1996 (12) TMI 121 - AT - Income Tax

Appeal outcome: Donation to SRS dismissed, car expenses disallowed; Aparna Ashram donation appeal partly allowed. Penalty upheld.

The Tribunal dismissed the appeal regarding the donation to Sigma Medical Aid & Research Society (SRS) and the disallowance of car maintenance ... Assessment Year, Deduction In Respect, Scientific Research Expenditure Issues Involved:1. Deduction of Rs. 15 lakh donation to Sigma Medical Aid & Research Society (SRS) under section 35CCA.2. Enhancement of income by disallowing Rs. 20 lakh donation to Aparna Ashram under section 35(2A).3. Disallowance of 1/5 of car maintenance expenses.4. Initiation of penalty under section 271(1)(c).Issue-wise Detailed Analysis:1. Deduction of Rs. 15 lakh donation to Sigma Medical Aid & Research Society (SRS) under section 35CCA:The assessee claimed a deduction of Rs. 15 lakh under section 35CCA for a donation to SRS. The Assessing Officer sought verification from the CIT, Bombay, regarding SRS's recognition under section 35CCA. The CIT(A) disallowed the deduction, noting that the donation was made using a loan, and further, there was no profit from which the donation could be made. The CIT(A) also found no independent acknowledgment from SRS and doubted the genuineness of the donation. The approval granted to SRS under section 35CCA was withdrawn on 28-1-1987, rendering the donation ineligible for deduction. The managing trustee of SRS admitted that the society issued certificates for a commission, not for development, leading to the confirmation of the disallowance.2. Enhancement of income by disallowing Rs. 20 lakh donation to Aparna Ashram under section 35(2A):The CIT(A) disallowed the Rs. 20 lakh donation to Aparna Ashram, noting that the donation was made using a loan and lacked independent acknowledgment. The CIT(A) found discrepancies in the signatures on the receipt and doubted the genuineness of the donation. The required certificate under section 35(2A) was not filed before the Assessing Officer. The CIT(A) enhanced the assessee's income by disallowing the deduction. However, the Tribunal remitted the matter back to the Assessing Officer for fresh consideration and verification of Aparna Ashram's tax assessment and recognition under section 35(2A).3. Disallowance of 1/5 of car maintenance expenses:The CIT(A) disallowed 1/5 of the car maintenance expenses, reasoning that no logbook was maintained to show the car's use for business purposes, and personal use could not be ruled out. The Tribunal found this disallowance reasonable and dismissed the ground of appeal.4. Initiation of penalty under section 271(1)(c):The assessee's appeal against the initiation of penalty under section 271(1)(c) was dismissed, as there is no appeal against the initiation of penalty.Conclusion:The Tribunal dismissed the ground of appeal regarding the donation to SRS and the disallowance of car maintenance expenses. The ground of appeal relating to the donation to Aparna Ashram was allowed for statistical purposes, with the matter remitted back to the Assessing Officer for fresh consideration. The appeal was partly allowed.