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TMI Blog2018 (4) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... pment & component and project execution work. The return of income for the Asst Year 2014-15 was filed by the assessee on 30.9.2014 disclosing total income of Rs. 35,46,93,990/-. The ld AO observed that the assessee claimed donation of Rs. 4,37,50,000/- (being 175% of Rs. 2,50,00,000/-) u/s 35(1)(ii) of the Act for the scientific research organization donation made as under:- Herbicure Healthcare Bio-Herbal Research Foundation (HHBHRF in short) 7.3.2014 1,00,00,000 HHBHRF 11.3.2014 1,00,00,000 HHBHRF 29.3.2014 50,00,000 2,50,00,000 Survey Operations u/s 133A of the Act were conducted on 27.1.2015 in the premises of HHBHRF by the Directorate of Investigation, Kolkata. In such survey, it was found that the aforesaid concern was engaged in collecting bogus donations u/s 35(1)(ii) of the Act from beneficiaries to enable them to claim weighted deduction of 175% of the amounts actually paid by such beneficiaries. The ld AO issued a show cause notice asserting the following :- * As per Tax audit report column 15(a), the amounts debited and deduction allowable u/s 35 is being shown as "NA". * These institutions are engaged in the bogus donation u/s 35(1)(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trations u/s 35(1)(ii) of the Act. * These are not bogus donations as alleged. The donations are genuine and no commission whatsoever was paid to any person with respect to these donations. At the time of making these donations no such discrepancy came to the knowledge of the assessee company. * The assessee company is subjected to regular assessment every year and it can be seen from the accounts that for several years the assessee group has been supporting several institutions by giving donations. This is the philosophy of the group. * The deduction claimed is correct and should be allowed in full. In support of its claim the assessee company furnished following:- a) Registration & renewal certificate of Department of Science & Technology, Government of India. b) Request letter of HHBHRF. c) Income Tax Exemption of Certificate. d) Receipts of Rs. 2,50,00,000/- issued by HHBHRF * Assessee requested the ld AO to provide all materials proposed to be used against the assessee company in respect of transactions with foundation. The assessee also requested to cross examine the parties who have given adverse statements. * It was also mentioned that in view of the judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a detailed written submissions before the ld CITA meeting out each and every point of the order of the the ld AO which are reproduced in pages 7 to 24 of the order of the ld CITA which are not reiterated herein for the sake of brevity. The ld CITA deleted the disallowance by observing as under:- "5.1. I have gone through the assessment order, written submissions filed by the AR of the appellant company as well as the paper book containing all the supporting documents in the matter. I find that the identical issue has already been decided in favour of the appellant by me in the appellant's own case for AY 2013-14 vide ITA No. 10687/CIT(A)-4/Circle-12(1)/16-17 dated 24.10.2016.In such circumstance and following the principles of Consistency, the addition made by the AO on this count for the year under consideration is alos hereby directed to be deleted. The AO is directed accordingly in the matter. These grounds are allowed." 7. Aggrieved, the revenue is in appeal before us on the following grounds:- 1. That on the facts & circumstances of the case and in law, the Ld. CIT(A) has erred by deleting the disallowance of deduction u/s. 35(1)(ii) of the Act of Rs. 4,37,50,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 14.3.2018 wherein it was held as under:- 8. We have heard the rival submissions and perused the materials available on record. The brief facts pertaining to HHBHRF are as under:- a) HHBHRF was registered u/s 12AA of the Act by the ld DIT(Exemptions), Kolkata with effect from 26.12.2003. b) HHBHRF was also recognized in the year 2006-07 as a scientific industrial research organization (SIRO) by Ministry of Science & Technology, Government of India. The renewal of recognition as SIRO by the Department of Scientific and Industrial Research under the Scheme on Recognition of Scientific and Industrial Research Organisation, 1988 was made for the period from 1.4.2012 to 31.3.2015 vide communication in F.No. 14/444/2006-TU-V dated 13.8.2012. c) HHBHRF was recognized vide Gazette Notification No. 35/2008 dated 14.3.2008 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance, Government of India, u/s 35(1)(ii) of the Act. 8.1. The brief fact pertaining to SGHPH are as under:- a) SGHPH was recognized vide Gazette Notification dated 28.1.2009 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance (Department of Revenue), G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed under Section 12A by the CIT is a quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power vested in him under the Act to do so. In this case there was no such express power. 22. Indeed, the functions exercisable by the CIT under Section 12A are neither legislative and nor executive but as mentioned above they are essentially quasi judicial in nature. 23. Third, an order of the CIT passed under Section 12A does not fall in the category of "orders" mentioned in Section 21 of the General Clauses Act. The expression "order" employed in Section 21 would show that such "order" must be in the nature of a "notification", "rules" and "bye laws" etc. (see - Indian National Congress(I) v. Institute of Social Welfare [2002] 5 SCC 685. 24. In other words, the order, which can be modified or rescinded by applying Section 21, has to be either executive or legislative in nature whereas the order, which the CIT is required to pass under Section 12A of the Act, is neither legislative nor an executive order but it is a "quasi judicial order". It is for this reason, Section 21 has no application in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2004. We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. Infact the assessee's case herein falls on a much better footing than the facts before the Hon'ble Apex Court. In the case before Hon'ble Apex Court, the power of cancellation of registration us 12A of the Act was conferred by the Act on the ld CIT w.e.f. 1.10.2004 and the Hon'ble Apex Court held that prior to that date, no cancellation of registration could happen. But in the instant case, there is absolutely no provision for withdrawal of recognition u/s 35(1)(ii) of the Act. Hence we hold that the withdrawal of recognition u/s 35(1)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii) of the Act. 8.4. We also find that the co-ordinate bench of this tribunal in exactly similar facts had decided the issue in favour of the assessee in the following cases:- a) Rajda Polymers vs DCIT in ITA No. 333/Kol/2017 for Asst Year 2013-14 dated 8.11.2017. b) Saimed Innovation vs ITO in ITA No. 2231/Kol/2016 for Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "9. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that a similar issue relating to addition on account of expenditure disallowed under section 14A while computing book profit under section 115JB of the Act has been decided by the Special Bench of this Tribunal at Delhi in the case of ACIT vs Vireet Investment Pvt. Ltd. (I.T.A. No. 502/Kol/2012 dated 16.06.2017) wherein it was held, after taking into consideration the decision of Delhi High Court in the case of Goetze (India) Ltd. (supra), that the expenditure incurred to earn exempt income computed under section 14A of the Act could not be added while computing book profit under section 115JB of the Act. In the case of CIT vs. Jayshree Tea Industries Ltd. (ITAT No. 47 of 2014 dated 19.11.2014), Hon'ble Kolkata High Court has also expressed a similar view by holding that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act. Hon'ble Kolkata High Court has further held that the computation of the amount of expenditure relatable to exempt income of the Act wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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