2. The Assessing Officer in his order of assessment mentioned that the assessee contributed to the Society for Integral Development as permissible under Section 35CC A for Rs. 5,00,000 which was not allowed by the Assessing Officer on the basis that the approval accorded to the said Society was withdrawn retrospectively from 31-12-1982. The assessment year involved is 1985-86 and the assessee's accounting year ended on 30-6-1984. The assessment order was made on 30-3-1988. He also mentioned in the order that the State Level Committee as prescribed under Section 35CC A found that the Society has violated the conditions for not maintaining proper books of accounts, for not utilising money for approved programme for rural development and merely acting as an agency for supplying certificates under Section 35CCA(2) on commission and returning the balance to the alleged donors within a day or two of the clearing of the cheque received as donation. He also observed that by claiming such payments, the assessee had furnished inaccurate particulars of the income and has made wilful attempt to evade tax. He, accordingly, asked the assessee to reply to the query as to why such claim should not be disallowed in view of the withdrawal of the recognition accorded to the Society for Integral Development. He pointed out that the assessee in its reply did not meet the point regarding allowability of the donation. But had questioned the legality of withdrawal of recognition to the Society. He, therefore, concluded that the claim of the assessee cannot be allowed and the amount was added back.
3. The assessee took up the matter before the learned CIT( Appeals), who, on the same reasonings sustained the disallowance. He noted that the Assessing Officer by his letter dated 6-7-1989 informed the learned CIT( Appeals) that the certificate accorded under Section 35CCA issued by the Government has been cancelled with retrospective effect to the Society for Integral Development, Calcutta. That was the basis for the disallowance. Hence, this appeal by the assessee.
4. It is vehemently urged by the assessee's learned counsel that the authorities below were not justified in not allowing deduction as correctly prescribed by Section 35CC A in respect of the amount of donation given by the assessee to the said Society and that at any rate the same cannot be disallowed merely on the retrospective withdrawal of the recognition by the State Level Committee. It is argued also that even otherwise such withdrawal of the approval with retrospective effect was bad in law and was not valid as on the date of making of donation by the assessee, the approval was very much there is existence and the same should not have been disallowed on the basis of a latter development of the case. In course of his arguments, the assessee's learned counsel refers to the various papers in the paper book to show that it was on the strength of the approval of the Committee given under the above Section for the period from 31-12-1982 to 12-12-1985 that the assessee did give the donation to the Society and rightly and correctly claimed for deduction under the above Section. It is argued that the withdrawal of the recognition, if any, in respect of the said Society should not adversely affect the assessee as on the date of giving of the donation the approval was in existence. It is submitted that the said Society has obtained approval from the prescribed authority authorised in writing, vide letter dated 28-3-1984, to issue such certificate, as per letter of the said Society dated 30-6-1984 addressed to the assessee. Amongst other things, it is argued at length by the assessee's learned counsel that as far as the assessee is concerned, it has fulfilled the conditions to rightly claim the above amount as deduction under the above Section irrespective of the fact that the approval was withdrawn at a latter stage retrospectively. It is stated that the assessee has done his best and has fulfilled the condition to obtain the benefit sanctioned by law and for any default or shortcoming on the part of the said Society, the assessee should not be asked to be penalised. It is also submitted that, on the other hand, the State Level Committee has no jurisdiction at all to withdraw the approval, once the same was accorded by it earlier, as there is no such sanction or provision either in the Section itself or under Rule 6AAA of the Income-tax Rules. It is vehemently urged that when there is such jurisdiction for the State Level Committee to exercise powers of withdrawal, such withdrawal would have no legal consequences or would have no effect at all. Various cases in which rulings have been given, are cited before us in order to reinforce the submissions made on different aspects by the assessee's learned counsel. Amongst other'things, he refers to the decision of the Hon'ble Delhi High Court in the case of Chhabra Electric Stores v. Chief Commissioner [1972] 30 STC 85, copy of which has been placed in our file. The issue in the Delhi case was under the Sales-tax (Delhi) in which registration granted earlier to the dealer was cancelled and the question was whether such cancellation can be made retrospectively which would affect the person concerned. At page 87 of the said report, it was noted that at the time of the sales made in favour of Jai Hind Stores, the registration certificate of the concern was still subsisting and the dealer could not have any knowledge that the registration certificate of Jai Hind Stores would be cancelled with retrospective effect. It was held that the dealer cannot be deprived of the benefit of the deduction as contemplated by the Sales-tax Act. Further reference is placed on the decision of the Hon'ble Bombay High Court in the case of Suresh Trading Co. v. State of Maharashtra 48 STC 207, copy of which has been placed in our file, in which a similar situation has arisen. Amongst other things, it was pointed out in that Bombay decision that the Act did not contain any provision which would give such cancellation of registration a retrospective operation. It was noted that it is well settled that a tax or a liability could not be imposed without express words to that effect.
