ORDER
R.B. Krishna, Accountant Member
1. This appeal is preferred by the assessee directed against the order of the CIT (Appeals) dated 26-12-1989. The assessee is an individual and formerly Chief Justice of the Madras High Court. The assessment for the assessment year 1988-89 (previous year ended 31-3-1988) was completed under Section 143(3) on 8-12-1988. The assessee had claimed that, as he was an author of books, the ceiling for deduction under Section 80C in his case as provided for under Section 80C(4)(i) would be Rs. 60,000. The Assessing Officer, however, noted that against the gross total income disclosed by the assessee of Rs. 3,90,821 including income from salary, profession, honorarium, interest and dividends, royalty received on publication of books was only Rs. 6,614. The Assessing Officer, therefore, took the view that it had not been established on facts that the primary activity of the assessee was that of an author and restricted the ceiling for deduction under Section 80C to Rs. 40,000 only. The CIT (Appeals) also noted that the major income of the assessee was from the Madras Racing Undertaking and that receipts from royalty constituted a very small portion of the income of the assessee. He, therefore, upheld the ceiling of Rs. 40,000 fixed by the Assessing Officer with respect to the deduction under Section 80C.
2. Before us the learned counsel for the assessee submitted that the assessee is a well-known author and that his books have been published in Tamil and in English. He argued that Rule 11A of the Income-tax Rules, 1962 prior to its deletion, with effect from the assessment year 1984-85, had fixed the deduction available under Section 80C based upon the income derived from the profession of an author; but that effective from the assessment year 1984-85 Section 80C(4) had been directly amended to increase the ceiling limit in the case of an individual, being an author, playwright, artist, musician, actor or sportsman (including in athlete) to Rs. 60,000. He submitted that the income tag contained in Rule 11A had thus been “omitted effective from the assessment year 1984-85. He therefore argued that as the assessee was a recognised author, he would be entitled to get the benefit of the higher ceiling limit of Rs. 60,000. He relied upon the Supreme Court decision in CIT v. P. Doraiswamy Chetty [1990] 183 ITR 559 to support the proposition that subsequent amendments would serve as pointers to legislative intent.
3. The learned Departmental Representative on the contrary contended that although the assessee was a recognised author, the income derived from such profession was negligible compared to the total income of the assessee. He pointed out that the legislative intent was to make available the benefit of the higher ceiling limit only to those persons having substantial income from the recognised profession. He argued that in the case of the assessee the income from such profession was only Rs. 6,614 and that the increase in the ceiling for deduction under Section 80C from Rs. 40,000 could only be this additional sum of Rs. 6,614. He relied upon the comments made by the Supreme Court in the case of CIT v. J.H. Gotla [1985] 156 ITR 323 to the effect that taxing statutes would have to be interpreted in such a manner as to avoid an absurd result.
4. We have considered the rival submissions. It is a recognised fact that the assessee is a well-known author. As a matter of fact, in the order passed under Section 264 for the assessment years 1978-79,1980-81 and 1982-83, the Commissioner, as per his order dated 23-3-1984, noted that the assessee is an author of several erudite books in Tamil. A list of such publications has been made available to us on pages 7 and 9 of the Paper Book. We have, therefore, no hesitation in concluding that the assessee is an author.
5. Prior to the assessment year 1984-85, the provisions of Rule 11A of the Income-tax Rules, 1962 governed the deduction permissible under Section 80C. The ceiling that had been fixed in the case of an author was an amount equal to the aggregate of 40 per cent of the income derived from the profession as an author and 30 per cent of the balance of income. In other words, Rule HA linked the ceiling to the income derived from the profession of an author. However, this rule was deleted with effect from 1-4-1984 and the ceiling limits were directly fixed in Section 80C(4). Sub-clause (i) provided that in the case of an author such ceiling would be Rs. 60,000. No reference was made to the income derived by the assessee as an author. We also note that Sub-section (2) of Section 80C gives benefit with respect to any sums paid in the previous year by the assessee out of his income chargeable to tax. In other words, there is no provision for making the distinction between various types of income received by the assessee. The whole scheme of Section 80C is for giving a relief to the assessee with respect to sums paid out of the total income chargeable to tax. It follows therefore that no such dichotomy is possible even within the framework of Section 80C(4) of the Income-tax Act, 1961.
6. We find that there is no indication as to the reason for the deletion of Rule HA and the enactment of Section 80C(4) in the new format effective from the assessment year 1984-85. It follows that we would be called upon to interpret the intention of Legislature in a manner which avoids injustice or leads to an absurd result. [See the observations of the Supreme Court in J.H, Gotla’s case (supra)]. We note that Rule HA which contained a provision for linking the ceiling prescribed under Section 80C to the income derived by an individual assessee from his profession as an author has been advisedly deleted effective from the assessment year 1984-85. We also note that in the amended provisions of Section 80C(4)(i) there is no reference to income derived from the profession as an author. It follows that it was the legislative intent, when such amendment was made, to remove the income tag for determining the ceiling limit.
7. We have already found that the assessee is a recognised author. It follows that the provisions of Section 80C(4)(i) would squarely apply to the case of the assessee. We, therefore, direct the Assessing Officer to fix the ceiling limit for deduction under Section 80C at Rs. 60,000 in the case of the assessee and re-compute the allowable deduction under Section 80C as per law.
8. The assessee’s appeal is allowed.
