Expenditure on Eligible Projects or Schemes [Section-35 AC]

(i) This deduction has come into force from 1-4-92, i.e., assessment year 1992-93.

(ii) It is allowed to all assessees.

(iii) Rate of deduction is 100% of amount actually given during the previous year.

(iv) The amount is to be given to a

(a) Public Sector Company; or

(b) Local authority; or

(c) An institution; or

(d) An association; which is approved by the National Committee constituted by the Central Government.

(v) The payment must have been made for carrying out any eligible project or scheme for promoting the social and economic welfare of, or the uplift of the public as the Central Government may notify in this behalf on the recommendation of the National Committee.

(vi) The company assesses may claim this deduction by incurring such expenditure either by way of payment to above noted persons or directly on the eligible project.

(vii) When a person, other than company claims this deduction, it must furnish a certificate from the company, institution, local authority or the association, as the case may be, alongwith return as proof of payment.

(viii) In case of company assessees this deduction is to be allowed only on production of proof of payment. In case expenses are incurred by company directly it must submit a certificate from Chartered Accountant in the prescribed form [35AC(2)1.

(ix) In case a deduction is claimed by a person under this section it cannot be claimed under any other section [35AC(3)1.

Withdrawal of Approval

The approval granted by the National Committee can be withdrawn if subsequently the Committee is satisfied that :

(a) the project or the scheme which was approved u/s 35AC(l) or was notified as an eligible project or scheme under clause (b) of the Explanation; is not being carried on in accordance with all or any of the conditions under which approval was granted ; [Section 35AC(4)(i) or 35AC(5)(i)]

(b) such institution or association to which approval was granted has not furnished at the end of each financial year, a report in such form as may be prescribed. [Section 35AC(4)(ii) or 35AC(5)(ii)]

The approval so granted or notification so issued can be withdrawn after giving a reasonable opportunity to the institution or association to explain its position under a show cause notice.

The copy of the order withdrawing approval or notification shall be served to the Assessing Officer having jurisdiction over such institution or association.

 
 

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