2022 (7) TMI 1357 - AT - Income Tax

Disallowance of deduction claimed u/s 35(1)(ii) in respect of donation given by the assessee - AO disallowed claim on the basis of certain information shared by the Investigation wing and the said disallowance was confirmed by learned CIT(A) - HELD THAT - As identical disallowance made in the hands of the assessee in A.Y. 2012-13 2022 (3) TMI 1451 - ITAT MUMBAI has since been deleted by the Division Bench of the Tribunal - Thus we respectfully follow the judicial precedence and set aside the order of the CIT(A) and direct the Assessing officer to delete the addition and allow the ground of appeal in favour of the assessee.

Summary

Issues Involved:
1. Disallowance of deduction under section 35(1)(ii) of the I.T. Act for donation given by the assessee.

Issue-wise Detailed Analysis:

Disallowance of Deduction under Section 35(1)(ii):
The sole issue in this appeal pertains to the disallowance of a deduction of Rs. 17.50 lakhs claimed by the assessee under section 35(1)(ii) of the Income Tax Act, 1961, in respect of a donation given to M/s. Herbicure Health Care Bio Herbal Research Foundation (HHBRF). The assessee had donated Rs. 10 lakhs to HHBRF, which was an eligible institution under section 35 of the Act, and claimed a weighted deduction of Rs. 17.50 lakhs. The Assessing Officer disallowed this claim based on information from the Investigation Wing, and this disallowance was upheld by the learned CIT(A).

The assessee's representative argued that a similar donation made in the subsequent assessment year (2012-13) was also disallowed but later allowed by the Division Bench of the Tribunal. The representative provided a copy of the Tribunal's order dated 23.3.2022, which deleted the disallowance for A.Y. 2012-13.

Upon review, the Tribunal noted that the facts of the current case were identical to those in A.Y. 2012-13. The Tribunal referenced several decisions where similar disallowances were overturned, emphasizing that the genuineness of the donation was supported by evidence. It was highlighted that the withdrawal of recognition of the institution by the CBDT with retrospective effect does not affect the assessee's right to claim the deduction if the donation was made when the institution was duly approved.

The Tribunal cited multiple precedents, including the cases of M/s Sopariwala Exports Pvt Ltd vs. DCIT, Motilal Dahyabhai Jhaveri & Sons Vs. ACIT, Borsad Tobacco Co. Pvt. Ltd. Vs. DCIT, and Kitchen Essentials Vs. ACIT, where it was consistently held that the deduction under section 35(1)(ii) should be allowed despite the retrospective withdrawal of the institution's approval.

The Tribunal concluded that since the payee institution was approved at the time of the donation, the assessee could not have anticipated the subsequent withdrawal of approval. Therefore, the Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to allow the deduction of Rs. 17.50 lakhs claimed by the assessee.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to grant the deduction under section 35(1)(ii) of the Act, thereby setting aside the disallowance made by the CIT(A). The decision was pronounced in the open court on 22.07.2022.