SHIV KUMAR BANG vs. COMMISSIONER OF INCOME TAX AND OTHERS

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ITA/28/2003HC ChhattisgarhCGHC01003745200318 June 2009Author: HON'BLE SHRI JUSTICE DHIRENDRA MISHRA,HON'BLE SHRI JUSTICE RANGNATH CHANDRAKAR4 pages
AI SummaryDismissed

What did the High Court hold?

On the first issue, the Tribunal held that to claim deduction under Section 88(1), sums paid or deposited as a contribution by an individual to any provident fund qualify for exemption. The sum of Rs. 8,235, being interest accrued on the PPF account, cannot be considered a contribution by the assessee to the provident fund. The Court agreed with this reasoning, stating that while interest accrued on PPF is not chargeable to tax, Section 88(8)(1) only stipulates that contribution to any fund shall not include sums in repayment of a loan, and this provision cannot be construed to mean that interest accruing on a PPF account is deductible from total income. On the second issue, the Tribunal had dealt with the argument in detail and held that although the AO accepted the returned income, the tax payable on the returned income was disputed by disallowing the claim under Section 88. Since the assessee failed to pay part of the advance tax under Section 208, the computation of interest under Section 234C was upheld. The Court agreed with the Tribunal's reasons for rejecting the grounds raised by the assessee.

What were the facts?

The assessee, Shri Shivkumar, filed his income tax return for Assessment Year 1996-97 on November 20, 1996, declaring a total income of Rs. 1,09,484. He claimed a rebate under Section 88 of the Income Tax Act, 1961, for a contribution to his PPF account of Rs. 30,000 and Rs. 8,235, which was interest accrued in the PPF account. The Assessing Officer (AO), in proceedings under Section 143(3), disallowed the rebate on the Rs. 8,235 interest. The AO also computed interest under Section 234C at Rs. 180, as opposed to the assessee's calculation of Rs. 108, after disallowing the rebate on the PPF interest. The assessee's appeals to the CIT(A) and the Income Tax Appellate Tribunal were dismissed.

What were the issues?

1. Whether the Tribunal was correct in law in treating the payment/deposit amounting to Rs. 8,235 in the PPF Account as not a contribution, ignoring the express provisions of Section 88(8)(i) of the IT Act, 1961, and thereby erred in not granting rebate on the said amount? The assessee argued that Section 88(8)(i) only excludes contributions towards a loan from the definition of 'contribution', implying that accrued interest should be deductible. The revenue supported the impugned order. 2. Whether the Tribunal was correct regarding the application of Section 234C, considering tax calculation on the basis of assessment framed under Section 143(3) instead of tax calculations made by the assessee on the basis of tax due on returned income? The assessee contended that the interest under Section 234C should be calculated on the tax due on returned income, not on the assessment order under Section 143(3). The revenue supported the impugned order.

Which sections of the Income-tax Act were involved?

Section 88,Section 88(8)(i),Section 143(3),Section 234C,Section 208

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF CHHATI'ISGARH AT BILASPUR DIVISION BENCH: HON. MR. DHIRENDRA MISHRA & HON. MRI R_N_ CHANDRAKAR J'.T w I.T.A. No.28 of 2003 (Appeal under Sec’rion 260A of Income Tax Acf, 1961) Appellant Shri Shivkumar‘ Vs Responden‘rs Commissioner of Income Tax, Raipur‘ ano’rher ORDER FOR CONSIDERATION Sd/- IL Dhirendra Mishra Juilge HON'BLE MR. JUSTICE R.N. CHANDRAKAR 3W PosT FOR ORDER ON 13-06—2009 Sd/— R-N- Chandrakar * Judge $062009 & DIVIsION BENCH: aw HON'BLE MR. DHIRENDRA MISHRA & HON'BLE MR. R.N. CHANDRAKAR, JJ’ I.T.A. No.28 of 2003 (Appeal under SecTion 260A of Income Tax Act, 1961) Present Mr. P.G. Dendr'e & Mr‘. N.K. Vya's, Advoca‘res for The appellant Mr. S. Rajeshwar‘ Rao, J’r‘. STanding Counsel for The respondents.

O R D E R (Passed on 13E lJune, 2009) Dhirendra Mishra, J':

1.

This appeal has been odmi’rfed for hearing on The following subs’ranfiol ques’rions of law-.- a. Whefher The Tribunal was correcf in law in Treafing paymen‘r/deposif amouni‘ing To Rs.8,235/— in P.P.F. Accoun’r was no‘r conTribuTion, ignoring The express provisions of Sec’rion 88 (8) (i) of The I.T. ACT, 1961 and Thereby erred in noT granTing rebaTe on The said amounT? b. WheTher The Tribunal was correcT as regards applicaTion of S. 234C considering Tax calculaTion on The basis of assessmenT framed U/s 143 (3) insTead of Tax calculaTions made by assessee on The basis of Tax due on reTurned income?"

2.

