Delhi High Court
Cit vs V.P. Jain (Huf) on 23 January, 2003
Equivalent citations: 2003 130 TAXMAN 509 Delhi
ORDER
By the court
At the instance of the revenue, the Income Tax Appellate Tribunal, New Delhi, has referred, under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), the following question for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the partner is entitled to exemption under section 80L of the Income Tax Act in respect of interest earned by the firm on bank deposits, etc., held in its name ?"
Although the revenue has failed to file the paper books as well as the annexures to the statement of the case but keeping in view the fact that the issue involved in the case is purely legal, we dispense with the filing of the paper book and proceed to dispose of the reference.
Despite service, no one appears for the respondent-assessed. We have, accordingly, heard Ms. Prem Lata Bansal, learned senior standing counsel for the revenue.
2. The issue raised by the revenue in the reference is as to whether a partner is entitled to exemption under section 80L of the Act in respect of the interest, earned by the firm on certain deposits made by it with a bank.
2. The issue raised by the revenue in the reference is as to whether a partner is entitled to exemption under section 80L of the Act in respect of the interest, earned by the firm on certain deposits made by it with a bank.
3. There has been a divergence of opinion on the issue between various High Courts. The Allahabad and the Bombay High Courts have taken the view that in such a situation partners would be entitled to the exemption, whereas the Madhya Pradesh High Court has taken a contrary view. It is, however, submitted by learned counsel for the revenue that in view of the insertion of sub-section (3) in section 80L by the Taxation Laws (Amendment) Act, 1984 with retrospective effect from 1-4-1976, it is not necessary for us to examine the issue in the light of the opinion expressed by various courts. It is urged that in view of the said insertion, which has been made applicable with retrospective effect from 1-4-1976, deduction under section 80L cannot be allowed to the partners of a firm at least from assessment year 1976-77. It is asserted that since in the instant case, the assessment year involved is assessment year 1976-77, the respondent-assessed would not be entitled to deduction under the said section.
3. There has been a divergence of opinion on the issue between various High Courts. The Allahabad and the Bombay High Courts have taken the view that in such a situation partners would be entitled to the exemption, whereas the Madhya Pradesh High Court has taken a contrary view. It is, however, submitted by learned counsel for the revenue that in view of the insertion of sub-section (3) in section 80L by the Taxation Laws (Amendment) Act, 1984 with retrospective effect from 1-4-1976, it is not necessary for us to examine the issue in the light of the opinion expressed by various courts. It is urged that in view of the said insertion, which has been made applicable with retrospective effect from 1-4-1976, deduction under section 80L cannot be allowed to the partners of a firm at least from assessment year 1976-77. It is asserted that since in the instant case, the assessment year involved is assessment year 1976-77, the respondent-assessed would not be entitled to deduction under the said section.
Prima facie, we find substance in the contention of learned counsel for the revenue but having regard to the fact that the order of the Tribunal was passed on 26-2-1984, i.e., before the insertion of sub-section (3) by the Taxation Laws (Amendment) Act, 1984, the Tribunal had no occasion to consider the effect of the said amendment in the Statute.
Prima facie, we find substance in the contention of learned counsel for the revenue but having regard to the fact that the order of the Tribunal was passed on 26-2-1984, i.e., before the insertion of sub-section (3) by the Taxation Laws (Amendment) Act, 1984, the Tribunal had no occasion to consider the effect of the said amendment in the Statute.
Under the circumstances, we are of the view that it would be proper and expedient if the matter is remitted back to the Tribunal for reconsideration in the light of the aforenoted amendment. We order accordingly.
4. The reference stands disposed of in the above terms with no order as to costs.
4. The reference stands disposed of in the above terms with no order as to costs.
