2019 (8) TMI 1505 - AT - Income Tax

Disallowance of claim of deduction u/s 35(1)(ii) - donation given to School of Human Genetics Population Health (SHG PG) - HELD THAT - Exactly on identical issues the co-ordinate Bench of this Tribunal B Bench Kolkata in the case of DCIT vs. Maco Corporation (India) Pvt. Ltd. 2018 (3) TMI 811 - ITAT KOLKATA has considered the issue in regard to very same trust i.e. SGHPH and holds that prior to the date of donation under cancellation of registration has happened and there is absolutely no provision of withdrawal of recognition under section 35(1)(ii). 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very clear that the payer (the assessee herein) would not get affected if the recognition granted to the payee had been withdrawn subsequent to the date of contribution by the assessee.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) - Decided in favour of assessee.

Summary

Issues:
Disallowance of deduction under section 35(1)(ii) of the Income Tax Act in relation to donation given to School of Human Genetics & Population Health (SHG&PG).

Analysis:
The appeals arose from orders of the Commissioner of Income Tax (Appeals) confirming the disallowance of deduction under section 35(1)(ii) of the Act for donations to SHG&PG. The Assessments were framed by the Assistant Commissioner of Income Tax for the relevant assessment years. The AO initiated the reassessment based on information received regarding alleged accommodation entries for donations claimed under section 35(1)(ii). The AO disallowed the deduction as investigations revealed the donations were not utilized for scientific research or infrastructure. The CIT(A) upheld the AO's decision, leading to the appeals before the Tribunal.

The assessee contended that the donations were genuine and supported by receipts and necessary approvals. The institution, SHG&PG, held various registrations and certificates demonstrating eligibility for receiving donations under section 35(1)(ii). The assessee argued that the institution underwent a rigorous verification process by government authorities before being notified for such donations. The assessee also cited a Tribunal decision in a similar case where the deduction was allowed despite the withdrawal of recognition post-donation.

The Tribunal considered the evidence presented by the assessee and the legal provisions. Referring to previous Tribunal decisions, the Tribunal held that the withdrawal of recognition post-donation does not affect the entitlement of the payer to claim the deduction under section 35(1)(ii). Citing consistency with prior decisions, the Tribunal allowed the appeals for both assessment years, concluding that the assessee was entitled to the deduction for donations made to SHG&PG.