TMI Blog1987 (10) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the Tribunal was correct in disallowing deduction under section 80C of the Income-tax Act, 1961, on life insurance premia paid of Rs. 6,304 ? " It would suffice to make the brief reference to the facts of Income-tax Reference No. 72 of 1978. The status of the assessee is Hindu undivided family. Return of income for the assessment year 1973-74 pertaining to the accounting years ending March 31, 1972, and March 31, 1973, was furnished by the assessee. The business income shown therein is to the following effect : Business income : Rs . Rs. (i) Shares from the firm, M/s. Lal Oil Chemical Mills, Amritsar, as per books subject to rectification under section 154/l55 on completion of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of the deduction of Rs. 6,304 was dismissed by the Appellate Assistant Commissioner of Income-tax, Range " B ", Amritsar, vide order dated January 25, 1977 (annexure " B "). His appeal before the Tribunal also failed and was dismissed vide order dated March 16, 1978. It is not in dispute that the firm, M/s. Lal Woollen and Silk Mills, Amritsar, from which the assessee derived income of Rs. 56,483 mentioned at (ii) above with the year ending June 30, 1972, was converted into private limited company with effect from July 1, 1972. The company took over all the assets and liabilities of the said firm. The amount which stood to the credit of the assessee in its personal account maintained with the said firm also became the liability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given and section 80C(2) refers to the nature of, sums which would qualify for deduction provided in section 80C(1). Reading in this context, it is clear that there is a clear nexus between the income chargeable to tax and the amount of life insurance premia paid by an assessee and, in order to qualify for the relief provided in section 80C(1), the amount of life insurance premia must come out of the income chargeable to tax. The above view of the learned Tribunal is clearly misconceived. The income of the assessee as Hindu undivided family was the subject-matter of assessment. Its total income from the two firms mentioned above pertaining to the relevant accounting years was Rs. 1,07,488. The fact that the payment of life insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jiwandas v. CIT [1967] 63 ITR 627 (SC), is misplaced. In that case, the Revenue had disallowed the claim for deduction of life insurance premia on a strict interpretation of the contract of insurance. The final court held that the claim of the assessee was admissible. It was observed that the object of enacting section 15(1) of the Indian Income-tax Act, 1922, which corresponds to section 80C of the Act, is the encouragement of thrift and the section should hence be interpreted in such manner as not to nullify that object. The interpretation sought to be placed on the said provision by the Tribunal would in fact nullify its object and thus cannot be sustained. Consequently, we answer the above question in the negative, i.e., against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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