1987 (10) TMI 124 - AT - Income Tax

Tribunal clarifies deduction under section 80G must be based on gross, not net amount

The Tribunal upheld the decision of the Commissioner of Income tax (Appeals) regarding the interpretation of deduction under section 80G of the Income-tax ... Donations To Charitable Institutions, Deduction Issues: Interpretation of deduction under section 80G of the Income-tax Act, 1961.The judgment involves an appeal by the assessee against the order of the Commissioner of Income tax (Appeals) regarding the deduction admissible under section 80G of the Income-tax Act, 1961. The assessee, a domestic company, filed a return of income for the assessment year 1981-82, claiming a deduction under section 80G. The Income Tax Officer initially disallowed the deduction under section 80G, leading to the appeal. The crux of the issue was the interpretation of the phrase 'amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter' in relation to the calculation of the deduction under section 80G.The assessee contended that the gross total income should be reduced by the deduction under section 80M, and then 10 percent of the balance should be considered for the deduction under section 80G. The Commissioner of Income tax (Appeals) disagreed with this interpretation and recomputed the admissible deduction under section 80G based on his understanding of the relevant provisions. He held that the assessee was entitled to a deduction of Rs. 17,259 under section 80G of the IT Act, 1961. The appeal was then made to the Tribunal for further consideration.During the hearing, the assessee's counsel relied on legal references to support their interpretation, emphasizing the need to adopt a view favorable to the assessee in tax matters. On the other hand, the Departmental Representative supported the orders of the authorities, emphasizing the significance of the specific wording used in the statute to determine the deduction under section 80G. The Tribunal considered these arguments and analyzed the relevant provisions to arrive at a decision.The Tribunal analyzed the language of section 80G and related provisions, concluding that the phrase 'any amount' in section 80G referred to the gross or aggregate amount only. The Tribunal clarified that the restriction on the eligible deduction under section 80G was based on the gross amount, not the net amount, with specific reference to the factors specified in the statute. Therefore, the Tribunal upheld the decision of the Commissioner of Income tax (Appeals) in reworking the eligible amount for deduction under section 80G, leading to the dismissal of the appeal by the assessee.In summary, the judgment delves into the interpretation of the provisions of section 80G of the Income-tax Act, 1961, specifically focusing on the calculation and admissibility of deductions for the assessee. The Tribunal's analysis and decision provide clarity on the application of the relevant statutory provisions in determining the allowable deduction under section 80G, emphasizing the importance of understanding the specific language and intent of the law in tax matters.