TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1077
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....e weighted deduction u/s. 35(1)(ii) of the Income-tax Act, 1961 (hereinafter referred to as the "Act"). 5. Brief facts of the case are that the assessee had made donation of Rs. 1,55,00,000/- and Rs. 1,16,25,000/- (total Rs. 2,71,25,000/-) to M/s. Herbicure Healthcare Bio-Herbal Research Foundation (In short M/s. HHBHRF) and claimed weighted deduction u/s. 35(1)(ii) of the Act which has been disallowed by the AO on the ground that it has come to his knowledge based on the admission of the founder of M/s. HHBHRF and other whistleblower; and the CIT(E)'s action to cancel the section 12A registration pursuant to the finding that M/s. HHBHRF was indulged in giving accommodation entry to persons who gave donations to it which was bogus. So, the AO added the amount as income of the assessee to the tune of Rs. 2,71,25,000/-. At the appellate stage, the assessee pleaded that the subsequent action of the CBDT to withdraw/cancel the registration granted to M/s. Herbicure Healthcare Bio-Herbal Research Foundation with retrospective effect cannot in any way affect the weighted deduction which has to be granted in light of Explanation appended to sec. 35(1)(ii) of the Act. However, the Ld. CIT....
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....that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn." 7. We find that there is no provision in section 35(1)(ii) of the Act to withdraw the recognition granted to the assessee therein. When there is no provision for withdrawal of recognition in the Act, the action of the revenue in withdrawing the recognition with retrospective effect from 1.4.2007 is unwarranted. In this regard, the recent decision of the Hon'ble Supreme Court in the case of Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd vs CIT Gwalior reported in (2018) 90 taxmann.com 281 (SC) wherein it was held that :- 21. In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel the registration certificate granted under Section 12A of the Act. Second, the order passed under Section 12A by the CIT is a quasi judicial orde....
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....amely, Delhi High Court in the case of DIT (Exemptions) v. Mool Chand Khairati Ram Trust [2011] 11 taxmann.com 42/199 Taxman 1/339 ITR 622, Uttaranchal High Court in the case of Welham Boys' School Society v. CBDT [2006] 285 ITR 74/[2007] 158 Taxman 199 and Allahabad High Court in the case of Oxford Academy for Career Development v. Chief CIT [2009] 315 ITR 382. 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till 01.10.2004; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004. 8. We hold that the ratio decidendi of the aforesaid judgement of ....
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....to disallow proportionate interest expenditure to the tune of Rs. 40,65,156/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the same. Aggrieved, the assessee is before us. 13. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the facts stated aforesaid is not in dispute. However, the main contention of the assessee is that assessee had own funds to the tune of Rs. 148.27 cr. and had a profit of approx. Rs. 28 cr. in this assessment year, and out of this amount only Rs. 4.51 cr. has been given as interest free advance to related and unrelated parties as spelled out by the AO in his order. Since the assessee had own funds of Rs. 148.27 cr. plus Rs. 28 cr. the presumption is that when the assessee has in its possession mixed funds which includes its own fund in sufficient quantity, the presumption that its own funds were utilized for giving interest free advances/loans has to be drawn. This principle has been laid by the Hon'ble Bombay High Court in Reliance Utility & Powers Ltd. Vs. CIT 313 ITR 343 (Bom) and Hon'ble Madras High Court in CIT Vs. Hotel Savera 239 ITR 795 (Mad) and Tin ....
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.... is into coal liaisoning and this business requires the assessee's employees to travel extensively to coal fields, railway offices for getting the wagons on time, power plants which are located at far flung areas etc. According to Ld. AR, the supply of coal to the power plants has to be monitored continuously or else the power plants have to be shut down if there is any deficiency in supply of coal. Therefore, the employees had to be constantly moved and they in-turn have to constantly monitor the movement of coal to various consumers. Therefore, the expenditure has been booked on actual basis only and since the partners are aged more than 80 years the question of personal element in expenditure on the aforesaid claim does not arise. It was also brought to our notice that in the subsequent year ie,AY 2014-15 which is before us, the AO only has made disallowance on two counts i.e. in respect of travelling and business promotion and on other counts he has not made any disallowance. 16. After having heard the rival submissions, we note that the assessee is into coal business. We also note that there are only two partners aged about 82 and 80 years and the AO for AY 2014-15 only made....