TaxTMI 
TaxTMI 
2020 (1) TMI 256
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....e modus operandi of the Trust taking donations and returning the amount in cash. The A.O. observed that the Central Government had retrospectively withdrawn the approval for deduction u/s 35(1)(ii) granted to the institution vide notification No. 79.2016/F No. 203/135/ITA dated 06/09/2016. Accordingly, the A.O. disallowed Rs. 52.50 lacs u/s 35(1)(ii) of the Act. By the impugned order, the ld. CIT(A) confirmed the action of the A.O., against which the assessee is in further appeal before the ITAT. 4. At the outset, the ld AR of the assessee placed on record the order of the ITAT Kolkata Benches in the case of DCIT Vs. M/s Desmet Reagent Pvt. Ltd. in ITA No. 15/Kol/2017 dated10/10/2018 wherein under similar facts and circumstances, the donation given to the very same institution i.e. HHCBHRF was allowed U/s 35(1)(ii) of the Act. 5. On the other hand, the ld DR has relied on the orders of the lower authorities. 6. We had gone through the order of the ITAT, Kolkata Benches dated 10/10/2018 wherein similar disallowance made in respect of donation given to HHCBHRF and claimed deduction U/s 35(1)(ii) of the Act was allowed in favour of the assessee after having the following observatio....
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....fied by the Explanation given u/s. 35(1)(ii) of the Act is reproduced under: "Section 35(1)(ii) - Explanation. The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground 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to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn." So the explanation given in the statute itself dispels all doubts and the Ld. CIT(A) has rightly allowed the weighted deduction claimed by the assessee for the donation given to M/s. HHBHRF in the facts and circumstances above. 5. Moreover, in similar case of M/s. Saimed Innovation ITA No. 2231/Kol/2016 (for AY 2013-14), the Coordinate bench of this Tribunal "D" Bench, wherein the author of this order has in detailed dealt with the merits of the disallowance of the weighted deduction claim u/s. 35(1)(ii) of the Act for similar donation given to M/s. HHBHRF( which is referred in that case as M/s. Herbicure )wherein the Tribunal has observ....
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....s as per the objective of the Ministry of Science & Technology, Govt. of India seeking generous donation and has given its details like name, certificate of incorporation, 12A registration, gazette notification u/s. 35(1)(ii) of the Act, renewal of SIRO dated 31.03.2015 vide order dated 13.08.2012 in Memo No. 14/444/2006TUV by the Ministry of Science & Technology, Govt. of India. FCRA registration renewal of 80G which was renewed vide certificate of exemption u/s. 80G(5)(vi) of the Act vide No. DIT(E)/438/8E/155/04-05 dated 18.08.2009 and PAN No. has been stated. We also note that the M/s. Herbicure has stated its project in brief which is reproduced as under: "The vision of Herbicure Healthcare Bio-Herbal Research Foundation is to meet the scientific research needs in Life Science and to constantly strive for excellence and global leadership in the field of new drug discovery from natural resources for the purpose of prevention and management of burden of diseases at affordable cost and also to provide later healthcare services, education and training on scientific research for the welfare of the society." 7. We also note that Smt. Sujata Ghosh Dastider has stated in her lette....
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.... paper company. In view of the same you are once again being given an opportunity to speak the truth and explain the transaction reflected from your bank book as above. Ans. Sir, I wish to state that our concern Herbicure Health are Bio-Herbal Research Foundation was incorporated in the year 2003 u/s 25 of the Companies Act, 1956 which was recognized in 2006-07 as a scientific and industrial research organization (SIRO) by the Ministry of Science & Technology, Govt. of India and subsequently we became a Gazette notified company u/s 35(1)(ii) of the I. T. Act, 1961 in March, 2008. Despite of our sincere, honest and best intention we failed to procure any genuine donations till 2010-11. The situation was becoming bad to worse due to non-availability of funds for not agreeing to the prevalent practice in the donation market. The situation became so critical for us to survive and carry on our mission to do the work for the larger interest of the ailing population we had no other alternative but to become the victim of the circumstances against our will and principle. Subsequently, I was approached by one Mr Kishan Bhawasingka with the proposal to adopt the prevalent practice of....
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....ferent beneficiary Companies/ Individuals a commission of 5 % approx is charged by us which is the actual donation we receive front that particular donor in reality. The commission of almost 5 to 8 % is charged by Mr. Kishan Bhawnsingka for facilitating the said accommodation entry. Subsequently, a sanction letter is received from the donor reflecting the amount of donation and mode of payment. The particulars are then verified with the amount credited in our bank accounts after which an exemption u/s. 35(1)(ii) of the I. T. At, 1961 which qualifies him/her to claim 'one and three fourth' of the said donation as tax exempt u/s. 35(1)(ii) of the I. T. Act, 1961." 9. We note that the sole basis for making the addition is on the basis of the statement recorded on oath during survey at M/s. Herbicure of Shri Swapan Ranjan Dasgupta, other than the said statement there is no other evidence to show that the assessee has received back the donation as suggested in his general statement about providing accommodation entry by Shri Swapan Ranjan Dasgupta. We also note that the said Shri Swapan Ranjan Dasgupta has not stated anywhere that the assessee indulged in bogus donation or that the ....
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....artner replied that the doctor resides at Kshudiram Sarani, Rathtala, Kolkata. For question no. 21 as to whether they knew about the Directorate of Investigation, Kolkata carried out survey u/s. 133A and that its investigation is found that the activities were not genuine, the partners replied that they were not aware of the survey, however, they added that after their visit of the two centers they were on a bonafide belief that M/s. Herbicure was a competent institute and based on the recommendation of the Cardiologist Dr. Bhuban Chakrabrty they made donation to the said concern. We also note that the AO issued summons to Shri Swapan Ranjan Dasgupta who did not appear for cross examination due to ill health but the said Shri Dasgupta confirmed the donations made by the assessee firm to M/s. Herbicure in writing to the AO and clearly stated that no money was refunded back to assessee firm, which fact has been reproduced by the AO at page 7 of his order as under: "Shri Swapan Ranjan Dasgupta, Director of M/s Herbicure Healthcare Bio-Herbal Research Foundation had filed a letter on 28/01/2016 stating "Referring to the above and your comments on my reply dated 22.01.2016, I would fu....
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....the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri Kishan Bhawasingka as held by Hon'ble Supreme Court in Andaman Timber (supra). 11. In the light of the aforesaid facts and circumstances, we cannot sustain the order of the authorities below. Therefore, we set aside the impugned order and direct the AO to allow the deduction of Rs. 26,28,500/- u/s. 35(1)(ii) of the Act." In view of the aforesaid discussion and the statutory provisions and the decision in similar case as cited above, we find no infirmity in the order of Ld. CIT(A) and the same is hereby upheld." 7. We have carefully gone through the orders of the authorities below as well as order of the ITAT, Kolkata Benches dated 10/10/2018 in the case of DCIT Vs M/s Desmet Reagent Pvt. Ltd. (supra) and found that the assessee has given donation of Rs. 30,00,000/- to Herbicure Healthcare Bio-Herbal Research Center and claimed deduction u/s 35(1)(ii) of Rs. 52,50,000/- in the computation of income. The assessee was informed that a search action had been undertaken in case of the said entity and report received ....