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2020 (10) TMI 985
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....nt of Revenue) (Central Board of Direct Taxes) Notification New Delhi, dated 26.01.2009 u/s 35(i)(ii) of the Act r.w. Rule 5C and 5E of the Income Tax Rules, 1962 from the AY 2008-09 onwards in the category of "Other Institution" project engaged in research activities vide F.No.203/64/2009/ITA-II dated 20.01.2009. 3. The AO disallowed the claim made by the assessee u/s 35 of the Act by holding as follows: a) Information was received from the Pr. DIT(Inv.) vide letter dated 09.10.2015 that a survey action u/s 133A was carried on dated 27.01.2015 at the registered/Administrative offices of SHG&PH, MIER&E and HHBRF and these institutions were engaged in bogus donation through various brokers for a commission. The Investigation Wing stated that the bogus donations were taken by cheques/RTGS and after taking commission, the same were routed back to the donor in the form of cash after passing the same through 3-4 layers of bogus billing or other accommodation entries. The assessee was issued a show cause notice by the AO as to why this claim should not be disallowed. Thereafter the AO concluded as follows: "It is clearly prove in the statement of Smt. Samadrita Mukhe....
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.... Notification reads as follows: "Ministry of Finance, (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, the 15th September, 2016, S.O. 2961(E)-ln exercise of the powers conferred under clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 read with Rule 5C and 5E of the Income-tax Rules, 1962, the Central Government hereby rescinds the notification of the Government of India, Ministry of Finance, Department of Revenue number 4/2010 dated 28.01.2010 published in Gazette of India , Part II, Section 3, Sub-section (ii) dated 28.01.2010 vide S.O. 348 with effect from 1st April, 2007 and shall be deemed that the said notification has not been issued for any tax benefits under the Income-tax Act, 1961 or any other law of the time being in force." The above notification makes clear that the earlier notification No. 4/2010 dated 28.01.2010 shall be deemed not to have been issued for any income-tax benefits under the Income-tax Act. Therefore, the payment of Rs. 65,00,000/- for the purpose of availing weighted deduction of 175% u/s 35(1)(ii) of the Act made to M/s School of Human Genetics and Population Health, Kolk....
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.... assessee as the registration was in force as on the date of payment of donation. f) The Kolkata Benches of the ITAT have considered the facts that, the donee institute has approached the Settlement Commission on this issue of assessment made on them consequent to search and seizure operations on the donees, but have not drawn any adverse inference based on such material. Thus the claim of the assessee is not affected by the fact that the donee has approached the Settlement Commission. 6. The ld. Counsel for the assessee relied on the judgement of the jurisdictional High Court in the case of CIT vs. Bhartia Cutler Hammer Co. [1998] 232 ITR 785 (Calcutta) for the proposition that, even if an inference drawn by the AO is correct, yet the claim of the assessee cannot be disallowed on the ground that, as on the date of issuance of notice, the donee was non-existent or that they were not involved in desired activities. He also relied on the following case laws: i) Nirbhayram Vishram vs. DCIT, ITA No. 42 & 43/Kol/2018. ii) Zenith Credit Corporation vs. ITO, ITA No. 718/Kol/2018. iii) DCIT vs. Maco Corporation (India) Pvt. Ltd., ITA No. 16/Kol/2017. ....
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....u/s 35(1)(ii) of the Act. b) SGHPH was also recognized as a scientific industrial research organization (SIRO) by Ministry of Science & Technology, Government of India. The renewal of recognition as SIRO by the Department of Scientific and Industrial Research under the Scheme on Recognition of Scientific and Industrial Research Organisation , 1988 was made for the period from 1.4.2010 to 31.3.2013 vide communication in F.No. 14/473/2007-TU-V dated 17.6.2010. 8.2. At the outset, we find that the Taxation Laws (Amendment) Act, 2006 with retrospective effect from 1.4.2006 had introduced an Explanation in Section 35 of the Act which reads as 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. Hence the aforesaid provisions of the Act....
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....ive nor an executive order but it is a "quasi judicial order". It is for this reason, Section 21 has no application in this case. 25. The general power, under Section 21 of the General Clauses Act, to rescind a notification or order has to be understood in the light of the subject matter, context and the effect of the relevant provisions of the statute under which the notification or order is issued and the power is not available after an enforceable right has accrued under the notification or order. Moreover, Section 21 has no application to vary or amend or review a quasi judicial order. A quasi judicial order can be generally varied or reviewed when obtained by fraud or when such power is conferred by the Act or Rules ITA No.16/Kol/2017 M/s Maco Corporation (India) Pvt. Ltd. A.Yr. 2013-14 under which it is made. (See Interpretation of Statutes, Ninth Edition by G.P. Singh page 893). 26. ............ 27. It is not in dispute that an express power was conferred on the CIT to cancel the registration for the first time by enacting sub-Section (3) in Section 12AA only with effect from 01.10.2004 by the Finance (No.2) Act 2004 (23 of 2004) and hence....
