Section 10 - Insertion of New Section 35CC - Finance (No. 2) Act, 1977

10. Insertion of New Section 35CC In the Income-tax Act, after section 35C, the following section shall be inserted w.e.f. the 1st day of September, 1977, namely :- 35CC. Rural Development Allowance. - (1) Where the assessee, being a company or a co-operative society, incurs any expenditure on any programme of rural development, the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount of such expenditure incurred during the previous year : Provided that the approval of the prescribed authority has been obtained by the assessee in respect of such programme before incurring the expenditure. Explanation : For the purposes of this sub-section, - (a) programme of rural development includes any programme for promoting the social and economic welfare of, or the uplift of, the public in any rural area; (b) rural area means any other than - (i) an area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (ii) an area within such distance, not being more than fifteen kilometers, from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the stage of development of such area (including the extent of, and scope for, urbanization of such area) and other relevant considerations, specify in this behalf by notification in the Official Gazette. (2) Where the expenditure referred to in sub-section (1) results in the acquisition or creation of an asset, being building, machinery, plant or furniture, and the assessee does not divest itself of the ownership of such asset before the end of the previous year, no deduction in respect of such expenditure shall be allowed under sub-section (1) but the assessee shall be entitled to the allowance for depreciation in respect of the asset so acquired or created as if such assets was used for the purposes of the business and the provisions of sections 32, 34, 41 and 43 shall, so far as may be, apply accordingly. (3) No deduction shall be allowed in respect of the expenditure referred to in sub-section (1) unless the assessee furnishes, along with the return of income for the assessment year for which the deduction is claimed, a statement of such expenditure in the prescribed from duly signed and verified by an accountant as defined in the Explanation below sub-section (2) of section 288 and setting forth such particulars as may be prescribed. (4) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year.