Section 35AC Expenditure on Eligible Projects & Schemes

 Example

• Developement of Drinking Water Projects
• Construction of School Building
• Development of Sports etc

How is Expenditure Incurred

Such expenditure may be incurred by 

• By the way of Donation to Outside Agency 

           i.e. public sector company / local authority / institution  or association/NGO

               which is Approved by National Committee of Central Govt

• Assessee Himelf- This deduction is allowed only for Companies,not for Partnership or Proprietorship  

Deduction is available as follows

Note:-If deduction claimed under this section then it cannot be claimed in any other section

Assessees not having Business Income can claim similar deduction under Section 80GGA.

QUESTIONS

Q1

Suppose Expenses Include following expenses on Eligible Projects and Schemes

Compute PGBP Income

-a-

Direct Expenditure not allowed as Ajay& Co is a proprietorship,not a company

Donation to Specified Agency whose Certificate not obtained is also not allowed

-ea-

Q2 Solve last question assuming it is a company

-a-

Direct expenditure will be allowed.

However,Donation to Specified Agency whose Certificate not obtained is also not allowed

-ea-

Withdrawal of Approval

National Committee may withdraw the approval after giving opportunity of being heard

Consequences:-

In case of Donation to Outside Party

If approval for instituition is  withdrawn,still deduction shall be available to assessee

In case of Expenditure by Company directly

Deduction claimed earlier will be deemed to be income of the assessee in the year approval of scheme is withdrawal