Commissioner of Income Tax vs Saraswati Industrial Syndicate Ltd. (No. 2)

S.S. Sodhi, J.—The question of law referred here reads as under :

"Whether, on the facts and in the circumstances of the case, the amounts being the deductions admissible as donations u/s 80G of the Income Tax Act, 1961, for the assessment years 1970-71 and 1973-74 could not be considered as sums ''not includible'' in income for Income Tax assessments and, therefore, would not fall for deduction under Rule 4 for computing the capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?"

The answer to the question posed involves the interpretation and scope of Section 80G of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). This precise question of law came up for consideration before the High Court of Kerala in Commissioner of Income Tax Vs. Premier Cotton Spinning Mills Ltd., and COMMISSIONER OF Income Tax Vs. TRAVANCORE ELECTRO CHEMICAL INDUSTRIES LTD. (VICE VERSA)., where, on the basis of the interpretation of the provisions of the said Section 80G of the Act, it was held that the assessee was entitled to proportionate deductions. This view was accepted and adopted by our court in dealing with a similar reference in ITR Nos. 175 and 176 of 1979-- Commissioner of Income Tax Vs. Avery Cycle Industries (P.) Ltd. (No. 1), --decided on November 8, 1988.

Following the earlier decision of our court in Commissioner of Income Tax Vs. Avery Cycle Industries (P.) Ltd. (No. 1), the reference here is answered in the affirmative, against the Revenue and in favour of the assessee. There will, however, be no order as to costs.