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2010 (11) TMI 582 - HC - Income TaxRejection of application for approval / renewal under section 35(1)(ii) - Held that - though it has been found by the authority that, adequate scientific research activity, which is an essential requirement to qualify for approval under section 35(1)(ii) of the Income-tax Act has not been carried out by the petitioner and it has been concluded that the application of the petitioner is not a fit case for grant of approval , however, no reason has been mentioned in support of the order. - the impugned order is cryptic as it does not disclose the basis or reasons for rejection. - CBDT directed to forward the application to the authority concerned of the Central Government for disposal of the application of the petitioner for renewal of approval under section 35(1)(ii) of the Act.
Issues:
Challenge to rejection of application for approval under section 35(1)(ii) of the Income-tax Act, 1961. Analysis: The petitioner, an organization recognized by the Department of Scientific and Industrial Research, challenged the order rejecting their application for approval under section 35(1)(ii) of the Income-tax Act, 1961. The Central Board of Direct Taxes rejected the application citing inadequate scientific research activity. The order was criticized for lacking reasons and not disclosing the basis for rejection. The petitioner argued that they were entitled to be heard before the rejection. The court agreed that the order was cryptic and did not provide any justification for the decision. The undisclosed "prescribed authority" was also a point of contention. As a result, the court set aside and quashed the impugned order, directing the Central Board of Direct Taxes to forward the application to the Central Government authority for a reasoned decision within a specified timeframe after giving the petitioner an opportunity to be heard and present relevant documents. The court clarified that it did not delve into the merits of the case, leaving all points open for the authority under the Central Government to consider. The writ petition was disposed of at the admission stage without requiring the respondents to file affidavits, implying that the allegations made were not admitted by them. No costs were awarded in this matter.
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