TaxTMI 
TaxTMI 
2017 (7) TMI 255
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....roved trusts. 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the sum of Rs. 2.50 crores has been credited into the account of Mahila Utkarsh Sansthan Trust held with Kotak Mahindra Bank, Kolkata. 6. For that the Commissioner of Income Tax (Appeals) erred in upholding the disallowance even after the Assessing Officer in his remand report has stated that the banker of the appellant has confirmed that the funds have been transferred through proper banking channels to the intended party. 7. For that the Commissioner of Income Tax (Appeals) failed to appreciate that a deduction is allowed u/s.35AC if payments are made to approved association and that it does not talk about the utilization of such funds by such association for allowing the deduction. 8. For that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of depreciation of Rs.1,45,35,605/- on intangible assets. 9. For that the Commissioner of Income Tax (Appeals) failed to appreciate that acquisition of rights to export and market appellant's products in foreign countries is to be treated as intangible assets and depreciation a....
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....ores made by the appellant company to the approved trust was also made available before the Assessing Officer. 3. The condition for claiming deduction under section 35AC is solely that the payment is made to an association or institution approved by the National Committee for carrying out any eligible project or scheme. 4. The duty cast by the statute upon the person making the payment is restricted thus far and the purported non utilization of the said funds by the trust for the intended purposes will thus not affect the deduction in the hands of the appellant under section 35AC as held in the case of Chotatingrai Tea Estate Pvt. Ltd. Vs. CIT [1999] 236 ITR 644 (Gauhati). Therefore, since payament made by the appellant to the trust has thus been made in compliance of the provisions under section 35AC, the deduction under section 35AC cannot be denied. 5. Further even going by the allegations made by the Trustee that the funds donated did not reach them, the veracity of which is not known to appellant, it is most humbly submitted that where the moneys so donated, in good faith did not reach the intended donee, it is to be appreciated that the appellant ha....
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....80F of the IT Act. 3. It is not clear if the account (payee) which is mentioned in the report given is actually an account which is opened and operated by the trust. 4. It needs to be reiterated that on an independent enquiry conducted during the scrutiny proceedings, the trust had denied receipt of any funds from the assessee. 5. In the light of the above, the issue may be decided on merits." 6.2 The assessee's comments dated 26.02.2015 on the remand report dated 18.11.2014 are as follows: "In response to the remand report dated 18.11.2014, the appellant has offered the following comments: a) The appellant had made a donation to an institution approved for the purpose of Section 35AC and has furnished the bank statement and certificate under section 58A in proof of the genuineness of the payment made and the receipt thereof. Thus, fulfilling the condition prescribed for availing deduction under Section 35AC. b) Further it was pointed out that the Assessing Officer has not brought on record the reason as to why Sonia Sharma having acknowledged receipt of the donations of Rs. 2.5 crores made by the appellant company v....
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....ns under section 35AC, the disallowance of deduction under section 35AC is not called for. 6.6 Further, it was submitted that the Assessing Officer vide his remand report dated 14.10.2015 has also confirmed that the funds are transferred through proper banking channels to the intended party, there is no reason to deny the deduction under section 35AC of the Act. Therefore, the assessee humbly submitted before CIT(Appeals) that the disallowance of deduction of Rs. 2.5 crores under section 35AC to be deleted. 7. The CIT(Appeals) observed that according to the AO, the assessee is not entitled for claim of deduction u/s.35AC of the Act for its donation of Rs. 2.5 crores allegedly paid to Mahila Utkarsh Sansthan Trust. Further, the CIT(Appeals) observed that the AO has incorporated the scanned correspondences from Mahila Utkarsh Sansthan Trust in his assessment order and the AO concluded that the Trust represented by its President, Ms. Sonia Sharma (Trustee) has acknowledged that the Trustee has not received the donation claimed to have been paid by the assessee company for the F.Y. 2009-10 relevant this A.Y. 2010-11. According to the CIT(Appeals), it is clear from written communi....
