SECTION 8OF l DEDUCTION IN RES PECT OFEDUCATIONAL EXPENSES IN CERTAIN CASES
519. Applicability of section 80F postponed
1. A new scheme relating to assessment of charitable or religious trusts/institutions has been introduced by the Direct Tax Laws (Amendment) Act, 1987 by inserting a new section 80F in the Income-tax Act with effect from 1-4-1989 relevant for assessment year 1989-90 and subsequent years.
2. In view of the representations received from various quarters regarding the new scheme of assessment of charitable trusts/institutions and scientific research associations, etc., the then Minister of Finance in the last Budget Session of Parliament had made an announcement that the amendments made by the Direct Tax Laws (Amendment) Act, 1987 in the provisions of the Income-tax Act relating to the assessment of charitable trusts/ institutions and scientific research associations, etc., will be reconsidered along with other provisions of the Direct Tax Laws (Amendment) Act, by introducing a new Direct Tax Laws (Amendment) Bill in the Monsoon Session of Parliament.
3. Because of the large number of representations that have been received relating to amendments made by the Direct Tax Laws (Amendment) Act, 1987, issues raised during discussions with the representatives of the Chambers of Commerce/trade associations, etc., and Government’s anxiety to insure that due consideration is given to the various difficulties that have been brought to its notice, it was not possible to bring forth the Amendment Bill in the Monsoon Session of the Parliament. However, since the accounting period to which the new provisions relating to charitable trusts /institutions and scientific research associations, etc., has already started for assessment year 1989-90, the delay has created some uncertainty for them. Therefore, an announcement was made by the Minister of State for Finance (Revenue) on behalf of the Government in both the Houses of Parliament on 5th and 6th September, 1988 that the position in respect of charitable trusts/religious institutions and scientific research institutions, etc., would continue to be the same till 30-3-1990, as it was before the amendments made by the Direct Tax Laws (Amendment) Act, 1987.
4. The effect of this announcement would be that till this period, the following provisions of the Income-tax Act, 1961, Wealth-tax Act, 1957 and Gift-tax Act, 1958 which stand omitted/amended with effect from 1-4-1989 would continue to operate for and up to the assessment year 1989-90 as they stood before the amendments made by the Direct Tax Laws (Amendment) Act, 1987:
( i) Section 2(24)(iia) relating to the definition of income with regard to voluntary contributions received by the charitable trusts/ institutions.
(ii ) Sections 10(21), 10(23), 10(23C)(iv ) and (v) relating to exemption of income available to scientific research associations, income of associations or institutions established with its object to control, supervise and regulate the games of cricket, hockey, football, etc., income of fund or institutions established for charitable purposes having importance throughout India or throughout any State or States and any charitable or religious trusts or institutions approved by the Central Government.
(iii ) Provisions of sections 11, 12, 12A and 13 relating to the assessment of charitable trusts/institutions.
(iv ) Sections 35, 35CCA and 35CCB relating to deductions from profits and gains of business on account of expenditure on scientific research, expenditure by way of payment to associations and institutions for carrying out rural development programmes and expenditure by way of payment to associations and institutions carrying out programmes of conservation of natural resources.
(v) Section 43(1) being the special provision consequential to changes in rate of exchange of currency. [The amendment in this section was in consequence of the amendment to section 35 by the Direct Tax Laws (Amendment) Act, 1987].
(vi ) Section 80A(3) relating to deduction to be made in computing the total income.
(vii ) Section 80G relating to deduction from gross total income in respect of certain donations to certain funds, charitable institutions, etc.:
Section 80G(5)( i)
All these amendments in
Section 80G(5)( v)
section 80G are consequent to
Clauses ( i) and (ii) of
insertion of section 80F and
Explanation 2 to section 80G.
amendments in sections 10(23),
Explanation 4 to section 80G.
10(23C)( iv) and (v)
(viii) Section 80GGA relating to deduction from gross total income of assessees not carrying on business or profession, in respect of certain donations for scientific research or rural development.
(ix) Section 139(4A) and clause (d) of proviso to section 139(10) relating to filing of return in the case of charitable trusts/institutions.
(x ) Section 155(5B) relating to amendments on account of expenditure on scientific research, etc. (This was in consequence to the amendment made in section 35).
(xi ) Section 164(1), 164(2) and 164(3) including provisos and Explanation 2 relating to charge of tax where share of beneficiaries unknown.
( i) Proviso to section 5(1) relating to deduction from net wealth on account of charitable trusts/institutions.
(ii ) Section 21A relating to assessment in cases of diversion of property, or of income of property held under trust for public charitable or religious purposes.
Section 45(e) and Explanation 3 relating to exemption of gift in certain cases.
5. Further, the operation of the provisions of newly inserted section 80F dealing with deductions in respect of amounts applied for charitable or religious purposes, etc., section 54A dealing with relief of tax on capital gains on transfer of property held under trust for charitable or religious purposes by certain institutions and section 80G(2)( a)(iiid) and 80G(2)(a)(iiie ) regarding 100 per cent deduction to donations to certain institutions is deferred till 31-3-1990, which means that these provisions will not be applicable for assessment year 1989-90.
Circular : No. 524, dated 17-10-1988.