9911796707
TMI Blog2012 (9) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... ered u/s.12A of the Income Tax Act. For the Assessment Year 2004-05 the income was claimed and allowed as exempt u/s.10(21) of the Income Tax Act as approval u/s.35(1)(ii) of the Act was on record for the period from 01-04-2001 to 31-03- 2004. The assessee filed an application for approval u/s.35(1)(ii) of the Act before the competent authority but the approval was not received till the date of assessment order. It was held by the Assessing Officer that since no certificate u/s.35(1)(ii) has been filed for the year under consideration therefore the income was not entitled for exemption u/s.10(21) of the Income Tax Act. The AO considered the status of the foundation as AOP and added the surplus of ₹ 3,70,22,567/- by observing as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(5). Moreover, no utilisation for acquiring any of the asset has been made. Thus the amount of said donation is held as income received during the year to the AOP". 3. Before the CIT(A) the assessee strongly challenged the order of the AO in making the addition of ₹ 3,70,22,567/-. It was submitted that the assessee is an institution dedicated for scientific research and the department of Science and Technology has also recognised the foundation as an entity engaged in scientific research. It was recognised and notified u/s.35(1)(ii) since 04-01-1980 and is also entitled for relief u/s.10(21) of the Income Tax Act. It was submitted that last notification of Government of India u/s.35(1)(ii) was valid upto 31-03-2004. It was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions relied on by the assessee the learned CIT(A) upheld the action of the AO in bringing to tax the corpus donation of ₹ 3 crores as taxable income. He also did not accept the contention of the assessee that 15% of the gross receipts of the foundation amounting to ₹ 35,65,359/- should be reduced from the gross receipts. Further, he upheld the action of the AO in not reducing an amount of ₹ 8,42,461/- spent by the foundation as capital expenditure from the taxable income. 5. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : "1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in : (a) Holding that the corpus donation amounting to ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it is not valid in law; (b) On merits, the denial of approval was not justified. He submitted that the Hon'ble High Court vide its order dated 16-02-2009 set aside the order passed by CBDT and directed it to pass a reasoned order and also to deal with the issue as to who is the prescribed authority. He submitted that the CBDT vide order dated 29-07-2009 again held that the assessee foundation is not a fit case for grant of approval under that section and rejected the application. He submitted that against this order of the CBDT the assessee has filed a writ petition before the Hon'ble High Court which is pending for final hearing. In the mean while the AO passed the order and held that the corpus donation of ₹ 3 Crores constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the provisions of section 2(24)(iia) does not in term apply to the facts of the case. It applies to voluntary contribution received by an institution referred to in clause (21) of section (10). Referring to provisions of section 10(21) he submitted that it refers to a scientific research institution which for the time being has been approved u/s.35(1)(ii). If it is not so approved, then neither section 2(24)(iia) nor section 10(21) can apply. In such a case the assessee stands at par with any other normal assessee in whose case gift cannot be taxed as income. 8. Referring to the provisions of section 12(1) he submitted that for invoking the same the assessee has to be registered u/s.12A. However, since the assessee has never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also not been registered u/s.12A of the Income Tax Act. Therefore, the AO apart from bringing the amount of ₹ 3 crores to tax did not reduce 15% of the gross receipts of the foundation. Further the AO did not consider the incurrence of capital expenditure amounting to ₹ 8,42,461/- towards its objects and did not reduce the same from taxable income. The order of the AO has been upheld by the CIT(A). It is the submission of the learned counsel for the assessee that even if approval u/s.35(1)(ii) is not granted then also the amount cannot be brought to tax since it is in nature of a gift and since this aspect has not been considered by the lower authorities in the light of the various decisions cited therefore the Tribunal shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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