2018 (1) TMI 1235 - AT - Income Tax

Eligibility to claim exemption u/s 35(1)(ii) - order of CBDT having no authority to grant approval - Held that - It is clear from the record there was no approval for the assessee to claim exemption u/s 35(1)(ii) of the Act as on the date of assessment and grounds raised are liable to be dismissed. No force in the submissions of the Ld.AR in respect of the CBDT has no power to decide the application seeking approval u/s 35(1)(ii) of the Act. Admittedly, it is noticed that for the A.Y under consideration, there was no approval for getting exemption u/s. 35(1)(ii) as on the date of assessment to claim exemption. Therefore, in our opinion, the CIT-A rightly exercised his jurisdiction in confirming the order of AO in rejecting the claim of the assessee. Therefore, grounds raised by the assessee in the appeal are dismissed.

Summary

Issues:
1. Justification of confirming the assessment order determining the total income of the assessee against the returned income.

Analysis:
The appeal was filed against the order of the Commissioner of Income-tax, Jalpaiguri for the assessment year 2009-10. The main issue revolved around the confirmation of the assessment order determining the total income of the assessee at Rs. 92,04,200 against the returned income of Nil. The Assessing Officer (AO) treated the assessee as an 'AOP' after the application for renewal of approval u/s. 35(1)(ii) was rejected by the Central Board of Direct Taxes (CBDT). The assessee contended that it was involved in various research activities and should have been granted exemption under the IT Act. However, the CIT-A rejected the claim due to the absence of approval u/s. 35(1)(ii) of the Act. The Tribunal upheld the decision, stating that the CBDT rejected the application based on inadequate scientific research activity, making the assessee ineligible for exemption. The Tribunal also highlighted that the High Court of Calcutta had previously ruled on the matter, affirming the authority of the CBDT in such cases. Consequently, the Tribunal dismissed the appeal, affirming the decision of the CIT-A in rejecting the claim of the assessee for exemption u/s. 35(1)(ii) of the Act.

In conclusion, the Tribunal's decision was based on the lack of approval for exemption u/s. 35(1)(ii) of the Act, as the CBDT had rejected the application due to insufficient scientific research activity. The Tribunal also cited the High Court's ruling, confirming the authority of the CBDT in such matters. Therefore, the appeal was dismissed, upholding the decision of the CIT-A to reject the assessee's claim for exemption.