TaxTMI 
TaxTMI 
2020 (10) TMI 985
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....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 Mukherjee Sardar {Secretary of SHG&PH} that The assessee / company M....
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....al 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, Kolkata is denied. It may be clarified here that explanation to section 35(1)(iii) of the Incometax Act shall n....
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....itute 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. 7. The ld. DR on the other hand, submitted that he relies on the order of the AO as well as the ld. CIT(A) and the material gathered by the Investigation Wing of the Department. He submitted tha....
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....arch 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 are very clear that the payer (the assessee herein) would not get affected if the recognition granted to the payee had been withdrawn subsequent to the date of contribution by the assessee. Hence no disallowance u/s 35(1)(ii) of the Act could be made in the instant case. ITA No.16/....
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....ant 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 such power could be exercised by the CIT only on and after 01.10.2004, i.e., (assessment year 2004-2005) because the amendment in question was not retrospective but was prospective in nature. 28. The issue involved in this appeal had also come up for consideration before three High Courts, namely, Delhi High Court in the case of DIT (Exemptions) v. M....
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.....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, wherein an identical claim made of a donation to "The School of Human Genetics and Population Health", was disallowed by the Assessing Officer and the ld. CIT(A), upheld the same. The Tribunal at para 13 onwards held as follows:- "13. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that the assessee has challenged disallowance of weighted deducti....
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....tutions 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 extracts of which was provided to the assessee in the show cause notice, the name of the assessee firm does not appear anywhere. It is to be noted that none of those persons implicate the assessee to have made bogus donations and that cash was paid to ITA No. 1162/Kol/2018 Assessment Year: 2011-12 Santosh Suresh Kumar Agarwal the donors assessee in lieu of the alleged bogus donation after deducting their commission. We note that the st....
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....anjan 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 HumanGenetics and Population ITA No. 1162/Kol/2018 Assessment Year: 2011-12 Santosh Suresh Kumar Agarwal Health', therefore these institutions are not entitled to claim benefit under section 35 (1) (ii) of the Act. We note that the withdrawal of recognition u/s 35(1)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assesseeherein for claim of weighted deduction u/s 35(1)(ii) of the Act, for that we rely on th....
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....opulation 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 originally granted on 28th January, 2010 and renewed on 17th June, 2010 by Government of India . Ministry of Science and Technology. In response to letter dated 03.02.2014 given by M/s. School of Human Genetics and Population Health, to the assessee, donation of Rs. 15,00,000/- was made on 31.03.2014 by the assessee. The said amount was given to the donee on 31.03.2014 and withdrawal was on 15.09.2016. i.e. after 17 months from the date of donation made in March, 2014. Such withdrawal in my view cannot take away the vested right....
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....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 Population Health" was made while it was holding the approval in question, we direct the AO to grant the said deduction as claimed. In the result this issue is decided in favour of the assessee." 3.2. Similar view was taken by the 'B' Bench of the Tribunal in the case of DCIT vs. M/s. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017; Assessment Year 2013-14, order dt. 14/03/2018. 4. Consistent with the view taken therein, we allow this appeal of the assessee and direct the Assessing Officer to grant the necessary deductions." 11. Si....