This appeal relates to the the assessment year 1975-76 which is filed by the assessee against the order of Commissioner (Appeals).
1 to 6. [Paras I to 6 are not printed here as they involve minor issues.] 7. The last ground relates to the claim for deduction under Section 80G of the Income-tax Act, 1961 ("the Act"), amounting to Rs. 2,26,000. The assessee had made donations amounting in all to Rs. 2,26,000, the details of which are set out in para 9 of the order of the Commissioner (Appeals). The ITO disallowed the claim of the assessee on the ground that the gross total income after set off of deduction under Section 80J of the Act was reduced to nil. Therefore, the claim under Section 80G could not be determined with reference to the gross total income.
In this view of the matter, therefore, the claim for deduction was rejected.
8. Before the Commissioner (Appeals) it was contended that the real controversy related to the order of the priority in regard to deductions relating to donations under Section 80G and deductions under Section 80.T. It was, therefore, contended that the gross total income before making any deduction under Chapter VI-A worked out to Rs. 3,65,299. Therefore, it was with reference to the said gross total income that the relief under Section 80J should be calculated. In other words, if the deduction under Section 80G was determined with reference to the gross total income before setting off of relief under Section 80J, the assessee's claim for deduction of a portion of the amounts of donation would succeed. This contention was rejected by the Commissioner (Appeals) who upheld the decision of the ITO. Hence this appeal.
9. After hearing both the parties, we are of the view that the assessee's claim for deduction of donations under Section 80G prior to the deduction under Section 80J cannot succeed. The position would be quite clear if we look to the provisions contained in Section 80G(4) as they stood for the relevant assessment year.
(4) The deduction under Sub-section (1) shall not be allowed in respect of such part of the aggregate of the sums referred to in Sub-clauses (iv), (v), (v/) and (vii) of Clause (a) and in Clause (b) of Sub-section (2) as exceeds ten per cent of the gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), or two hundred thousand rupees, whichever is less.
It is, therefore, clear that the expression gross total income is given a special meaning for the purpose of Section 80G(4) of the Act. A reading of the above provisions clearly shows that deduction under Section 80J has to be taken into consideration before the gross total income for the purpose of relief under Section 80G is determined. In this view of the matter, therefore, we decline to interfere with the decision of the Commissioner (Appeals) and uphold his order.