1988 (1) TMI 74

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....ing incomes from salary. On 28th March, 1984 relevant for the asst. yr. 1984-85, the assessee received a sum of Rs. 31,320 from the Life Insurance Corporation as maturity value of a Life Insurance Policy. He stated that he invested a sum of Rs. 27,000 out of the above amount in purchasing National Savings Certificates in September, 1984 relevant for the asst. yr. 1985-86 which is under consideration. The assessee's claim for relief under s. 80C of the IT Act, 1961 was rejected by the ITO on the ground that the investment in National Savings Certificates was not paid out of the assessee's income chargeable to tax in the previous year under consideration. He found that only a sum of Rs. 2,000 was utilised from salary income for the purchase o....

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....he AAC directed the ITO to allow relief under s. 80C of the Act even on the fund invested out of the maturity amount received from the LIC. 5. Shri S. Dasgupta, the learned representative for the Department, urged before us that the AAC erred in his decision. He referred to s. 80C(2)(e)(i) of the Act. This section clearly states that the sums which will qualify for relief should come out of the income chargeable to tax. Then, he referred to s. 80A which refers to 'total income' which is defined under s.2(45). This definition refers to the charging s. 5 of the Act which refers to a particular previous year whose income has to be computed at a time in respect of each assessment year. His point was that the maturity amount received from LIC....

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....claims such relief. Where the language of the statute is plain and clear it cannot be discarded on any pretext vide the decision of the Supreme Court in the case of CIT vs. Sundaram Iyenger (1976) CTR (SC) 25: (1975) 101 ITR 764 (SC). Again, it has been held by the Supreme Court in the case of Madurai District Central Cooperative Bank Ltd. vs. ITO (1975) CTR (SC) 220 : (1975) 101 ITR 24 (SC) that mere harshness of a taxing statute cannot invalidate it. The rule that an interpretation favourable to the assessee should be adopted is applicable only when two reasonable interpretations are possible and not when only one interpretation is reasonably possible vide decision in CED vs. Alladi Kupouswamy (1977) CTR (SC) 297 : (1977) 108 ITR 439 (SC)....