ITAT allows fresh inquiry on 80GGC donation claims and directs reconsideration of double taxation relief under Section 90

The ITAT Ahmedabad set aside the disallowance of donations claimed under section 80GGC due to incomplete bank statement evidence and failure to establish receipt of donations by political parties. The matter was remitted to the AO for fresh examination after proper inquiry with the political parties and opportunity to the assessee. Additionally, the tribunal directed the AO to reconsider the claim for double taxation relief under section 90, which was overlooked by lower authorities, allowing the assessee to substantiate the claim afresh.

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ISSUES:

Whether donations made to political parties qualify for deduction under section 80GGC of the Income Tax Act, 1961.Whether the disallowance of donations under section 80GGC was justified despite the assessee furnishing evidence of payment and genuineness.Whether the failure of political parties to respond to summons under section 131 affects the claim of deduction under section 80GGC.Whether the revised return claiming credit for Double Taxation Relief under section 90 was properly considered by the assessing authorities.

RULINGS / HOLDINGS:

The court held that the disallowance of donations under section 80GGC could not be upheld at this stage because the assessee had furnished proof of payment, but the evidence was incomplete and the political parties did not cooperate fully; thus, the matter was remitted to the Assessing Officer for de novo examination after proper enquiry and opportunity to the assessee to substantiate the claim.The court emphasized that "a political party is an organized group of people meant to play crucial role in facilitating governance" and that failure of political parties to respond to lawful summons cannot be lightly accepted, but the assessee must be given opportunity to prove eligibility for deduction.The court found that the revised return claiming Double Taxation Relief under section 90 was not considered by the lower authorities and therefore set aside their actions and remitted the issue for fresh determination after providing the assessee proper opportunity.

RATIONALE:

The court applied the provisions of section 80GGC of the Income Tax Act, 1961, which permits deduction for donations made to political parties, contingent upon proof of genuineness and receipt.The court relied on procedural fairness principles, emphasizing that the assessee must be given "proper opportunity" to substantiate claims and that "de novo examination in accordance with law" is necessary when evidence is incomplete or political parties fail to cooperate.Regarding Double Taxation Relief, the court applied section 90 of the Act, which allows credit for foreign tax paid, and stressed that failure to consider revised returns claiming such relief requires remand for fresh adjudication.The court distinguished the present case from precedents where evidence was complete, noting the "incomplete bank statement" and non-service of summons as material factors necessitating further inquiry.

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