1994 (12) TMI 65

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....ome-tax Act, 1961, this court directed the Tribunal to refer the following question of law for the opinion of the court : " Whether the Tribunal was justified in holding that the claim of deduction under section 80C was allowable though there was no direct nexus of the investment with the income chargeable to tax shown by the assessee during the year in question ?" The short facts necessary ....

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....with the conclusion of the Assessing Officer and came to the conclusion that the amount invested in the National Savings Certificates should have come from the income of the assessee and that it is not necessary that it should have come from the chargeable income of the previous year in which the relief was claimed and in view of the fact that the fixed deposit made earlier was out of the chargeab....

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....he Revenue, contended that an assessee who is an individual is entitled to claim deduction under section 80C of the Income-tax Act only if the sum in respect of which the deduction is claimed was from the income in the previous year by the assessee out of the income chargeable to tax and, therefore, there is a direct nexus between the amount paid and the income of the assessee from out of which th....

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.... claimed. If the same has been paid out of an income which is not chargeable in the previous year, then the deduction claimed cannot be allowed. The Tribunal was wholly in error in coming to the conclusion that there is no nexus between the investment made for the purpose of section 80C with the income earned by the assessee. In our considered opinion, until and unless it is established that the s....