Tribunal Upholds Denial of Donation Deduction; Confirms Book Profits Must Reflect Actual Profits Under Income Tax Act.

The Tribunal upheld the denial of the weighted deduction for the assessee's donation under section 35(1)(ii) of the Income Tax Act, 1961, due to the recipient institute's expired approval for scientific research donations. Consequently, the donation was deemed fraudulent. Additionally, the Tribunal rejected the assessee's argument that the disallowed donation should not affect book profits under section 115JB, affirming that book profits must reflect actual profits. The appeal was dismissed, and no separate judgment was issued by the judges.

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Issues:
The judgment involves the denial of weighted deduction to the assessee on a donation made to a scientific research institute under section 35(1)(ii) of the Income Tax Act, 1961, and the related adjustment of book profits under section 115JB of the Act.

Denial of Weighted Deduction:
The appeal was filed against the order passed by the Ld. Commissioner of Income-Tax(Appeal) pertaining to Assessment Year 2016-17. The assessee failed to appear throughout the proceedings before the Tribunal, leading to an ex parte decision. The main issue revolved around the denial of weighted deduction on a donation of Rs. 1,25,00,000 made to a scientific research institute. Both the Assessing Officer and the Ld. CIT(A) disallowed the deduction, amounting to Rs. 2,18,75,000 in total, due to the institute's lack of necessary approval for raising donations for scientific research. The AO's inquiries revealed that the institute's approval had expired, rendering the donation claim as fraudulent. The Tribunal upheld the denial of deduction, citing the absence of valid approval and previous similar rulings.

Adjustment of Book Profits:
The assessee contended that the disallowed donation should not impact its book profits under section 115JB. However, the Revenue authorities found the donation to be fraudulent and bogus. The Tribunal concurred, stating that such claims cannot be considered for determining book profits, which must reflect actual profits for tax purposes. Therefore, the contention of the assessee was dismissed, and the appeal was ultimately rejected.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

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