Law:

Section:

Section 35CCA of the Income-tax Act, 1961 - Rural development programmes - Assessment year 1983-84 - Whether it is impermissible to withdraw deduction allowed to assessee for which he is entitled under valid certificate issued by society which was approved by department on date of payment to that society, notwithstanding fact that said approval was withdrawn with retrospective effect - Held, yes - Whether even though department has power of withdrawal, such withdrawal can be only with prospective effect - Held, yes FACTS The assessee had donated an amount to a society to which approval under section 35CCA had been given. The assessee's claim for deduction under section 35CCA was originally allowed by the Assessing Officer. There-after, the Commissioner noticed that the approval given to the society in question had been withdrawn with retrospective effect, i.e., from a date before the period relevant to the assessment year under consideration. The Commissioner, therefore, passed an order under section 263 directing the Assessing Officer to disallow the assessee's claim. The assessee appealed to the Tribunal claiming that the approval to the concerned society was valid and in existence when the assessment order was passed. The Tribunal allowed the assessee's appeal. On reference : HELD When the approval of exemption to the society had been withdrawn with retrospective effect, the order of the Assessing Officer could not be said to be erroneous or prejudicial to the interests of the revenue. When the assessee had paid donation to the society it held valid approval under section 35CCA and that had not been withdrawn not only in the accounting year but till the assessment was made. That approval to the society withdrawn though with retrospective effect, the benefit under section 35CCA could not be denied. Once the approval is given to the society under section 35CCA and the assessee has paid the amount/donation to that society, he cannot be denied the deduction for which he is entitled under the valid certificate issued by society which was approved by the department on the date of payment to that society. Assuming that by mistake the approval has been given to the…

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