5. The assessee's learned counsel has also referred to the decision of the Hon'bie Supreme Court in the case of CIT v. Bazpur Co-operative Sugar Factory Ltd. [1988] 172 ITR 321 : 38 Taxman 195 in which on the facts of that case, the subsequent retrospective amendment of the bye-laws providing the amount to be adjusted towards shares was held to be invalid. Amongst other things, it was observed in that decision that the power of the Society to amend its bye-laws arises out of the provision of Rule 11 of the United Provinces Co-operative Societies Rules, 1936, but there was nothing expressly or impliedly in Rule 11 which would confer on the Society to amend its bye-laws with retrospective effect and in the absence of such power being conferred either expressly or by implication, it cannot be said that the Society had any power to amend the bye-laws with retrospective effect. It is, thus, stressed by the assessee's learned counsel that Rule 6AAA of the Income-tax Rules with which we are concerned did not give such power to the State Level Committee to withdraw approval given by it earlier to the Society for the purpose of Section 35CCA and there is no such provision to withdraw the approval with retrospective effect. It is, therefore, submitted that in the present facts of the case and having regard to the decisions relied on by the assessee, the authorities below erred in not giving the relief as contemplated by the said Section in the matter of computation of income taxable for the year It is urged, therefore, that the appeal by the assessee on this point may be allowed.
6. The learned Departmental Representative supports the order of the authorities below, highlighting the fact that although the approval was accorded earlier by the Society by the State Level Committee, the same has been validly withdrawn by the said prescribed authority and it is submitted that the Assessing Officer as well as the learned CIT( Appeals) have properly taken note of the same and have validly rejected the contentions of the assessee. It is submitted that the assessee in collaboration with the Society had shown certain payments as donation for obtaining deduction and at the same time the money was returned back to the assessee after some time. It is pointed out that the State Level Committee has withdrawn the approval with proper reasons and findings of fact which cannot be challenged at this stage and, in fact, such challenge cannot be raised in appeal before the Income-tax Appellate Tribunal as the issue could be solved in a different forum.
In short, it is urged that the orders of the authorities below being proper and valid under the circumstances of the case requires to be maintained.
7. We have given our consideration of the various submissions made by both the sides and we have gone through the orders of the authorities below as well as other papers placed before us for our perusal. It is seen that at the time of giving away the donation by the assessee to the said Society, the approval was there. In fact, it is the assessee's case that it acted genuinely on the basis of such approval as accorded to the Society by the State Level Committee and that is why the assessee paid the said amount as donation for such purposes as intended by the Statute. It is seen from the orders of the authorities below that subsequently the State Level Committee came to a different finding which compel it to withdraw the approval accorded to the Society earlier on which the assessee had acted upon. Whether the State Level Committee for Integral Development has the power to withdraw the approval given earlier or has the power to withdraw such approval with retrospective effect, cannot be the subject matter before this Tribunal. The case of the revenue, on the other hand, is that in the view of those facts which were brought to light at a later stage would have to be taken into account as rightly done by the authorities below.
It is the point of the revenue that even subsequent events could have to be taken judicial notice of and, therefore, the claim of the assessee has been rightly rejected. As far as the facts of the assessee is concerned, it is not disputed that the assessee did donate the above sum to the above Society for the avowed object as intended by the Section and the assessee has fulfilled the condition in the sense that he had made the donation and had obtained the certificate to that effect from the donee and approval was obtained by the donee for the purpose of the above Section read with Rule 6AAA.8. In the ruling enunciated by the different Courts relied on by the assessee's learned counsel, certain principles have been laid down, of course they are under different statutes. But the case of the assessee is that those principles would be relevant for consideration in dealing with the similar problem before us.
9. Section 35CCA permits deduction of expenditure by way of payment to an association or institution, which has as its objects, undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved by the prescribed authority.
For that purpose, Rule 6AAA has been brought into the Income-tax Rules in which the components of the "prescribed authority" have been spelt out. As stressed by the assessee's learned counsel, we do not find any provision either in the Section or in the said Rule to say that once an approval is given by the prescribed authority, the said authority can withdraw such approval at any time and including also withdrawal with retrospective effect. In fact, a proviso or a Rule would have to be considered harmoniously with the main Section or main enactment or provision. In the case of CIT v. Ajax Products Ltd. [1965] 55 ITR 74, the Hon'ble Supreme Court on the facts of that case observed that if the words of a statute are precise and unambiguous they must be accepted as declaring the express intention of the Legislature. In another case of CIT v. Madurai Mills Co. Ltd. [1973] 89 ITR 45, on the facts of that case, it was held by the Hon'ble Supreme Court that it is well settled that considerations stemming from the legislative history must not be allowed to override the plain words of a statute and that a proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect. It was further held that if the language of the enacting part of the statute is plain and unambiguous and does not contain the provisions which are said to occur in it, one cannot derive those provisions by implication from a proviso.
10. Section 35CCA is an enabling provision which authorises the assessee to claim expenditure as deduction if such expenditure was a sum paid to certain approved Society for specific object as contemplated by the said Section. It is true that before the assessee gets a right to claim such payment as deduction, the donee, i.e., the Society for Integral Development should have obtained the approval from the State Level Committee being the prescribed authority under the said Rule 6AAA.11. In the present case before us, we do not find any material to support the contention of the Assessing Officer that the assessee has made this payment to the Society which had received back in cash after some time after the said Society had retained some amount as commission. We find no material for such assertion that the amount has come back to the assessee soon thereafter or later on in some form or the other.