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....y paid by the assessee to the Trust was genuine and whether the said donation was properly used for the purpose of the Trust when the President of the Trust herself has denied having received the money. The CIT(Appeals) further observed that the AO in the remand report has concluded that the decision in the case may be taken on merits and on the facts of the case based on the communication received from the aforesaid SBI Branch. 7.4 In view of the above, the CIT(Appeals) concluded that the facts and circumstances in this case are overwhelmingly against the assessee. The statement of the President of the Trust clearly indicates that the assessee has diverted its taxable income under the garb of donation u/sd.35AC of the Act which did not reach the objective of the Trust. The police complaint registered by the President of the Trust also confirms this point of view. According to the CIT(Appeal) all the remand reports pointed out that there was diversion of assessee's tax able income through fraudulent means in the name of the Trust. The correspondence dated 19.12.2014 of SBI, Egmore Branch, Chennai only confirms that the money was transmitted to the account of Mahila Utkarsh Sanst....
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....sum of Rs. 75 lakhs and another sum of Rs. 50 lakhs was donated to Akshya Nagar Pallisiri Sangha. The Assessing Officer, on examination, found that though the above three Trusts are genuine, the bank account to which the money was transferred does not belong to the abovesaid Trusts. We have carefully gone through the enquiry report filed by the Inspector of Income Tax, Jamshedpur, dated 24.12.2010, the copy of which is available at page 8 of the paper book. From the enquiry report, it appears that the receipt said to be issued by the Secretary of Aadivasi Mahila Vikas Samidhi does not contain the signature of the Secretary. In fact, the Secretary denied her signature in Form 58A. The Secretary has also further claimed that she neither knows the assessee-company nor received any money during the year under consideration. In view of this specific statement, it appears that the money has not reached Aadivasi Mahila Vikas Samidhi. This copy of the report submitted by the Income Tax Inspector was not furnished to the assessee. The assessee, however, enclosed a copy of the communication said to be received by the Dy. Commissioner of Income Tax, Chennai from the Dy. Director of Income Tax....
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.... in his capacity as Director. If Shri Vijaysadarangani was looking after the day today affairs of the assessee-company, this Tribunal is of the considered opinion that he would have filed the return before the Assessing Officer in the regular course. Therefore, it is obligatory on the part of the Assessing Officer to bring to the notice of the Director who is in-charge of the day today administration so that he may be in a better position to reply or enlighten the Assessing Officer with regard to the donation said to be given by the assessee-company. Therefore, this Tribunal is of the considered opinion that it needs to be clarified who is looking after the affairs of the assessee-company on day today basis at the relevant point of time. Whether Shri Balasubramanian or Shri Vijaysadarangani was looking after the affairs of the assessee-company at the relevant point of time. If Shri Balasubramanian was looking after the affairs of the assessee-company, then it has to be clarified whether the enquiry report filed by the Income Tax Inspector and the communication said to be received by the Dy. Commissioner of Income Tax, Chennai from the Dy. Director of Income Tax(Investigation), Jams....
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....m reimbursement of similar expenses incurred by agents on behalf of the assessee. The AO was of the opinion that the expenses are in the nature of acquiring exclusive right for so many years and it has the same colour of appreciability and enhancement in its value, trade utility in the course of its time. According to the AO, the assessee company is acquiring an enduring right, which may enhance from time to time as per their Dossier studies / reports and is not squarely falling under the specific definition of intangible assets as defined in the Income Tax Act. The assessee is incurring huge Registration Charges in foreign countries to explore their market in such countries with long term vision and prospective outlook to demonstrate its business and strength and these expenses are not qualified either as revenue expenses or as depreciable intangible assets as claimed by the assessee. The Registration expense is a capital investment to create a capital asset of appreciable nature with exclusive rights in respective markets. 11.1 Further, the ld. A.R submitted that such registration fee/license fee gives rise to a right which is of the same nature as know-how, patents, copyright....