1993 (6) TMI 13 - HC - Income Tax

Summary

Issues:
Interpretation of section 35(2A) of the Income-tax Act, 1961 regarding entitlement to weighted deduction for donations made to a university for scientific research projects approved after the donation date.

Analysis:
The case involved a question referred by the Income-tax Appellate Tribunal regarding the entitlement of the assessee to weighted deduction under section 35(2A) of the Income-tax Act, 1961 for donations made to a university for scientific research projects. The donations of Rs. 15 lakhs were given in the calendar year 1974, relevant to the assessment year 1975-76, before the approval of the research programs by the Department of Science and Technology, New Delhi, on December 9, 1975.

The relevant provisions under section 35 of the Income-tax Act were examined. Section 35(1)(ii) allows deduction of sums paid to a scientific research body approved by the prescribed authority. Section 35(2A) provides for additional deduction if the donation is made for a research program approved by the prescribed authority. Two conditions must be fulfilled for this additional benefit: the donation must be for scientific research and the program must be approved by the prescribed authority.

The University of Poona, to which the donations were made, was approved under section 35(1)(ii) since December 4, 1972. The research programs were approved by the prescribed authority on December 9, 1975, with retrospective effect. The resolution by the university confirmed that the donations would be used only for the approved schemes.

The court emphasized that the provision of section 35(2A) must be interpreted in light of its purpose, and any reasonable doubt should benefit the taxpayer. In this case, the approval dated December 9, 1975, was considered to have retrospective effect, justifying the assessee's entitlement to the additional benefit under section 35(2A).

Ultimately, the court answered the question in the affirmative and in favor of the assessee, allowing the weighted deduction under section 35(2A. No costs were awarded in the judgment.