Commr. of Income Tax, Shillong Vs. M/s. Chotatingrai Tea & Ors. etc.
EmailAppeal: Civil Appeal nos. 2365-2367 of 2000
Petitioner: Commr. of Income Tax, Shillong
Respondent: M/s. Chotatingrai Tea & Ors. etc.
Apeal: Civil Appeal nos. 2365-2367 of 2000
Judges: RUMA PAL & B.N. SRIKRISHNA, JJ.
Date of Judgment: Oct 29, 2002
Head Note:
INCOME TAX
Income Tax Act, 1961
Section 35CCA – Deductions – Requisites – Donation made to society engaged in rural development – Society had approval – Subsequently approval withdrawn – No evidence of return of donation by assessee. Held that since the assessee had fulfilled all conditions as held by High Court, there is no case for interference. (Para 4)
Cases Reffered:
1. Commissioner of Income Tax v.
Bhartia Cutler Hammer Co. 232 I.T.R
785
Bhartia Cutler Hammer Co. 232 I.T.R
785
JUDGEMENT:
ORDER
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 sub-section shall not be allowed in respect of expenditure by way of payment of any sum to any 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.?”
4. The High Court followed the reasoning of the Calcutta High Court in Commissioner of Income Tax v. Bhartia Cutler Hammer Co.1 and came to the conclusion that once it was found that the assessees had fulfilled all the conditions which had been laid down under section 35CCA of the Act for claiming deduction of the amount donated by it, there was no obligation on the part of the assessee to see that the amount was utilised for the purpose for which it was donated. Furthermore, the deduction was allowed on the certificate furnished and it was not for the assessee to show whether the institution to which the money had been donated was carrying on the rural development work, as envisaged under section 35CCA of the Act.
5. In our view, the reasoning of the High Court while answering the question referred to it in favour of the assessee is sound and calls for no interference.
6. The final submission of the learned counsel appearing on behalf of the appellant is that the High Court’s final observation that the order of the tribunal remanding the matter for decision would stand quashed and that the assessees were entitled to claim deduction was beyond the jurisdiction of the High Court. The learned counsel for the appellant may be technically correct but what has been observed by the High Court was as a necessary corollary to the answer on the referred question which was merely spelt out by the High Court.
7. We, accordingly, dismiss, the appeals without any order as to costs.
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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 sub-section shall not be allowed in respect of expenditure by way of payment of any sum to any 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.?”
4. The High Court followed the reasoning of the Calcutta High Court in Commissioner of Income Tax v. Bhartia Cutler Hammer Co.1 and came to the conclusion that once it was found that the assessees had fulfilled all the conditions which had been laid down under section 35CCA of the Act for claiming deduction of the amount donated by it, there was no obligation on the part of the assessee to see that the amount was utilised for the purpose for which it was donated. Furthermore, the deduction was allowed on the certificate furnished and it was not for the assessee to show whether the institution to which the money had been donated was carrying on the rural development work, as envisaged under section 35CCA of the Act.
5. In our view, the reasoning of the High Court while answering the question referred to it in favour of the assessee is sound and calls for no interference.
6. The final submission of the learned counsel appearing on behalf of the appellant is that the High Court’s final observation that the order of the tribunal remanding the matter for decision would stand quashed and that the assessees were entitled to claim deduction was beyond the jurisdiction of the High Court. The learned counsel for the appellant may be technically correct but what has been observed by the High Court was as a necessary corollary to the answer on the referred question which was merely spelt out by the High Court.
7. We, accordingly, dismiss, the appeals without any order as to costs.
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