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TMI Blog2013 (6) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... . He filed his return of income by claiming deduction of Rs.1.00 lakh u/s 80C of the Act. The assessing officer noticed that the premium amounts were paid by the Grand father of the assessee named Shri V.Thiruvenkitam, who was the proprietor of M/s S. Veeraiah Reddiar, Kottayam and the concerned LIC accounts were shown as assets in the books of accounts of M/s S.Veeriah Reddiar. The assessing officer held that the assessee was not in receipt of any amount as gift or loan from Mr. Thiruvenkitam for making payments towards LIC premiums. Accordingly, he rejected the claim of deduction u/s 80C of the Act. 4. The assessee carried the matter in appeal before Ld CIT(A). The first appellate authority also did not accept the claim of the assessee that the LIC premiums were paid by him by taking loan from his grandfather. The Ld CIT(A) held that the premium amounts were paid by the grand father of the assessee only. He further held that the benefit of deduction u/s 80C of the Act shall be available only to the person who actually made the payment and not to the beneficiary of such payment. By placing reliance on the circular No. 3-P dated 11.10.1965, the Ld CIT(A) held that the object of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be paid out of income chargeable to tax. In this regard, the Ld D.R placed reliance on the decision of the Hon'ble jurisdictional Kerala High Court in the case of CIT Vs. Abraham George reported in 242 ITR 171. 7. In the rejoinder, the Ld A.R submitted that the provisions of income tax should be interpreted strictly without supplementing or deleting any words to the relevant provisions. He submitted that Chapter - VIA of the Act prescribes the "Deductions to be made in computing Total income" and it has been divided in four parts as given below:- (a) "Part A" prescribes certain conditions for availing deductions specified in Chapter -VIA of the Act. (b) "Part B" lists out the "Deductions in respect of certain payments" (c) "Part C" lists out the "Deductions in respect of certain income". (d) "Part D" lists out "Other deductions". He submitted that the deductions relating to certain income is listed out only in Part C. Deduction u/s 80C of the Act is included in "Part B" and the deductions listed out in Part B are related to deductions in respect of certain payments made by an assessee during a year. He submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and perused the record. Admittedly the assessee did not maintain any books of account. Admittedly, the payments of LIC premiums were reflected in the books of account of M/s Veeriah Reddiar, the proprietary concern of the grand father of the assessee. The assessing officer has stated that the payments relating to LIC premiums were made M/s Veeriah Reddiar to M/s Seematti, Kottayam, where the assessee is working, meaning thereby that the grand father of the assessee has only provided the funds for making payment of LIC premiums. Hence, it cannot be said that the LIC premiums were paid directly by the grand father of the assessee. Accordingly, under these set of facts, it can be said that the assessee has availed loan from his grand father for making LIC premium payments. 10. Now the question that arises is whether the LIC premium amounts paid out of loan funds are eligible for deduction u/s 80C of the Act? The department heavily placed reliance on the decision of Hon'ble jurisdictional High Court in the case of Abraham George (referred supra). Admittedly, the said decision was rendered in the context of old provisions of sec. 80C which prescribed the condition that the eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee as the tax payable is determined with reference to the total income of an assessee. It would, therefore, logically follow that, when an exemption or relief is claimed under section 15(1) in respect of any sum it must be shown that the said sum bears the character and quality of being included in the total income of the assessee, with reference to which the tax is levied." In view of the specific provisions of sec.16(1)(a) and the language used in sec. 15(1) viz., "Tax shall not be payable", the Bombay High Court held that the absence of the words "out of income chargeable to tax" does not make any difference in implementing the provisions of sec. 15 of the Act. 12. The Hon'ble Jurisdictional High Court was interpreting the provisions of sec. 80C relating to the assessment year 1989-90 which contained the words "any sum paid in the previous year by the assessee out of his income chargeable to tax" . Thus the old provisions of sec. 80C of the Act clearly specified the condition that the payments listed out in that section should be paid out of income chargeable to tax. The Hon'ble Kerala High Court also referred to the decision rendered by the Hon'ble Orissa High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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