COMMISSIONER OF INCOME TAX SHILLONG Vs. CHOTATINGRAI TEA
SUPREME COURT OF INDIA (FROM: GAUHATI)
COMMISSIONER OF INCOME TAX,SHILLONG
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(1.)These appeals have been preferred from the decision of the Gauhati High Court in which the High Court has set aside the order passed by the Income Tax Appellate Tribunal, gauhati (for short 'the Tribunal') remanding the matter to the assessing officer for the purpose of determining whether the assessees who had, admittedly, fulfilled the conditions for claiming deduction under section 35cca of the Income Tax Act (for short 'the Act') could subsequently become disentitled to said deduction by reason of subsequent events. Section 35cca provides:
"35Cca (1) Where an assessee incurs any expenditure by way of payment of any sum- (a) to an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved by the prescribed authority; or (b) xxxxxxxxxxxxxx (c) xxxxxxxxxxxxxx (d) xxxxxxxxxxxxxx the assessee shall, subject to the provisions, of sub-section (2) , be allowed a deduction of the amount of such expenditure incurred during the previous year. (2) The deduction under clause (a) of sub-section shall not be allowed in respect of expenditure by way of payment of any sum to any association or institution referred to in the said clause unless the assessee furnishes a certificate from such association or institution to the effect that - (a) the programme of rural development had been approved by the prescribed authority before the 1st day of March, 1983; and (b) where such payment is made after the 28th day of February, 1983 such programme involves work by way of construction of any building or other structure (whether for use as a dispensary, school, training or welfare centre, workshop or for any other purpose) or the laying of any road or the construction or boring of a well or tube-well or the installation of any plant or machinery, and such work has commenced before the 1st day of March, 1983. (2a) The deduction under clause (b) of subsection shall not be allowed in respect of expenditure by way of payment of any sum to lany association or institution unless the assessee furnishes a certificate from such association or institution to the effect that - (a) the prescribed authority had approved the association or institution before the 1st day of march, 1983 and (b) the training of persons for implementing any programme of rural development had been started by the association or institution before the 1st day of March, 1983. (2b) No certificate of the nature referred to in sub-section (2) or sub-section (2 A) shall be issued by any association or institution unless such association or institution has obtained from the prescribed authority authorisation in writing to issue certificate of such nature. Explanation - For the purposes of this section "programme of rural development" shall have the meaning assigned to it in the explanation to sub-section (1) of section 35cca. "
(2.)It is not in dispute that the assessees had made donations to the society for integratal development, Calcutta which had as its object the undertaking to carry out approved programmes of rural development. The society had granted a certificate to the assessee which had also been approved by the prescribed authority.
(3.)According to the revenue authorities the assessees were not entitled to deduction as claimed despite the aforesaid because subsequently the approval granted by the prescribed authority was withdrawn with retrospective effect. It was also alleged that the assessees had received back the donation which had been made by them to the society. When the matter came up before the tribunal at the instance of the assessees, the tribunal found, as a matter of fact that the assessee had fulfilled all the conditions under section 35cca of the Act for grant of deduction thereunder. The tribunal also found that the assessees' position could not be affected by any subsequent withdrawal of the certificate granted by the prescribed authority under section 35cca but found that there was no evidence in support of the revenue's case that the assessees had received back the amount donated by them to the society. However, the matter was remanded to the assessing officer for fresh disposal for the purpose of determining whether the money had in fact been utilised for an approved programme. Pursuant to the directions of the high Court the following questions were referred under section 256 (2) of the Act. (1) Whether on the facts and in the circumstances of the case, the tribunal having held that the assessees have fulfilled all conditions laid down in section 35cca of the Income Tax act, 1961 read with rule 6aaa of the Income tax Rule for deduction of the amount donated to the approved society, which had not come back to the assessee soon after or later on in some form or the other, that tribunal was justified in law in restoring the matter to the assessing officer on the reasons and grounds given in the order passed on appeal (2) Whether on the facts and in the circumstances of the case, and in view of the findings of facts recorded by the tribunal on questions of facts arising for decision, the tribunal was justified in law in holding that the entitlement of the assessee for claiming deduction of the amount donated to the approved society would depend upon the utilisation of such fund by the approved society in the approved programme before the date specified in the section and on this basis only restore the matter to the assessing officer -
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