Briefly sTaTed, facTs of The case are ThaT The appellanT filed his income Tax reTurn in The'assessmenT year 1996—97 on 20.11.1996 declaring ToTaI income aT Rs.1,09,484/—. He had claimed rebaTe under SecTion 88 of The Income Tax AcT, 1961 (for shorT ‘The AcT') in respecT of The conTribuTion To P.P.F. aT Rs.30,000/- and also Rs.8 235/— which was inTeresT accrued ‘in The P.P.F. AccounT. The ‘ l l Appellanf Shri Shivkumar, S/o La’re Gopikishan Bang, C/o M/s Maheshwari Adver’rising Agency, Opp. Dadabadi, MG. Road, Raipur‘ (6.6.) Vs Respondenfs

1.

Commissioner of Income Tax, Roipur Range, New CenTral Revenue Building, Civil Lines, Raipur‘ (C.G.)

2.

Income Tax Officer, Ward 1 (2), New Cen’rr‘al Revenue Building, Civil Lines, Raipur (CG).

AA Assessing Officer (for shor’r ‘A.O.’) in a proceeding under Section 143 (3) of The Acf disaHowed The reba’re on inferesf of Rs.8,235/— credifed fo fhe PPF accoum‘. The assessee in his refurn had also compufed inferesf under Sec’rion 234C of The AcT on his ToTal income aT Rs.108/—. AfTer disollowing The rebaTe Towards inTeresT crediTed in The PPF occounT, The A.O. deTermined The inTeresT payable under SecTion 234C of The ACT aT Rs.180/—.

3.

Being aggrieved by The order of The A.O. The appellanT preferred an appeal before The CIT (A) and The same was dismissed. Thereaf’rer, The oppellonT preferred second appeal before The Income Tax AppellaTe Tribunal, Nagpur Bench, Camp aT Raipur (for shorT 'The Tribunal') and The same has also been dismissed by The impugned order.

4.

The appellanT has impugned The order of The Tribunal on The ground ThaT The Tribunal erred in TreaTing The amounT crediTed Towards inTeresT in his PPF accounT was noT a conTribuTion under SecTion 88 (v) ignoring express provision of SecTion 88 (8) (1) of The AcT. So far as The firsT subsTanTial quesTion of law is concerned, referring To SecTion 88 (8) (1) iT was argued ThaT conTribuTion Towards loan alone is excluded from The definiTion of conTribuTion To The fund. This clearly reveals ThaT The amounT which accrues as inTeresT To The PPF accounT is also deducTable from The ToTal income.

5.

On The oTher hand, learned counsel for The respondenTs has supporTed The impugned order.

6.

The Tribunal reproducing SecTion 88 (1) (Si (2) (v) of The AcT held ThaT To claim deducTion under SecTion 88 (1) The sums paid or deposiTed as a conTribuTion by an individual To any providenT fund alone qualifies for exempTion. The sum of Rs.8,235/— cannoT be said To be a conTribuTion by The assessee To The providenT fund.

7.

From bare reading of sub—secTion (1) <Si (2) (v) of SecTion 88 of The AcT, iT is manifesTly clear ThaT deducTion is permissible only for The conTribuTion To The providenT fund, seT up by The CenTral GovernmenT, .\. \w\here such conTribuTion is made by The assessee ouT of his income \_

Roshan/- chargeable ‘ro Tax. IT is no? in dispute Tha’r The inferes? accrued on The PPF accoum‘ is not chargeable ‘ro Tax. Sec‘rion 88 (8) (1) only sfipulates ThaT The confribufion To any fund shall no’r include any sums in repayment of Ioan. The above provision canno‘r be construed Tha’r The im‘eresf which accr'ues on PPF accounf and which is no’r chargeable To ’rax, is deducfable from The ToTal income. . Learned counsel for The appellanT vehemenTly argued ThaT all The Forums below have failed To deal properly as regards The provisions of SecTion 234C and TreaTed The Tax payable on The basis of assessmenT order under SecTion 143 (3) as Tax due on reTurned income and consequenTly raised The inTeresT figure ignoring The facT ThaT Tax payable on The reTurned income was only required To be considered for applicaTion of provisions of SecTion 234C of The AcT and noT Tax based on regular assessmenT under SecTion 143 (3) of The AcT. . The Tribunal has dealT wiTh The aforesaid argumenT in Para—8 of iTs order in deTail and has held ThaT The A.O. has accepTed The income reTurned by The assessee, however, Tax payable on The reTurnedi income has been dispuTed by disallowing The claim of The assessee under SecTion 88 of The AcT in respecT of The inTeresT crediTed in The PPF accounT: Since The. assessee failed To pay The parT of advance Tax under SecTion 208 of The AcT, Therefore, compuTaTion of inTeresT under SecTion 234C has been upheld. We are in agreemenT wiTh The reasons assigned by The Tribunal for rejecTing The grounds raised by The appellanT againsT The order of assessmenT by The A.O.

10.

In The resulT, we find no subsTance in This appeal, The same deserves 39/ i/ To be dismissed and accordingly, iT is hereby dismissed.

11.

No order as To cosTs. N“‘“A\%—’g e 7/ R.N. Chandrakar 'v Dhirendra Mishra : r Judge -i Judge \ _

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