( 1 ) THE Income Tax Appellate Tribunal, Ahmedabad Bench c has referred the following question of law under section 256 (1) of the Income Tax Act,1961 (hereinafter referred to as the Act ). "whether, the Appellate Tribunal is right in law in holding that the assessee is entitled to a deduction under section 80l of the Income Tax Act,1961 in respect of Rs. 2,000. 00 and Rs. 3,308. 00 received on its compulsory deposits for the asst. years 1982-83 and 1983-84 respectively, disregarding the provisions of Sec. 80ab of the I. T. Act,1961?"

( 2 ) THE assessment years involved are 1982-83 and 1983-84. The relevant previous years being S. Y. 2037 and S. Y. 2038 respectively. The assessee claimed deduction of interest of Rs. 3,007. 00 and Rs. 3,308. 00 respectively for both the years under section 80l of the Act as the said income was earned as interest from compulsory deposits. The Income Tax Officer disallowed the said claim and the assessee went in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the assessment orders and being aggrieved the assessee carried the matter in appeal before the Tribunal for both the years. The Tribunal for the reasons stated in its order dated 10/01/1986 upheld the claim of the assessee and allowed the appeals.

( 3 ) ON behalf of the revenue, Mr. B. B. Nayak along with Smt. M. M. Bhatt for Mr. Manish R. Bhatt appeared and contended that the Tribunal was in error in reading the provisions of section 80ab of the Act along with section 80l of the Act. It was contended that there was no positive income under the head "other Sources" and hence, there was no question of permitting any deduction under section 80l of the Act. It was submitted that provisions of section 80ab and section 80l of the Act are clearly unambiguous and after insertion of section 80ab of the Act only the net income which is included in the gross total income would be entitled to deduction under Chapter VI-A of the Act. Further contention was raised that for the purpose of ascertaining deductible amount u/s. 80l of the Act, it was not necessary for the Income Tax Officer to examine each and every item falling under the head "other Sources". If there was no positive income under the said head in light of specific provision under section 80ab of the Act, no deduction was permissible under section 80l of the Act.

( 4 ) THE scheme for computation of total income commences with section 14 in Chapter IV of the Act, wherein specific heads of income viz. a to f have been laidout. Thereafter, the Act has provided the nature of income specifically falling under each of the heads and the machinery for computing the said income under each of the heads. In so far as the heads specified under items "a" to "e" in section 14 of the Act, it is not necessary for us to deal with the same for the present controversy. Under item "f" "income from other sources" is to be computed. Section 56 of the Act provides the nature of income which is to be considered as falling under the said head and section 57 provides for deductions which are permissible for ascertaining the income specified under section 56 of the Act

( 5 ) SECTION 80ab falls in chapter VI-A and the said chapter deals with deduction to be made in computing the total income. Section 80ab provides for deduction to be made with regard to income included in the gross total income. It is stated in the said section that where any deduction is required to be made or allowed under any section falling within the said chapter under the heading c "deductions in respect of certain incomes" in respect of any income of the nature specified in that section where the income is included in the gross total income of the assessee then regardless of anything contained in that section, computation of deduction under that section has to be of the amount of income of the specified nature as computed in accordance with the provisions of the Act. It is further provi