2021 (12) TMI 813 - AT - Income Tax

Disallowance u/s 35(1)(iii) - assessee has given donation to one School of Human Genetics Population Health (SHG PH) - survey under section 133A - as per revenue information, the donation made by the assessee to the above Institution in the financial year 2013-14 relevant to Asstt. Year 2014-15 were bogus case of the assessee is that claim under section 35(1)(ii) of the Act for making donation to the institution notified by the Government of India in this behalf - HELD THAT - When the assessee made the impugned donation, permission/approval granted by the Govt. of India with regard to provisions of sections 35(1)(ii) and 80G(5)(iv) was very much in force, and based on which, the assessee has made the donation to this institution. The assessee has provided sufficient evidence to prove its case before both the authorities below, and based on which, the ld. CIT(A) rightly allowed claim of the assessee. We find that recent judgment of Hon'ble Gujarat in the case of PCT Vs. Thakkar Ganpatlal HUF, 2020 (2) TMI 31 - GUJARAT HIGH COURT as dealt with the similar issue, and while allowing claim of the assessee, referred to the decision of S.G. Vat Care P. Ltd. 2019 (1) TMI 1694 - ITAT AHMEDABAD which was authored by one of us. The Hon'ble Gujarat High Court recorded observation and finding of the Tribunal on this issue in page no. 3 to 5 of the judgment, and thereafter came to the conclusion that the onus placed on the assessee has been discharged and no interference in the order of the ITAT is required. The Hon'ble Court, thus allowed claim of donation made to M/s. Herbicure Healthcare Bio-Herbal Research Foundation). Thus following principle of consistency, we find merit in the claim of the assessee and delete disallowance of deduction made of deduction under sections 35(1)(ii) of the Act.- Decided in favour of assessee.

Summary

Issues:
Challenge to deletion of disallowance under section 35(1)(iii) of the Income Tax Act, 1961.

Analysis:

Issue 1: Disallowance under section 35(1)(iii) of the Income Tax Act, 1961

- The appeal was filed by the Revenue against the order of the ld. CIT(A) for the Asstt. Year 2014-15, challenging the deletion of disallowance of ?52,50,000 under section 35(1)(iii) of the Act.
- The assessee had given a donation of ?30.00 lakhs to a specific institution and claimed it as a deduction under section 35(1)(ii). However, a survey revealed that the institution was misusing benefits by indulging in bogus donations. The ld. AO considered the donation as bogus based on this information.
- The assessee contended that the donation was made when the permission/approval granted by the Government of India was in force, and provided evidence to support their claim. The ld. CIT(A) allowed the claim of the assessee.
- The Tribunal referred to a judgment by the Hon'ble Gujarat High Court in a similar case, where the claim of the assessee was allowed based on evidence provided. The Tribunal found merit in the claim of the assessee and deleted the disallowance under section 35(1)(ii) of the Act.
- The Tribunal noted that since the issue was covered in favor of the assessee by the cited judgment, they upheld the claim and allowed the appeal of the assessee.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented, and the final decision made by the Tribunal regarding the challenge to the deletion of disallowance under section 35(1)(iii) of the Income Tax Act, 1961.