TaxTMI 
TaxTMI 
2000 (6) TMI 23
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....e out of the income chargeable to tax in the previous year ?" The issue raised in this case is with regard to the allowance of deduction under section 80C of the Act. An amount of Rs. 25,000 has been allowed to be deducted by the Appellate Tribunal. The assessing authority as well as the appellate authority refused to deduct the amount of Rs. 25,000 under section 80C of the Act on the ground that the purchase was not made out of the income earned during the previous year. When the assessee was asked to explain the source for an amount of Rs. 80,000 as cash balance as on March 31, 1984, as per the wealth statement filed and to file a cash flow statement his explanation was as follows: "Cash on hand of Rs. 80,000 as on March 31, 1984, stand....
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....f the savings of the income in the preceding year to get exemption under section 80C of the Act is not correct. Learned counsel submitted that section 80C itself says that the payment should be made out of the income chargeable to tax, then only the exemption will be obtained. Learned counsel brought to our notice a Division Bench decision of this court in CIT v. Abraham George [2000] 242 ITR 171. Arijit Pasayat C.J., speaking for the Bench, observed as follows : "The clear language used in the provision is 'any sums paid in the previous year by the assessee out of his income chargeable to tax'. Obviously, the deduction in terms of section 80C can be granted if the payment is made out of his 'income chargeable to tax'." Their Lordships ....