1993 (9) TMI 97 - HC - Income Tax

Summary

Issues:
Interpretation of section 80G(4) of the Income-tax Act, 1961 regarding deduction for donation under section 80G(1) with reference to gross total income as defined in section 80B(5).

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, where the question of law referred to the court was whether the assessee is entitled to a deduction for donation under section 80G(1) with reference to the gross total income as defined in section 80B(5). The dispute arose in the computation of the "gross total income" for determining the maximum amount permissible as deduction under section 80G(4). The assessee contended that the total income should be based on the total gross income as defined under section 80B(5), while the Income-tax Officer computed it after deducting the annuity deposit amount as provided in section 280-0 of the Act. The Tribunal ruled in favor of the assessee, directing the Income-tax Officer to recompute the deduction without reducing it by the annuity deposit amount, leading to the reference at the instance of the Revenue.

The Revenue argued that the computation of ten percent of gross total income should follow the provisions of section 80G(4) rather than the definition of "gross total income" under section 80B(5). They contended that amounts not deductible under section 80B(5) should still be considered for computing gross total income under section 80G(4). However, the court analyzed the provisions of section 80G(4) and section 80B(5) and concluded that for the purpose of section 80G(4), the "gross total income" defined in section 80B(5) should be reduced by specific conditions, excluding deductions under section 280-0. The court emphasized that "gross total income" for section 80G(4) should be computed without deductions under section 280-0, which is part of a different chapter. Since the annuity deposit was allowed as a deduction under section 280-0 and not Chapter VI-A, the Tribunal's decision to allow the deduction without reducing it by the annuity deposit amount was upheld.

In conclusion, the court answered the referred question in favor of the assessee and against the Revenue, affirming that the deduction for donations under section 80G(4) should be allowed with reference to ten percent of the gross total income without considering the amount of annuity deposit. No costs were awarded in the judgment.