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Issues involved:
The interpretation of section 80G of the Income-tax Act, 1961 regarding the application of limits prescribed under section 80G(4) in computing deductions for donations made by a limited company for the assessment year 1973-74. Summary: The High Court of Bombay addressed a reference under section 256(1) of the Income-tax Act, 1961, regarding the computation of deductions under section 80G for a limited company's donations. The issue revolved around whether the ceiling limit specified in section 80G(4) should be applied before or after calculating the deduction allowable under section 80G(1) for donations exceeding Rs. 2 lakhs. The Income-tax Officer contended that the ceiling applied to the amount of donations, while the assessee argued it applied to the deduction amount. The Commissioner (Appeals) and the Tribunal sided with the assessee, leading to the reference to the High Court. The court analyzed the provisions of section 80G, emphasizing that the deduction under section 80G(1) is subject to the limits set in section 80G(4) for donations exceeding ten percent of the gross total income or Rs. 2 lakhs, whichever is lower. It clarified that the ceiling in section 80G(4) applies to the aggregate of donations for which deduction is claimed, not the deduction amount itself. The court disagreed with the Andhra Pradesh High Court's interpretation and agreed with the Karnataka High Court's view on the matter. Regarding the principle of beneficial interpretation, the court explained that it applies when there is genuine doubt in interpreting a provision, not when the law is clear. The court cited previous cases to support this stance and concluded that the principle does not apply in cases where the statute's meaning is clear. The court also rejected the argument to construe section 80G liberally for the benefit of the assessee, stating that it is the Legislature's prerogative to determine the relief provided for charitable donations. In conclusion, the court answered the reference question in the negative, favoring the Revenue, and decided that the principle of beneficial interpretation did not apply in this case. No costs were awarded in the circumstances of the case.
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