Law: Income Tax Act, 1961

Section: 80,80L

Income-tax---Special deduction---Interest on fixed deposits in Banks, interest on securities, dividends, etc.---Firm---Painter---Law applicable---Effect of insertion of subsection (3) of S.80L w.e.f. 1-4-1976---Fixed deposits held in bank by firm---Partner not entitled to special deduction on interest from such deposits under S.80L---Indian Income Tax Act, 1961, S.80L [as amended by Taxation Laws (Amendment) Act, 1984). Subsection (3) of section 80L of the Income Tax Act, 1961, lays down that where the income referred to in subsection (1) is derived from any asset held by; or on behalf of a firm, an association of persons or a body of individuals, no deduction shall be allowed under the said subsection in respect of such income in computing the total income of any partner of the firm or any member of the association or body: Held, that though the controversy in this reference had been decided by the Court .in CIT v. Gopalkrishna M. Singre (1995) 214 ITR 443 (Bom.) in favour of the assessee, the legal position had since been changed by the insertion of subsection (3) of section 80L by the Taxation Laws (Amendment) Act, 1984 with retrospective effect from April 1, 1976. Therefore, the assessee was not entitled to deduction for the assessment years 1976-77 and 1978-79, under section 80L in respect of the interest income on fixed deposits with banks included in the assessee's share of profit from the Firm J. C IT v. Gopalkrishna M. Singre (1995) 214 ITR 443 (Bom.) distinguished. CIT v. Brij Raman Das (1979) 118 ITR 397 (All.).ref. THIS JUDGMENT DELIVERED BY MRS. RANJANA DESAI, J.---By this reference under section 256(1) of the Income Tax Act, 1961, the Income-tax Appellate Tribunal has referred the following questions of law to this Court for opinion at the instance of the Revenue: "(1) Whether, on the facts and circumstances of the case and in law, the Tribunal was right in holding that the assessee was entitled to deduction under section 80L of the Income-tax Act in respect of the interest income on fixed deposits with batiks included in the assessee's share of profit derived by the assessee from the firm of V.M. Jog & Co., Pune? Whether, on the facts and…

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