1980 PLP (Trib (PTD)

M. KARIM (MEMBER):

In this appeal the appellant has raised objection against rebate allowed for investment made under section 15‑AA of the Income tax Act. The appellant's objection was that rebate was wrongly allowed in place of deduction of the amount invested from the total income.

2. The appellant is a registered firm which claimed investment allowance under section 15‑AA of the Income tax Act. The appellant's claim was that the amount should have been deducted from the total income of the firm instead of rebate allowed according to the rate of tax paid. In order to appreciate the appellant's claim it will be better if we reproduce here the relevant part of section 15‑AA of the Income tax Act:‑ "15‑AA. Exemption of investment to Government securities, etc.‑(1) Sub ject to the provisions of subsections (3) and (4) of section 15 and subsection (3) of this section the tax shall not be payable by an assessee, not being a company, on so much of his total income as is invested by him in the purchases of Post Office Savings Certificates, Unit Trust Certificates not being Bearer Certificates i9sued by the National Investment Unit Trust and such Government Securities (including Development Loans) and shares of such investment com panies as may be specified by the Central Board of Revenue in this behalf." We would also quote clause (a) of subsection (1) of section 16 of the Income -tax Act. "

16. Exemption and exclusions to determining the total income.‑(1) In computing the total income of an assessee‑ (a) any sums exempted under the first and third provisions to sub section (1) of section 7, the second and third provisos to section 8, sub‑section (2) of section 14, section 15, section 15‑A, section 15‑AA, section 15‑B, section 15‑C, section 15‑CC, section 15‑D and section ; shall be included." From the above it is clear that before arriving at the amount of tax which shall not be payable by an assessee on that part of his total income which was invested by him, all the amounts invested will have to be included in computing his total income. Therefore, it is not the relevant income‑tax section under which any claim on account of investment by any assessee is admissible for straight line deduction. The Act is silent on this point. As far as such investments are concerned we have to refer to the relevant Finance Act under which straight line deductions are made to arrive at the taxable income Part‑I of the First Schedule lays down rates of income‑tax which are applicable to the `taxable income'. The Schedule explains the term "Taxable Income and also lays down which allowances will diminish the total income of an assessee to arrive at the `taxable income'. As far as a registered firm; concerned, it pays no income‑tax and hence Part‑I of the First Schedule is applicable. Part II of the First schedule prescribes the rate of super tax payable by a company, a local authority and a registered firm. Clause (4) (c) of Part II says in the case of every registered firm where the total Income does not exceed Rs. 15,000 tax payable NIL. There is not mention of taxable income in Part II.

4. From the above it was clear that super‑tax was payable on the "total" income and not on the `taxable income'. The concept of `taxable income` foreign to a Registered Firm. Mr. G. M. Gangat, who appeared on behalf of the appellant vehemently argued that the words Tax shall not be payable' could only mean exclusion of the amount from the total income and for that he sought succour from subsection (3) of section 15‑D which is quote below:‑- "15‑D.‑--(3) As respect any assessment for the year beginning on the first day of July, 1969 or any earlier year, the amount by which the tax payable by an assessee is reduced on account of the exemption under this section shall be equal to the sum which bears the same proportion to the sum exempted from tax under this section as the tax payable ors the total income of the assessee bears to the said total income. In his opinion rebate was allowable only on sum paid by a person as dona tion to an institution approved under section 15‑B of the Income‑tax Act because no such language had been used for investments under section 15‑AA He however, forgot that the Finance Act had specifically used term "Total Income" and "Taxable Income" and had allowed straight line deductions for investments made under section 15‑AA but not for the investment made under section 15‑D until the assessment year 1973‑

74. It was by the Finance Act,1973, that section 15‑D (3) was deleted and a straight line deduction was allowed by it. In the case of a Registered Firm, as we have seen the concept of "taxable income" .is just not there and hence it has to be taxed on the Total Income. After the super‑tax on the firm has been calculated rebate for investment made under section 15‑D is allowable so that the Registered Firm has to pay super‑tax as diminished by the rebate allowed for investment under section 15‑AA of the Income‑tax Act. Even the amendment made in 1973 keeps intact the concepts of "total income. and "taxable income". The firm has to pay tax on the total income and rot on the taxable income. In this view of the mater we confirm the order of the Income‑tax Officer and dismiss the appeal. Appeal dismissed.