1997 (12) TMI 91 - HC - Income Tax

Summary

Issues involved:
The deduction under section 35CCA of the Income Tax Act, 1961 for donations made to specific institutions for rural development.

Summary:

Issue 1: Deduction under section 35CCA of the IT Act
The assessee claimed deduction under section 35CCA of the IT Act for donations made to Jayashree Gram Vikash Trust and Jagannath Rural Development Kendra. The deductions were initially disallowed by the Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) (CIT(A)) on the grounds of the institutions not being traceable or not carrying out rural development work as required. However, the Tribunal disagreed with these findings, stating that it was not the assessee's obligation to monitor the institutions' activities. The High Court noted that the assessee had fulfilled the conditions for claiming the deduction under section 35CCA, as the payments were made to approved institutions and the necessary certificates were furnished.

Issue 2: Compliance with section 35CCA requirements
Section 35CCA of the IT Act allows deductions for donations made to institutions undertaking rural development programs, subject to certain conditions. The High Court emphasized that the assessee had met these conditions by making payments to approved institutions and providing the required certificates. Despite the lack of response from the institutions to IT notices, the Court held that the assessee could not be denied the deduction as long as the payments were made to approved entities, which was established in this case. The Court cited a previous judgment to support its decision.

Conclusion:
The High Court ruled in favor of the assessee, affirming that the deduction under section 35CCA of the IT Act was justified based on the compliance with the statutory requirements. The Court emphasized that the assessee had fulfilled all necessary conditions for claiming the deduction, and the lack of response from the institutions to IT notices did not invalidate the claim.