2023 (12) TMI 979 - AT - Income Tax

Disallowance of deduction u/s 80-GGA - donation made by the assessee to Navjeevan Charitable Trust - claim of the assessee that at the time of making of aforesaid donation Navjeevan Charitable Trust was duly approved u/s 35-AC - HELD THAT - As under section 80-GGA assessee is entitled to claim a deduction in respect of any sum paid in the previous year to a public sector company, local authority, association, or institution approved by the National Committee for carrying out any eligible project or scheme under section 35-AC. Further, Explanation-1 to section 80-GGA(2)(bb) further provides that the deduction to which the assessee is entitled of any sum paid to the aforesaid authority shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee the approval granted has been withdrawn or the notification notifying the eligible project or scheme referred to in section 35-AC has been withdrawn. Section 35-AC of the Act provides that expenditure incurred by an assessee by way of payment of any sum to a public sector company or a local authority or to an association or institution approved by the National Committee for carrying out any eligible project or scheme be allowed as a deduction. Since the relevant provisions of the Act, applicable to the present case, specifically debars denial of deduction claimed by the assessee merely on the ground of subsequent withdrawal of approval or notification under section 35-AC of the Act, therefore we find no merits in denial of deduction under section 80-GGA of the Act in the present case. Further, even though the Revenue has claimed that Navjeevan Charitable Trust has been involved in a bogus transaction of accommodation entry and the learned CIT(A) has also made various allegations against the assessee in the impugned order, however in the present case the impugned addition is based on the denial of deduction under section 80-GGA of the Act merely on the basis of subsequent withdrawal of notification u/s 35-AC of the Act and there is no material available on record to support the findings of the learned CIT(A). Accordingly, the impugned order upholding the denial of deduction claimed under section 80-GGA of the Act is set aside. As a result, grounds raised in assessee s appeal are allowed.

Summary

Issues Involved:
The judgment involves challenges to re-assessment proceedings under section 147, disallowance of donation claimed under section 80GGA, and jurisdictional issues.

Re-assessment Proceedings under Section 147:
The appeal challenged the re-assessment proceedings initiated under section 147 and the subsequent re-assessment order. The grounds included lack of jurisdiction by the Assessing Officer (AO), initiation of proceedings based on borrowed satisfaction, failure to provide documents for cross-examination, and absence of notice under section 143(2). The relief claimed was to declare the impugned order null and void.

Disallowance of Donation Claimed under Section 80GGA:
The issue pertained to the disallowance of a deduction claimed under section 80GGA for a donation made to Navjeevan Charitable Trust. The AO disallowed the deduction based on information received regarding the trust's activities. The CIT(A) upheld the disallowance. The appellant argued that the deduction should not be denied due to subsequent withdrawal of approval notifications. The provisions of sections 80GGA and 35-AC were analyzed to determine the eligibility for the deduction. The Tribunal found no merit in denying the deduction solely based on the withdrawal of approval, as there was no evidence to dispute the approval status at the time of donation. The impugned order was set aside, and the deduction was allowed.

Jurisdictional Issues:
The jurisdictional issues raised in the appeal were kept open for further consideration based on the submissions made during the hearing.

Conclusion:
The Tribunal allowed the appeal concerning the disallowance of the deduction claimed under section 80GGA, emphasizing that withdrawal of approval cannot be the sole basis for denying the deduction. The jurisdictional issues were left open for future review.