Supreme Court Of India
CIT vs. Chotatingrai Tea & Ors. Etc.
Section 35CCA
Ms. Ruma Pal & B.N. Srikrishna, JJ.
Civil Appeal Nos. 2365 to 2367 of 2000
29th October, 2002
Counsel Appeared
S. Rajjappa, K.C. Kaushik & Ms. Sushma Suri, for the Appellant : Sunil Kumar Jain, for the Respondents
ORDER
By the court :
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 back to the AO for the purpose of determining whether the assessees who had, admittedly, fulfilled the conditions for claiming deduction under s. 35CCA of the IT Act (for short ‘the Act’) could subsequently become disentitled to said deduction by reason of subsequent events.
2. Sec. 35AAC 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 ruraldevelopment, to be used for carrying out any programme of rural development approved by the prescribed authority; or (b) xxxxxxxx (c) xxxxxxxx (d) xxxxxxxx the assessee shall subject to the provisions of sub-s. (2), be allowed a deduction of the amount of such expenditure incurred during the previous year (2) The deduction under cl. (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 cl. (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-s. (2) or sub-s. (2A) shall be issued by any association or institution unless such association or institution has obtained from the prescribed authority authorisation in writing to issue certificates 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-s. (1) of s. 35CC.”
It is not in dispute that the assessee 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. 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 s. 35CCA of the Act for grant of deduction thereunder. The Tribunal also found that the assessee’s position could not be affected any subsequent withdrawal of the certificate granted by the prescribed authority under s. 35CCA but found that there was no evidence in support of the Revenue’s case that the assessee had received back the amount donated by them to the society. However, the matter wasremanded back to the AO 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 s. 256(2) of the Act : “(1) Whether, on the facts and in the circumstances of the case, the Tribunal having held that the assessee have fulfilled all conditions laid down in section of the IT Act, 1961, r/w r. 6AAA of the IT Rules 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 at the other, that Tribunal was justified in law in restoring the matter to the AO on the reasons to the AO 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 dates specified in the section and on this basis only restoring the matter to the AO ?”
The High Court followed the reasoning of the Calcutta High Court in CIT vs. Bhartia Cutler Hammer Co. (1999) 152 CTR (Cal) 512 : (1998) 232 ITR 785 (Cal) and came to the conclusion that once it was found that the assessees had fulfilled all the conditions which had been laid down under s. 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 s. 35CCA of the Act. 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. 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 back 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. We, accordingly, dismiss the appeals without any order as to costs.
[Citation : 258 ITR 529]
