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2019 (6) TMI 1048 - AT - Income TaxDisallowance of deduction u/s 35(1)(ii) - assessee claimed 175% of total donation - approval of Institution namely SHG PH has been withdrawn by CBDT w.e.f. 01.04.2007 vide notification dated SO 2961(E) 82 of 2016 dated 15.09.2016 - AO disallowed weighted deduction holding that the CBDT has withdrawn the notification dated 4/2010 dated 28.01.2010 - HELD THAT - As decided in M/S. MOTILAL DAHYABHAI JHAVERI AND SONS VERSUS ASSISTANT COMMISSIONER OF INCOME TAX 19 (2) , MUMBAI 2019 (4) TMI 1615 - ITAT MUMBAI withdrawal of deduction u/s 35(1)(ii) of the Act due to withdrawal of recognition with retrospective effect . In any case, we find that the provisions of section 35(1)(ii) of the Act vide its Explanation reproduced hereinabove clearly proves that the donor (i.e assessee herein) cannot be affected due to subsequent withdrawal of recognition with retrospective effect. We direct the ld AO to grant deduction u/s 35(1)(ii) - Decided in favour of assessee.
Issues:
Appeal against order of CIT(A) for Assessment Year 2014-15 regarding disallowance under section 35(1)(ii) for donation to an approved institution. Analysis: 1. The appellant, engaged in agrochemical manufacturing, filed its return for AY 2013-14, selected for scrutiny, and faced disallowance under section 35(1)(ii) by AO. The disallowance was due to the withdrawal of approval of the Institution, Human Genetics and Population Health (SHG&PH), Kolkata, with retrospective effect from 01.04.2007. 2. On appeal before CIT(A), the disallowance was upheld, citing the withdrawal of approval by CBDT from 01.04.2007. The appellant contended that the donation was made during the approval period and should not be disallowed due to subsequent withdrawal. 3. During proceedings, the appellant claimed a weighted deduction of ?2.62 crore for a donation of ?1.50 crore to SHG&PH, approved by CBDT. The appellant argued that withdrawal of approval should not affect the deduction claim, as the donation was made in good faith during the approval period. 4. The revenue supported the lower authorities, citing a survey revealing alleged wrongful activities of SHG&PH leading to withdrawal of approval. The appellant relied on a Mumbai Tribunal decision in a similar case to support their claim. 5. The Tribunal noted that the appellant made donations during the approval period and before withdrawal, similar to a previous case. The Tribunal cited the Taxation Laws (Amendment) Act, 2006, explaining that withdrawal of approval post-donation does not affect the donor's entitlement to deduction under section 35(1)(ii). 6. Relying on precedents and legal provisions, the Tribunal allowed the appeal, directing the AO to grant the deduction claimed by the appellant. The decision was based on the principle that withdrawal of approval post-donation does not impact the donor's eligibility for deduction under section 35(1)(ii). 7. The Tribunal's decision was in line with previous rulings on similar cases, emphasizing that the donor's entitlement to deduction should not be affected by the subsequent withdrawal of approval. The appellant's appeal was allowed based on these considerations.
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