2002 (10) TMI 3 - SC - Income Tax

High Court has set aside the order of 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 section 35CCA, could subsequently become disentitled to the said deduction by reason of subsequent events - order of HC was within in its jurisdiction and hence appeal of revenue against that order is dismissed

Summary

Issues:
Appeal against High Court decision on deduction under section 35CCA of the Income-tax Act.

Analysis:
The case involved appeals from the Gauhati High Court's decision regarding the deduction under section 35CCA of the Income-tax Act. The High Court had set aside the Tribunal's order and remanded the matter to the Assessing Officer to determine if the assessees could lose the deduction due to subsequent events. The assessees had fulfilled conditions for claiming the deduction, but the Revenue authorities argued they were not entitled to it as the approval was withdrawn retrospectively, and the donation was allegedly returned. The Tribunal found the assessees met all conditions for the deduction and that subsequent events did not affect their position. However, it remanded the matter to verify if the donation was utilized for an approved program.

The questions referred under section 256(2) of the Act were whether the Tribunal was justified in restoring the matter to the Assessing Officer and whether the entitlement for deduction depended on the utilization of funds by the approved society before the specified date. The High Court followed precedent and held that once the assessees fulfilled all conditions for claiming the deduction, they were not obligated to ensure the funds' utilization. The deduction was allowed based on the certificate provided, and it was not the assessees' responsibility to verify the institution's activities.

The Supreme Court upheld the High Court's decision, stating that the reasoning was sound and required no interference. Although the final observation by the High Court regarding the remand order's quashing and the assessees' entitlement to deduction may have been beyond its jurisdiction, it was a necessary consequence of the answer to the referred question. As a result, the appeals were dismissed without costs.