Calcutta High Court
The Commissioner Of Income Tax ... vs M/S. Bhartia Cutler Hammer Ltd., ... on 12 December, 1997
Equivalent citations: (1998)1CALLT306(HC), [1998]232ITR785(CAL)
ORDER
1. The following question of law has been referred for our opinion :--
"Whether, on the facts and in the Circumstances of the case, the Tribunal was Justified in allowing the deduction under section 35CCA of the Income-Tax Act for Rs.15,00,000/- in respect of donations of Rs.7,50,000/- each to M/s. Jayashree Gram Vikash Trust and M/s. Jagannath Rural Development Kendra?"
2. The facts are Indeed very short and simple. The assessee claimed deduction under section 35CCA of the Income-Tax Act in respect of two donations of Rs. 7,50,000/- each made by the assessee to two Institutions, namely Jayshree Gram Vlkash Trust and Jagannath Rural Development Kendra. The deductions under section 35CCA were disallowed by the ITO and the CIT(appeals) on the ground that either the aforesaid two Institutions were not traceable after notices were issued to them under section 131 of the Income Tax Act or that these two Instftutlons were actually not carrying out the rural development work as was envisaged under section 35CCA of the Act and for which approval had been granted by the prescribed authority to these two Institutions under that section. The Tribunal did not agree with the findings of the ITO and the CIT (Appeals) and instead held, while setting aside their orders that it was not part of the assessee's obligation to either keep track of the movement of the Institutions or to find out as to whether the rural development work was actually being carried out or not. We find ourselves in agreement with the view expressed by the Tribunal and for the reason indicated herein below.
3. Under section 35CCA of the Income-Tax Act, every assessee who Incurs any expenditure by way of any sum which he donates to an Association or Institution which has as Its object the undertaking of any programme of rural development and the donation is meant for being used for carrying out the aforesaid programme of rural development approved by the prescribed authority, an assessee is entitled to be allowed a deduction of the amount of such expenditure Incurred by him during the previous year. The only condition for claiming deduction is for the assessee to furnish a certificate from the association or the Institution to the effect that the prescribed authority had approved the association or the institution before the 1st March. 1983 and the training of persons for Implementing any programme of rural development had been started by the Association or Institution before 1st March, 1983.
4. As far as the facts are concerned, None has found that either the assessee did not make the payment to the aforesaid two Institutions or that the certificate as required under sub-section(2A) of section 35CCA of the Income Tax Act was not furnished by the assessee or that the two Institutions were not granted approval for the purpose mentioned in section 35CCA of the Act by the prescribed authority. The ground on which the deductions were disallowed were perhaps motivated because of the lack of response for these two Institutions after notices under section 131 of the Income Tax Act were Issued to them. It was found by the Income-Tax authorities that these two Institutions were not responding to these notices and therefore it was presumed that the Institutions were non-existent. Coupled with that was their inference that these Institutions were not actually Involved in the programme of rural development.
5. Even if we presume for the sake of argument that the Inferences drawn by the Income-tax authorities were correct, viz. that either these Institutions as on the date of issuance of the notice, were non-existent or that they had not been Involved in the rural development programmes, yet the assessee could not be disallowed the claim for deduction on either of these two grounds. The assesssee under section 35CCA of the Act is made entitled to the claim of deduction only on his establishing that he made the payment to the Institutions which had been approved for the purpose mentioned in section 35CCA of the Act and the approval has been granted by the prescribed authority. In our view, nothing more than that is required to be done by assessee. In the case that it has not been disputed by the Income tax authorities that these two institutions were actually approved by the prescribed authority. Similarly, the factum of the payment has also not been disputed. We are fortified by a single Bench Judgment of our court in the aforesaid view in the case of Pressman Advertising and Marketing Pvt. Ltd. v Commissioner of Income Tax & Anr. reported in 208 ITR page 68.
6. For the aforegoing reasons, therefore, we answer the question in the affirmative and against the Revenue.
7. Answered against Revenue.