Decided on October 27,1983



B.K.MEHTA - (1.) A short but interesting question which arises in this petition is as to what is the scope and ambit of sec. 35CCA of the Income-tax Act 1961 and particularly sub-sec. (2)(b) thereof as amen ded by the Finance Act 1983 with effect from 1/04/1983 The question arises in the following context.
(2.) The petitioner is a public charitable trust constituted under the deed of trust dated 23/11/1972 having several public charitable objects. It is registered under the Bombay Public Trusts Act 1950 and is also granted recognition under sec. 80-G of the Income-tax Act 1961 (hereafter referred to as the Act) by the Income-tax Depart ment from time to time. 1t appears that the petitioner had decided to set up a well-equipped Hospital of 100 beds an a phased manner at an estimated cost exceeding Rs. 1 crore for the general public in rural area at village Utaraj within Hansot Taluka of Broach District. It should be recalled that by the Finance Act 1978 sec. 35CCA was enacted and put on the statute book with effect from 1/06/1978 Broadly stated the scheme of sec. 35CCA before its amendment and inserted by the aforesaid Finance Act 1978 was that an assessee was entitled to claim for the purpose of computation of his income or profit of business as the case may be deduction of expenses incurred on account of donation to any institution or association which has as its object the undertaking of any programme of rural development provided both the programme and the association or institution were approved. Accordingly the petitioner trust had by its application dated 1/03/1980 sought approval of its project of establishing 100 beds Rural Hospital in village Utaraj. The Commissioner of Income -tax Gujarat-I had granted approval to the petitioner trust as well as its programme. This approval was effective for the commencing from 7/03/1980 to 31/03/1981 The petitioner therefore again applied for the renewal of approval by its application dated 20/01/1981 which approval was also granted to the petitioner trust as well as its aforesaid programme by the Commissioner of Income-tax Gujarat Circle I Ahmedabad by his letter dated 20/03/1981 This approval was valid and effective upto 31/03/1983 Before the expiry of the said approval by the Finance Act 1983 sec. 35 as it then stood was repealed and an altogether new provision was substituted as sec. 35CCA with effect from 1/04/1983. Broadly stated the purpose underlying the new sec. 35CCA was that there would not be any fresh approval for any rural development programme to be undertaken by any association or institution. However the legislature permitted the rural development programme which has commenced to be completed on certain conditions. One of the condi- tions which would enable the assessee to claim deduction of the expenses incurred by way of donation to such association or institution after 1/03/1983 is the production of a certificate issued by the association or institution as prescribed under new sec. 35CCA. How- ever it has been provided in the said section that it is only the authorised institution of association which Can issue the certificate. It is with that view of obtaining an authorisation that the petitioner trust applied to the Chief Commissioner of Income-tax Gujarat Circle vide its application dated 17/04/1983. It should be noted that before making the application for authorisation the petitioner trust had by its application dated 18/03/1983 applied for renewal of the approval to the trust as well as its programme as was hitherto done under old sec. 35CCA. It appears that the Commissioner made a reference to the Central Board of Direct Taxes for clarification as to whether approval can be renewed for an institution for the work already started before 1/03/1983 By the letter of 14/09/1983 the Commissioner of Income-tax Gujarat Circle I Ahmedabad intimated the petitioner trust that the Central Board of Direct Taxes has clarified that sec. 35CCA now does not envisage renewal any programme approved by the Prescribed Authority and hence no renewal of approval can he granted in the case of the petitioner trust. It is this communication of the Commissioner- which required the petitioner trust to move this Court for appropriate writ order or direction enjoining the respondents to renew the approval to the petitioners rural development project for a further period and grant authorisation to the petitioner tn issue certificates to the donors in this behalf. 3 Since the petitioner trust was expecting certain donations before the close of the Samvat Year the matter was taken up for urgent hearing; and Rule was issued and made returnable to-day. No reply has been filed on behalf of the respondents since this petition involved merely a question of interpretation of new sec. 35CCA.
(3.) We are of the opinion that this petition must be allowed obvi- ously for the following reasons.;

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