2019 (5) TMI 22 - AT - Income Tax

Tribunal grants deductions for PF, ESI, and donations under Income Tax Act

The tribunal allowed the assessee's appeals, granting deductions for PF and ESI dues paid before filing the return of income and donations made to the ... Claim of deduction of PF & ESI dues - payments are made prior to the due date of filing the return of income u/s 139(1) - HELD THAT:- Claim of deduction of PF & ESI dues. The undisputed fact is that these dues have been paid before the specified due date of filing return of income u/s 139(1). The Assessing Officer denied the deduction on the ground that the payment was made beyond the due date of payments specified in the relevant enactment. This issue is covered in favour of the assessee. As the payments are made prior to the due date of filing the return of income u/s 139(1), the same should be allowed. Hence, we allow this ground of the assessee. Disallowance of claim of deduction u/s 35(1)(ii) of donations given to SHG &PH - disallowance based on statement recorded on oath during survey - AO disallowed the claim on the ground that survey was conducted on SHG &PH and it came to light that the donations received by cheque/RTGS were returned in cash to the donors - HELD THAT:- The facts of this case as identical with the facts of this case decided by the ITAT cited above [2018 (3) TMI 1405 - ITAT KOLKATA] ; [2017 (9) TMI 1637 - ITAT KOLKATA]; [2017 (11) TMI 1631 - ITAT KOLKATA] . Copy of the statements was not confronted to the assessee. No evidence of the money being returned in cash is brought on record. The certificate is valid as on the date of donation. Hence, respectfully following of the judgment of Co-ordinate Bench of the Tribunal, we allow these grounds - Decided in favour of assessee. Issues Involved:1. Claim of deduction of PF and ESI dues paid before the filing of return of income.2. Claim of deduction under Section 35(1)(ii) of the Income Tax Act for donations given to the School of Genetics and Population Health, Kolkata.Issue-wise Detailed Analysis:1. Claim of Deduction of PF and ESI Dues:For the Assessment Year 2013-14, the assessee claimed a deduction for PF and ESI dues paid before the filing of the return of income under Section 139(1) of the Income Tax Act, 1961. The Assessing Officer (AO) denied the deduction on the ground that the payment was made beyond the due dates specified in the relevant enactment. However, the tribunal noted that the payments were made before the due date of filing the return of income under Section 139(1) of the Act. The tribunal held that the deduction should be allowed as the payments were made prior to the specified due date for filing the return. Consequently, this ground was allowed in favor of the assessee.2. Claim of Deduction under Section 35(1)(ii) for Donations:For both Assessment Years 2013-14 and 2014-15, the assessee claimed deductions under Section 35(1)(ii) of the Act for donations made to the School of Genetics and Population Health, Kolkata (SHG & PH). The AO disallowed these claims on the basis that a survey conducted on SHG & PH revealed that donations received by cheque/RTGS were returned in cash to the donors.The tribunal referred to several precedents where similar issues were adjudicated:- Tushar Chawda Case: The tribunal noted that the assessee had made a donation while the approval for SHG & PH under Section 35(1)(ii) was still valid. The withdrawal of the approval occurred 17 months after the donation was made. The tribunal held that such a withdrawal could not retroactively affect the assessee's right to claim the deduction.- Rajda Polymers Case: The tribunal emphasized that the AO’s disallowance was based on general statements about the modus operandi of SHG & PH without specific evidence that the assessee received cash back in lieu of the donation. The tribunal directed the AO to grant the deduction as claimed.- Zenith Credit Corporation Case: The tribunal pointed out that the statement of a key person from SHG & PH, which suggested bogus donations, was not sufficient evidence without providing the assessee an opportunity for cross-examination. The tribunal allowed the deduction as the donation was made while the approval was valid.- Saimed Innovation Case: The tribunal highlighted that the AO relied on statements made during a survey, which were not substantiated by further evidence or cross-examination. The tribunal reiterated that suspicion alone could not replace concrete evidence and allowed the deduction.In the present case, the tribunal found the facts to be similar to the aforementioned cases. The statements relied upon by the AO were not confronted to the assessee, and no evidence was provided to show that the money was returned in cash. The certificate of approval was valid at the time of the donation. Hence, the tribunal allowed the grounds related to the deduction under Section 35(1)(ii) for both Assessment Years 2013-14 and 2014-15.Conclusion:The appeals of the assessee were allowed, granting the deductions for PF and ESI dues as well as the donations made to SHG & PH under Section 35(1)(ii) of the Income Tax Act.