TMI Blog1983 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... wathi Ammal, prior to the commencement of the accounting period relevant to the assessment year 1967-68. The amount was kept in deposit with the assessee. The assessee had paid Rs. 14,158 for 1967-68, Rs. 13,090 for 1968-69 and Rs. 15,699 for 1969-70 towards interest. Out of the above interest amounts, Rs. 2,628 for 1967-68, Rs. 2,329 for 1968-69 and Rs. 4,169 for 1969-70 formed interest on interest on Rs. 1l,530 for 1967-68, Rs. 10,761 for 1968-69 and Rs. 11,530 for 1969-70 respectively. The ITO included the interest amounts on the gifted amounts of Rs. 1,02,000 excluding the interest on the interest in computing the total income of the assessee under s. 64(1)(iv) of the I.T. Act and levied income-tax. The assessee had paid life insurance premium of Rs. 1,410 in respect of the life insurance policy of his wife for the above three financial years from the interest amounts. He had also paid the life insurance premium in respect of the policies taken on his own life. The assessee claimed deduction of the above premia paid on his own life and on the life of his wife under s. 80C of the Act for all the three financial years. The ITO restricted the allowance of deduction only in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase not falling under clause (i) of this sub-section, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart." It is not disputed that the assessee had transferred by way of gift, Rs. 1,02,000 during the accounting year, which had earned interest for the relevant assessment year of 1967-68 and that, therefore, the interest income, excluding the interest on interest, was collectively included in computing the total income of the assessee. The inclusion of the wife's income under s. 64(1)(iv) has not been disputed. Section 80A(1) of the Act reads thus : " In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80VV. " Thus, s. 80A(1) contemplates the computation of the total income of an assessee for the purpose of levying income-tax after giving the deductions specified in s. 80C of the Act from his gross total income. The words used are " his gross total income " and " total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee from the income of the wife shall not be deducted for the purpose of s. 80C. The section has to be interpreted as it is without straining the language of the section to suit the interpretation of the Revenue. When two interpretations are possible, justice demands that the court should adopt a liberal interpretation and benevolent construction in favour of the assessee, as it is the assessee who will stand to lose and not the Revenue. Our above view gains support from the other provisions of the Act. Under section 2(7), the assessee has been defined in the following words: '" assessee " means a person by whom any tax or any other sum of money is payable under this Act, and includes (a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person or of the amount of refund due to him or to such other person. ' The above definition in s. 2(7) and the words, " of the income of any other person in respect of which he is assessable, " denote not only the liability of the assessee but als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come chargeable to tax ", used in s. 80C(2)(a), refers only to the exclusive income of the assessee, which does not appear to be the intention of Parliament, and not to the gross total income of the assessee as specifically spelt out by the Act. Our attention was drawn to a decision of the Kerala High Court in P. K. Yeshodamma v. CIT [1973] 87 ITR 54, wherein the question of law referred was : " Whether, on the facts and in the circumstances of the case, the assessee was entitled to the rebate contemplated under section 87(1)(a) of the Income-tax Act, 1961, in respect of the sum of Rs. 6,000 being the insurance premium on the policy of life of the assessee's husband paid not by the assessee but by the assessee's husband ? " It is true that the Kerala High Court has held, differing from the view of this court in V. D. M. RM. M. RM. Muthiah Chettiar v. CIT [1965] 55 ITR 147, that simply because the income of the husband was included in the income of the assessee, and if the husband had been assessed separately he would have become qualified to get rebate of the income-tax in respect of the insurance premia paid by him, it was not possible to interpret s. 87 in such a manner as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or arisen to the assessee or been received by or on behalf of the assessee shall be liable to be included in his total income, but this provision is subject to the other provisions of the Act and, therefore, if the income of any other person is declared by any provision of the Act to be includible in computing the total income of the assessee, such income would form part of the total income exigible to tax under s. 4 of the Act. It was further held that the total income of the assessee chargeable to tax would include the amounts representing the shares of the spouse and minor child in the profits of the firm and that, therefore, there can be no doubt that the assessee must disclose in the return submitted by him all amounts representing the shares of the spouse and minor child in the profits of the firm in which he is a partner, since they form part of his total income chargeable to tax. The above decisions were rendered in construing the effect of ss. 139(1) and 271(l)(c) of the Act. Of course, we are not concerned with the application of ss. 139(1) and 271(l)(c) in this proceeding and we are concerned only with the effect of s. 80C read with ss. 64(1), 2(45), 4 and 5 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting limit of one-sixth of income subject to ceiling of Rs. 6,000 is being raised to one-fifth of income with a ceiling of Rs. 8,000. Corresponding increases are being made for Hindu undivided families. This concession is designed to provide an incentive to savings and will cost the exchequer Rs. 25 lakhs." Before the I.T. Act of 1961, the relief was granted in the form of rebate and now under s. 80C, the relief is being granted in the form of a deduction from the total income. Thus, the intention of Parliament was two-fold, namely, one, an incentive to savings at the cost of the exchequer and two, to increase the benefit of deduction in favour of the assessee. Under these circumstances, it will be unfair to adopt a stringent and unfavourable construction of the provisions of the Act, which do not ex facie support such construction. Whatever it is, we have found from Chapter VI-A and especially from s. 80B, that the definition of " total income " specifically includes all the sources of income computed under the provisions of the Act. Therefore, the view taken by the Tribunal is quite correct and the contention of the Revenue has to be rejected. What has been granted by the spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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