Section 80 C : Questions and Answers

Q  Whether is is necessary that Investment under Section 80C of Income-tax Act, 1961  should be from the Income earned during the period?

Answer: Investment in National Savings Certificates, etc. for claiming deduction under section 80C need not be from income earned up to that period; it would be sufficient if total income of assessee for that year covers investment [Assessment year 1992-93] [In favour of assessee] [2009] 318 ITR 286 (ALL.) HIGH COURT OF ALLAHABAD Commissioner of Income-tax v. Pursottam Sa.

Q : Can the Assessee make the Investement u/s 80C from the Loan taken from others?

Section 80C of the Income-tax Act, 1961 - Deductions - Life insurance premia, contribution to provident fund, etc. - Assessment year 1985-86 - Assessee purchased National Savings Certificates and paid life insurance premia - Assessing authority denied relief under section 80C to assessee on ground that investment in National Savings Certificates and payment of life insurance premia was made out of loan taken from others and not out of assessee’s income chargeable to tax  whether  assessee was entitled to relief under section 80C, in respect of life insurance premia paid and National Savings Certificates purchased - Held, yes [2005] 146 TAXMAN 616 (ALL.) HIGH COURT OF ALLAHABAD Raj Kumar Dewan & Son v. Commissioner of Income-tax

Q : When the Amedement is made in the Income Tax Act to increase the Limit of Investement u/s 80 C can the concerned authorities like PPF etc can also be directed to Increase the Limit of Investment ?

Section 80C of the Income-tax Act, 1961 - Deductions - Life insurance premia, contribution to provident fund, etc. - Assessment year 2006-07 - Assessee, a senior advocate of Bar, was holding a PPF account (one of specified savings under section 80C) in a post office - Section 80C was amended by Finance Act, 2005 increasing permissible deduction from rupees seventy thousand to rupees one lakh for financial year 2005-06 - During said financial year assessee had deposited a sum of rupees forty thousand in his PPF account- Subsequently, he sent a cheque for rupees forty thousand by way of second instalment towards PPF - Post office refused to accept second instalment on ground that as per PPF (Second Amendment) Scheme, 2002 and Paragraph 3 (which came into force on 15-11-2002) an individual could subscribe to PPF account any amount not less than Rs. 500 and more than Rs. 70,000 in one financial year - Whether in view of fact that Act was amended by Finance Act, 2005 permitting an individual to deposit maximum of rupees one lakh in any of specified schemes, concerned authorities were to be directed to amend Paragraph 3 of PPF Scheme, 1968 in terms of section 80C and increase maximum limit of subscription to PPF account as per Finance Act, 2005 - Held, yes

[2009] 183 TAXMAN 209 (KAR.) HIGH COURT OF KARNATAKA M.S. Padmarajaiah

v. Secretary, Department of Finance, Government of Karnataka