Subsection (1) of Section 35CCA of the Income Tax Act, 1961 states that when an assessee incurs any expenditure by making payment of any sum:-

(a) To any institution or association whose object is to undertake any rural development programme and the sum is used to carry out such rural development programme approved by the prescribed authority; or
(b) To any institution or association whose object is to train persons for the implementation of the rural development programme; or
(c) To a rural development fund set up and notified by the Central Government; or
(d) To the National Urban Poverty Eradication Fund set up and notified by the Central Government on this behalf,

Suppose an assessee makes payment in any of the above. In that case, he shall be allowed a deduction of the amount equal to the expenditure incurred during the previous year, subject to subsection (2) provisions.

As per sub-section (2) of Section 35CCA, an assessee would not be allowed a deduction under clause (a) of sub-section (1) unless he furnishes a certificate from such institution or association to the effect that:-

(a) The rural development programme had been approved by the prescribed authority before 1st March 1983; and
(b) If the payment has been made after 28th February 1983, then such programme involves work by way of construction of any building or any other structure (whether for use as a school, dispensary, welfare centre, or training, or for any other purpose) or the laying of any road or construction or boring of well or tube-well or installation of plant or machinery, and such work has commenced before 1st March 1983.

Further, sub-section (3) states that if a deduction under sub-section (1) has been claimed and allowed for any assessment year, then the removal shall not be permitted under Section 35C or Section 35CC or Section 80G or any other provisions of this Act for the same or any other Assessment Year.

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Section 35CCA- Payment to Associations and Institutions for Carrying out Rural Development Programme

June Jashivya

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