Tax tribunal rules accrued interest on NSC not tax-exempt, notification needed. Assessee denied relief for non-residential building.

The tribunal held that the accrued interest on National Savings Certificates (V Issue) was not exempt from income tax, requiring a government notification for exemption. Additionally, the assessee was not entitled to relief under section 23(1)(c) for constructing non-residential buildings. The appeals were dismissed based on these findings.

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Issues:
1. Whether the accrued interest on National Savings Certificates (V Issue) held by the assessee is exempt from income tax under section 10(15)(ii) of the IT Act.
2. Whether the assessee is entitled to relief under section 23(1)(c) for the construction of new buildings.

Detailed Analysis:
1. The judgment dealt with three appeals involving an individual and Hindu Undivided Family (HUF) assessee. The common issue in all appeals was the exemption of accrued interest on National Savings Certificates (V Issue) under section 10(15)(ii) of the IT Act. The contention was that no government notification was required for exemption, but the tribunal disagreed. It held that all categories of investments, whether enumerated or not, require notification for interest exemption. The tribunal referred to the National Savings Certificates (V Issue) Rules, 1973, which clearly stated that interest on these certificates is liable to tax. Therefore, the assessee could not claim exemption, and the section 154 order was justified, along with disallowances in individual and HUF assessments.

2. In one of the appeals, the assessee claimed relief under section 23(1)(c) for constructing new buildings. The Income Tax Officer (ITO) denied the relief, stating that only repairs were done, not new construction. The tribunal found that although new buildings were constructed, they were non-residential properties, not residential houses as required by the section. As a result, the relief was correctly denied by the lower authorities. Consequently, the appeal related to this issue was dismissed.

In conclusion, the tribunal held that the accrued interest on National Savings Certificates (V Issue) was not exempt from income tax, requiring a government notification for exemption. Additionally, the assessee was not entitled to relief under section 23(1)(c) for constructing non-residential buildings. The appeals were dismissed based on these findings.

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