Actual investment required for Section 80C deduction; seized cash retained by department cannot be treated as NSC investment.

Deduction under section 80C was unavailable because the seized cash remained in departmental custody and was not actually invested in National Savings Certificates during the relevant previous year. A mere request to the Department to make the purchase could not amount to actual payment or a deemed investment for deduction purposes, so the Tribunal's denial of relief was sustained. On those facts, no referable question of law arose under section 256(2), and the reference application failed.

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Issues: Whether the assessee was entitled to deduction under section 80C of the Income-tax Act, 1961 on the footing that seized cash should be deemed to have been invested in National Savings Certificates, and whether any question of law arose warranting reference under section 256(2).

Analysis: Deduction under section 80C is available only when the amount is actually paid in the previous year towards a specified investment. The seized cash remained in the custody of the Department under section 132 and was not in fact invested in National Savings Certificates. A mere request to the Department to make such purchase could not be treated as an actual investment or as a deemed investment for the purpose of the deduction. On that footing, the Tribunal's view that the assessee had no entitlement to relief was accepted, and the proposed questions did not give rise to any referable question of law.

Conclusion: The assessee was not entitled to deduction under section 80C on the facts found, and the reference application failed.

Ratio Decidendi: Deduction under section 80C requires actual payment or investment in the specified instrument during the relevant previous year, and seized money merely retained by the Department cannot be treated as such investment on the basis of a request to purchase the instrument.

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