Commissioner of Income Tax vs D.H. Joshi

Syed Shah Mohammed Quadri, J.—This is an application by the Revenue u/s 256(2) of the Income Tax Act, 1961. The assessee is a partner in two firms. From out of his income from the firms, he claimed deduction of a sum of Rs. 50,000. That claim was upheld by the Income Tax Officer. However, u/s 263 of the Income Tax Act, the Commissioner of Income Tax directed the Income Tax Officer to delete the deductions and assess the said amount. On appeal by the assessee, the Income Tax Appellate Tribunal set aside the order of the Commissioner and restored that of the Income Tax Officer. Thereafter, the Revenue sought reference of the following question of law to this court u/s 256(1) of the Income Tax Act :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled to deduction u/s 35CCA in respect of payments made from income derived out of share income from the firms ?"

The Tribunal has held that no referable question of law arises. Hence, this application u/s 256(2) has been preferred by the Commissioner.

Shri S. R. Ashok, learned counsel for the Revenue, submits that as the assessee was not himself carrying on any profession, the deduction u/s 35CCA is not available to him. This contention has been met by the Tribunal holding that the word "assessee" defined in section 2(7) of the Income Tax Act means a person by whom any tax or any other sum of money is payable and that by no stretch of imagination it could be contended that the partner of a firm did not fulfil this condition to be deprived of the statutory benefit u/s 35CCA. We do not find any illegality in the approach of the Tribunal. On the facts found by the Tribunal and on consideration of section 35CCA and section 67, we are of the view that the Tribunal was correct. In this view, no referable question of law arises. The Income Tax case is, accordingly, dismissed.