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In First Income-tax Officer vs. Sadanand A. Shetty (1ITD122) the issue was what is the amount to be included under section 64. The assessee had claimed that deduction should be allowed in respect of the contribution made to the provident fund by the assessee’s wife from her salary income as well as the insurance premium paid by her on the policy taken by her under section 80C of the Act and only the balance was to be included. Also in the case of the minor children, the claim was that the provisions of section 80L of the Act would be applicable and to the extent of income assessable, relief ought to be allowed. The ITO negatived both these contentions.

In other words the assessee claimed separate allowance of deductions u/s 80C & 80L. The Bombay bench of the ITAT however held that on a plain reading of the section, there is no case for allowing any deduction under section 80C at the stage of computing the gross total income. It held that the income includible under section 64 is part of the gross total income. The assessee would be entitled to a deduction under section 80C in respect of such payments within the limits prescribed in the section as applicable to the assessee’s gross total income. For the same reason, the assessee would be entitled to deduction under section 80L within the limits prescribed therein.

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