Keeping in view that the Income-tax Act, 1961 was amended by the Finance Act, 2005 permitting an individual to deposit to the maximum of Rs. 1,00,000/- in any of the specified schemes, the concerned authorities should take steps to amend clause 3 of the PPF Scheme in terms of section 80C of the Income-tax Act.
Decided By: HIGH COURT OF KARNATAKA , In The Case of : M. S. Padmarajaiah v. Secretary, Department of Finance, Govt of Karnataka, Case No.: W. P. No. 297 of 2006 (GM), Dated : September 1, 2008
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2. The brief facts leading to the filing of this writ petition are as under:
The petitioner who is a Senior Advocate of the Bar, holding a PPF Account No. 0154 (one of the specified Savings under section 80-C of Income-tax Act) with the 6th respondent. Section 80-C of the Income-tax Act was amended by the Finance Act, 2005 increasing the permissible deduction from Rs. 70,000/ to Rs. 1,00,000/- for the financial year 2005-06 (commencing from 1-4-2005 to 31-3-2006). During the financial year 2005-06 the petitioner had deposited a sum of Rs. 40,000/- in his PPF Account. Later on, he sent a cheque for Rs. 40,000/ – by way of second instalment towards PPF. But, the said 6th defendant refused to accept the second instalment of Rs. 40,000/- on the ground that the total deposit exceed Rs. 70,000/- in a year. Hence the petitioner sent another cheque for a sum of Rs. 1,00,000/- in his PPF A/c., as per Finance Act, 2005, but in vain. The reply received by the petitioner from the respondents 5th, 3rd and 2nd are at Annexures – K, L and M. respectively. IT is contended that the respondents 1 to 5 have no authority to reply as per the impugned communication contrary to the Income-tax Act. therefore, the petitioner is before this Court praying for the reliefs as mentioned above.
6. The first prayer of the petitioner is for quashing the communications dated 9-11-2005, 27-7-2005 and 15-11-2005 at Annexures-K, L and M. But those letters have issued in terms of the existing PPF Scheme. Therefore, there is no good ground for quashing those communications. Keeping in view that the Income Tax Act. 1961 was amended by the Finance Act of 2005 permitting an individual to deposit to the maximum of Rs. 1.00,000/-, in any of the specified schemes, the concerned authorities should have taken steps to amend paragraph 3 of the PPF Scheme 1968 as amended earlier by increasing the subscription limit from Rs. 20.000/- to Rs. 30.000/ w.e.f. 2-3-79: from Rs. 30.000/- to Rs. 40,000/-w.e.f- 16-3-83: from Rs. 40.000/- to Rs. 60,000/- w.e.f. 23-6-86; and from Rs. 60,000/- to Rs. 70.000/- w.e.f. 15-11 2002 as and when section 80 of the I. T. Act was amended. The authorities should have amended paragraph 3 of the PPF Scheme, 1968 as per the Finance Act. 2005. In the facts and circumstances of the case, it would meet the ends of justice to direct the respondent Nos. 3 and 4 to take steps to amend clause 3 of the PPF Scheme, 1968 in terms of Section 80C of the I. T. Act.