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Commissioner of Income-tax Vs. Smt. Shakuntala Banerjee - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 1371 of 1976
Judge
Reported in[1979]120ITR837(All)
ActsIncome Tax Act, 1961 - Sections 80L and 199
AppellantCommissioner of Income-tax
RespondentSmt. Shakuntala Banerjee
Appellant AdvocateAshok Gupta, Adv.
Respondent AdvocateRaghubir Saran Agarwal, Adv.
Excerpt:
- .....on these securities deduction of tax is made and paid to the central govt. as the entire interest amount had to be given to the assessee, the interest accruing in the circumstances could be treated as income of the assessee for purposes of section 199. inasmuch as tax had been deducted and paid, the assessee was entitled to credit for the tax so deducted.5. we, accordingly, answer the question in the affirmative, in favour of the assessee and against the department. the assessee is entitled to costs which are assessed at rs. 200. counsel's fee is assessed at the same figure.
Judgment:

C.S.P. Singh, J.

1. The Income-tax Appellate Tribunal, ' A ' Bench, Allahabad, has referred the following question for the opinion of the court.

' Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the Appellate Assistant Commissioner's order allowing relief to the assessee under Sections 80L and 199 of the Income-tax Act, 1961 '

2. Sri Pyare Lal Banerjee, an eminent advocate of this court, had created a trust, vesting Government securities of the face value of Rs. 10,00,000 in the Imperial Bank of India, Calcutta as trustee, and directing, inter alia, that the trustee, that is the Imperial Baak of India, should pay the net income of the trust fund to the settlor during his lifetime and upon his death to Sonab Banerjee and Smt. Shakuntala Banerjee in equal shares. The reference related to the assessment year 1973-74. In pursuance of the trust deed Smt. Shakuntala Banerjee received interest from the Bank. A claim for deduction of Rs. 3,000 was made under Section 80L and also for the deduction of the tax paid by the bank at source. The ITO did not agree with the assessee's contention on the view that the assessee was not the owner of the securities from which she received interest income. On an appeal filed by the assessee the deductions claimed were allowed. The department then took up the matter before the Tribunal. The Tribunal held that the mere fact that the assessee was not the owner of the securities was not sufficient to deprive her of the benefits of Sections 80L and 199, for none of these sections requires that before relief could be given under these sections the assessee should be the owner of the securities. The view taken by the Tribunal appears to be correct. The relevant part of Section 80L reads as under :

' 80L. (1) Where the gross total income of an assessee, being-

(a) an individual.........

includes any income by way of-

(i) interest on any security of the Central Government or a State Government......

there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction as specified hereunder, namely :--

(a) in a case where the amount of such income does not exceed in the aggregate three thousand rupees, the whole of such amount; and

(b) in any other case, three thousand rupees.'

3. Thus all that is required for the deduction under this provision is that the gross total income of an assessee should include income by way of interest on the securities of the type mentioned in Clause (i). This being so, the assessee was entitled to a deduction of Rs, 3,000 as claimed. The fact that the income was received by her as a beneficiary under the trust deed and not as the owner of those securities was irrelevant for purposes of granting relief under Section 80L. Coming now to the claim made for deduction of the tax paid at source, the matter is governed by Section 199 of the Act, the relevant part of which is as under :

'199. Credit for tax deducted.--Any deduction made in accordance with the provisions of Sections 192 to 194, Section 194A, Section 194B, Section 194C, 194D and Section 195 and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment (including a provisional assessment under Section 141A), if any, made for the immediately following assessment year under this Act.......'

4. This provision treats a deduction of tax at source as a payment of tax on behalf of the person from whose income the deduction was made. Under the trust deed the bank was bouad to pay the interest accruing on the securities to the assessee, who was the beneficiary. On the amount of interest accruing on these securities deduction of tax is made and paid to the Central Govt. As the entire interest amount had to be given to the assessee, the interest accruing in the circumstances could be treated as income of the assessee for purposes of Section 199. Inasmuch as tax had been deducted and paid, the assessee was entitled to credit for the tax so deducted.

5. We, accordingly, answer the question in the affirmative, in favour of the assessee and against the department. The assessee is entitled to costs which are assessed at Rs. 200. Counsel's fee is assessed at the same figure.


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