1999 (2) TMI 436

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....appeal of the assessee is directed against the order dated 27-2-1996 of CIT(A), Jabalpur, for the assessment year 1992-93. 2. The first ground of this appeal is against the order of the ld. CIT(A) confirming non-allowance of rebate under section 88 in respect of PPF payment amounting to Rs. 60,000 paid by the assessee on 4-4-1991. 3. On behalf of the assessee, Shri Gitesh Malhotra and Shri Heman....

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.... firm in which the assessee was a partner and the assessee did not derive any taxable income from that firm, even then it was held that assessee is entitled to deduction under section 80C of the I.T. Act. The CBDT vide Circular No. 3P dated 11-10-1965 at Para 34 has explained the meaning of the term "out of his income chargeable to tax" as follows :-- "The tax rebate under section 87 and also the....

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....on 87 or section 80A is not availed of in cases where it is clear that the payments cannot be attributed, directly or indirectly, to the assessee's income chargeable to tax, such as where an employee has withdrawn money from his provident fund account for the purpose of paying life insurance premiums or where the premiums in respect of the life insurance policy of the assessee have been paid ex gr....

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....er appeal. In our opinion, if the payment is made out of income chargeable to tax even in the earlier years in that event also the assessee is entitled to rebate under section 88. We, therefore, restore this issue back to the file of the AO with a direction to verify the source of payment and if the payment of PPF amounting to Rs. 60,000 was paid out of income chargeable to tax in the earlier year....