular, a reference was made to the credits of rs. 21,312/- and rs. 15,125/- aggregating rs. 36,437/-, which were stated to be on account of interest income. thus, it was submitted that the loan of rs. 2 lakhs given to m/s. ganesh parasad hira lal had a nexus with the assessee's past income and income during the year. it was also stressed that during the year under consideration, the assessee had substantial income. relying on the decision of the punjab & haryana high court in thea case of ravi kumar mehra v. c.i.t. : 172 itr 108 and a decision of the appellate tribunal reported in 57 ttj 532, it was pleaded that the assessee was eligible for relief under section 80cca and 80ccb of the act. opposing these submissions, the department had contended that all the income earned by the assessee during the year was invested elsewhere and that the savings bank a/c of the assessee did not in any way show that the amount of rs. 2 lakhs was advanced to m/s. ganesh prasad hira lal, out of income chargeable to tax during this year or in earlier year.5. by observing as under, the tribunal decided the controversy in the matter in favour of the assessee vide its order dated 17.04.1998:at the outset, we may frankly admit that on the issue involved there is a difference of opinion between the high courts. the punjab & haryana high court in the case of ravi kumar mehra : 172 itr 108 has held that there is no rule that in order to qualify for relief, the amount must come out of income chargeable to tax and, therefore, the assessee could make payment out of funds in his accounts where credit balance was available. however, the orissa high court in c.i.t. v. dr. usharani panda 212 itr 119 has held that the deduction (under section 80-c) can be claimed only if the payment has been made out of the income chargeable to tax. no decision of the jurisdictional high court is placed before us. however, the very relevant factor is that the allahabad benches of the tribunal have been following the punjab & haryana high court decision, which is favourable to the assessee. incidentally, it may be mentioned that the departmental circular no. 3-p dated 11.10.1965, explaining the provisions of the predecessor section 87 (operative upto assessment year 1964-65), and then section 80-a (operative for assessment years 1965-66 to 1967-68) extracted below, also leads us to take a view in favour of the assessee.6. we have heard sri a.n. mahajan, learned counsel appearing for the revenue and sri shakil ahmad, counsel appearing for the respondents.7. we find that the controversy raised herein has been set at rest in sofaras, this court is concerned by the two division bench decisions namely c.i.t. v. ramesh chand khandelwal : (2005) 273 itr 363 and r.k. diwan v. c.i.t. : (2005) 277 itr 561. this court had held that investment in national savings certificates, etc. for claiming deduction under section 80c of the act, need not be from the income earned upto that period, it would be sufficient if the total income of the assessee for that year covers the investment. the court had followed the decision of the punjab & haryana high court in the case of ravi kumar mehra v. c.i.t. : (1988) 172 itr 108 and has dissented from the decision of the orissa high court in the case of c.i.t. v. usharani panda (dr.) (1995) 212 itr 119 and the rajasthan high court decision in the case of c.i.t. v. ram mohan rawat : (2002) 255 itr 555.8. sri a.n. mahajan, could not persuade us to take a different view.9. respectfully following the decisionof this court in the case of ramesh chand khandelwal (supra) and r.k. diwan (supra), we are of the considered opinion that the tribunal was right in allowing the deduction under sections 80cca and 80ccb of the act on the investment made by the respsondents.10. the question referred to us is, therefore, answered in the affirmative i.e. in favour of the assessee and against the revenue. however, there shall be no order as to costs.