Law:

Section:

Section 80L of the income-tax act, 1961 - Deductions-Interest on certain securities and dividends, etc.-Assessee, a beneficiary under trust deed, received interest on government securities from bank after deduction of tax at source-Whether assessee entitled to deduction under section 80l Held, yes Section 199 of the Income-tax Act, 1961-Tax deducted at source-Credit for-Whether assessee entitled to credit for tax deducted at source-Held, on facts, yes Facts One P created a trust in respect of government securities of the face value of Rs. 1,00,000 and vested the same in a bank as a trustee. The trustee was to pay the net income of the trust fund to the settlor during his life time and, upon his death, to X and Y in equal shares. In the assessment year 1973-74, the assessee, accordingly, received interest from the bank after deduction of tax at source and claimed relief under sections 80L and 199. The ITO disallowed the claim, holding that the assessee was not the owner of the securities. However, the AAC and the Tribunal allowed this relief. On reference: Held 1. Section 80L only requires that the gross total income should include income by way of interest on the specified securities. The fact that the assessee received interest as beneficiary under the trust deed and not as the owner of those securities is irrelevant for granting relief under section 80L. 2. The trust deed compelled the bank to pay to the assessee the interest accruing on the securities entailing statutory deduction of tax and its payment to the Central Government. Thus, the entire interest so accruing could be treated as the assessee's income for the purpose of section 199. Since tax had been deducted and paid, the assessee was entitled to get credit thereof. Judgment C.S.P. Singh J.-The Income-tax Appellate Tribunal, 'A' Bench, Allahabad, has referred the following question for the opinion of the court. "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the Appellate Assistant Commissioner's order allowing relief to the assessee under sections 80L and 199 of the Income-tax Act, 1961 ?" Sri Pyare Lal Banerjee, an eminent advocate of this court,…

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