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....is tribunal in exactly similar facts had decided the issue in favour of the assessee in the following cases:- a) Rajda Polymers vs DCIT in ITA No. 333/Kol/2017 for Asst Year 2013-14 dated 8.11.2017. b) Saimed Innovation vs ITO in ITA No. 2231/Kol/2016 for Asst Year 2013-14 dated 13.9.2017. The findings of those decisions are not reiterated herein for the sake of brevity. 8.5. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the various judicial precedents relied upon hereinabove, we hold that the ld CITA had rightly deleted the disallowance u/s 35(1)(ii) of the Act in the sum of Rs. 3,06,25,000/- made by the ld AO. Accordingly, the Grounds raised by the revenue are dismissed." 10. In the case of Santosh Suresh Kumar Agarwal vs. ACIT in ITA No. 1162/Kol/2018 order dated 05.09.2018, the SMC Bench of the Tribunal held as follows: "3. After hearing rival contentions, we find that an identical issue has been considered by the 'B' Bench of this Tribunal in the case of Narbheram Vishram vs. DCIT in ITA No. 42 & 43/Kol/2018; Assessment Year 2013-14 & 2014-15, orderdt. 27/07/2018, ....
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....ave received donations from various entities in lieu of cash returned to them after deducting commission there from. 14. We note that, during the course of hearing, before us, the ld Counsel for the assessee submitted that, the sums paid to "Matrivani' and "SHG, were genuine donations and both of the Institutions were admittedly registered under section 12A of the Income Tax Act, 1961. We note that both of the said two Institutions viz, "Matrivani" and "SHG", are Sctentific Research Association approved as such by Central Government under section 35(1)(ii) of the Income Tax Act, 1961 vide Notification, bearing No. 229/2007 (F.No.203/135/2007/ITA-II) dated 21.08.2007 and Notification No. 4/2010 (F. No. 2B/A/2009,/ITA-II dated 28.01.2010 respectively, published in Official Gazette of India. The assessee categorically denied that it ever received back the amounts of donations in cash or in kind from the said Institutions and from any person whatsoever in lieu of the various amounts donated to these two institutions. We note that in the statements, of key persons and alleged brokers recorded by the Investigation Wing in course of survey proceedings, in their cases and the ....
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....pan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon'ble Supreme Court in Kader Khan & sons (supra). Moreover, we note that if 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 KishanBhawasingka 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. 15. Now, we deal with the arguments of ld DR for the Revenue. We note that the solitary grievance of the ld DR for the Revenue is that since the registration had been cancelled by the CBDT,with retrospective effect that is, with effect from 1st April 2007, by issuing notification dated 06.09.2016, for both the institutions viz: 'Matrivani' and 'The School of Huma....
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....ts and circumstances of the case and respectfully following the various judicial precedents relied upon hereinabove, we direct the ld AO to grant deduction u/s 35(1)(ii) of the Act, in the sum of Rs. 4,81,25,000/- for A.Y. 2013-14 and in the sum of Rs. 10,50,00,000/-, for A.Y. 2014-15,as claimed by him under section 35(1)(ii) of the Act in respect ofthe amounts of donations made to two Institutions viz. 'Matrivani Institute ExperimentalResearch & Education' and'The School of HumanGenetics and Population Health'. Accordingly, the Grounds 1 to 4 raised by the assessee for A.Y. 2013-14 and the Grounds 1 to 5 raised by the assessee for A.Y. 2014-15 are allowed." 3.1. The 'SMC' Bench of the Kolkata Tribunal in the case of Tushar Chawda vs. Income Tax officer in ITA No. 2362/Kol/2017; Assessment Year 2014-15, order dt. 21/03/2018, under identical circumstances held as follows:- "5. After hearing rival contentions, I am of the view that the assessee cannot suffer on account of withdrawal of notification given to M/s. School of Human Genetics and Population Health, Kolkata granting approval u/s 35 (1) (ii) of the Act. This recognition was originall....
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....aid to them. The revenue had left the matter at this stage itself and did not further probe into it to check the veracity of the confirmation made by Shri Swapan Ranjan Dasgupta. Therefore, the ld AO proceeded to make the addition only based on the statement recorded from Swapan Ranjan Dasgupta at the time of survey. It may be true that in the said statement, Swapan Ranjan Dasgupta may have deposed to the fact that HHBRF were in receipt of various donations from various persons in cheques and the same were routed back to the donors in cash after retaining certain portion as their commission and intermediaries' commission. This is only a general statement given by Swapan Ranjan Dasgupta about the modus operandi carried out by HHBRF. But nowhere in the said statement or in the subsequent enquires / investigation , it came to light that the assessee herein had indeed received back the cash in lieu of cheque donations given to HHBRF. This serves as a clinching missing evidence in the entire gamut of this case. 7. Respectfully applying the proposition of law laid down in this case law to the facts of case on hand and as the donation to " School of Human Genetics and Populat....