COMMISSIONER OF INCOME TAX Vs. BANKAM INVESTMENT LIMITED

JUDGEMENT

(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1985-86, the following question of law has been referred to this court :

(2.) Shortly stated, the facts are as under : The assessee paid a donation of Rs. 40,000 during the relevant period to the Society for Integral Development which was granted approval under Section 35CCA of the Income-tax Act, 1961, as per letter of approval dated December 17, 1982, for the period from December 13, 1982, to December 12, 1985. The assessment of the assessee for the year under consideration was completed under Section 143(1) on June 26, 1987, on a total loss of Rs. 2,380 wherein the claim for deduction of Rs. 40,000 was allowed.

(3.) The Commissioner of Income-tax subsequently found that the approval under Section 35CCA to the Society for Integral Development which was accorded by the State Level Committee was withdrawn on March 3, 1987, with retrospective effect from December 13, 1982. The Commissioner of Income-tax was of the opinion that the assessment dated June 26, 1987, in which the donation of Rs. 40,000 was allowed was erroneous and prejudicial to the interests of the Revenue. He, accordingly, passed an order under Section 263 on February 15, 1988, setting aside the assessment order with direction to the Assessing Officer to pass a fresh order.