12. It is well settled Rule of interpretation that unless the terms of the statute expressly so provide or necessarily require it, retrospective operation should not be given to the statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards the matters of procedure. This was the, view of the Hon 'We Supreme Court in the case of Govinddas v. ITO [1976] 103 ITR 124, in which certain enactment was considered to see whether such amendment would have retrospective operation. In the case of the assessee, as far as Section 35CCA and Rule 6AAA are concerned, we do not find any such enactment of any part of the said Section or of the said Rule. It is only from the order of the Assessing Officer and as noted by the learned CIT (Appeals), that it could be seen that the approval given to the Society earlier has since been withdrawn. The Hon'ble Supreme Court in the case of J.P.Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 has on the facts of that case observed that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to receive any remedy already lost by efflux of time. To accept the contention of the revenue in the present case, would tantamount to giving of retrospective operation of the withdrawal of the approval by the prescribed authority which cannot be said to be warranted either by express language of the Section or by necessary implication. Similarly in the said Rule, we do not find any such provision or authorisation for such withdrawal of approval with retrospective effect. Of course, the said Section 35CCA would have to be read with the Rule which indicated the intention of the Legislature in enacting the said Section. But in doing so, we find no material or provision to support the stand taken by the assessing authority on this point.
13. In our opinion, a machinery Section or the Rules would have to be construed or considered so as to effectuate the charging Section.
Assuming without admitting that the said Society has defaulted or omitted to do certain things as intended by the Section and as spelt out by the Rules, it cannot be said that the assessee who is the donor has committed in a default to disentitle him to claim deduction of the above amount of expenditure in the computation of his income unless there are materials to show or infer that the said sum or part thereof has come back to the assessee in some form or the other, either during the year or otherwise.
14. As held by the Hon'ble Supreme Court in the case of CIT v. Taj Mahal Hotel [1971] 82 ITR 44, on the facts of that case under the Indian Income-tax Act, 1922, it was held that the Indian Income-tax Rules, 1922 were meant only for the purpose of carry ing out the provisions of the Act and that it cannot take away what is conferred by the Act or whittle down its effect.
15. Similar opinion was expressed by the Hon'ble Supreme Court in the case of Y. Narayana Chetty v. ITO [1959] 35 ITR 38, in which it was held that Rule 6B of the Indian Income-tax Rules, 1922 was obviously intended to carry out the purpose of the Income-tax Act. In other words, Rule 6AAA of the Income-tax Rules, 1962 is obviously intended to carry out the intendment of the purpose of the said Section.
16. We do not find any material to infer that the assessee was in the know of the things that approval accorded to the said Society would be withdrawn at a later stage and yet the assessee did not ask for the refund of the money to it. True, the Assessing Officer has made observation that the money has come back to the assessee after some time, but there is no material to support such assertion, as far as the assessment year under consideration is concerned. Of course Section 41 provides taxability of certain remission of liabilities etc., with which we are not concerned in the present appeal. It is for the revenue to deal with such situation, if arises.
17. As mentioned earlier, the purpose and the scope of the Rules would be for furtherance of the objects of the Section and the statutory provision thereof. Section 35CCA grants the assessee right to claim deduction of expenditure in respect of the payment made, to such association or society which was formed for executing programme of rural development as approved by the prescribed authority before the 1st day of March, 1983 and a conjunctive condition under Sub-section(2) also provides that such payment should be for such programme as approved and such work, amongst other things, has commenced before the 1st day of March, 1983. In other words, the entitlement of the assessee for claiming such deduction would also depend upon the utilisation of such fund in the approved programme in which such work has commenced before the date as specified in the Section as relevant to the year under consideration. A finding is required to be made in respect of this aspect also whether such utilisation of the fund have been used before a specified date.
18. In view of the various discussions and the authorities available and as noted above, the assessee would stand entitled to claim the amount donated as donation, but subject to such condition as laid down by the Section itself, which neither the authorities below have examined properly before outright rejecting the assessee's claim on the ground that the approval given to the society, was withdrawn, although the Assessing Officer has mentioned in the order that withdrawal was made, inter alia, as the society had not utilised the money for approved programme of rural development. But before coming to such conclusion categorically, certain facts are basically required to be brought out particularly so when the assessee itself has obviously no control over the utilisation of such funds for the approved programme for rural development etc., as its required by the Section. We consider, therefore, that it will be fair to both the sides if the matter is looked into by the Assessing Officer in respect of this point after bringing correct and basic facts on record and after giving the assessee adequate opportunity of being heard in view of the requirements of the Section and in view of the letter dated 28-3-1984 issued by the prescribed authority to the Secretary of the above society intimating that certain schemes have been approved and the authorisation would be valid so long as the approval to this institution, i.e., the society granted under Section 35CCA, remains operative, copy of which is available at page 5 of the assessee's paper book.
19 to 22. [These paras are not reproduced here as they involve minor issues.].