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TMI Blog2024 (3) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 29A of The Representation of Peoples Act, 1951 or an electoral trust and newsletter Rashtravadi is neither a trust. HELD THAT:- Though the deduction is not allowable for the reasons given by the ld. AO however, for the purpose of charging assessee for furnishing of inaccurate particulars of income, what has to be seen is, whether at the time of making the claim for deduction, there was any bonafide belief and explanation for making such a claim in the return of income. From the records, it appears that the claim was made on the basis of auditor s note who had given the detailed reasoning for making such a claim that it is allowable u/s. 80GGC. CIT (A) in the first round too has held to be a bonafide claim of deduction. Though in the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the A.Y. 2011-12. 2. The assessee is mainly aggrieved by levy of penalty of Rs. 3,24,450/- of disallowance of deduction claimed u/s. 80GGC of Rs. 10,50,000/-. 3. The brief facts are that assessee has claimed deduction u/s. 80GGC of Rs. 10,50,000/-. In response to show-cause notice, the assessee submitted invoices Rashtravadi which showed that money was paid for giving some advertisement in the news letter. Even the cheque was drawn in the name of the editor. Accordingly, ld. AO held that same is not allowable for deduction u/s. 80GGC which clearly states that deduction should be made to a political party registered u/s. 29A of The Representation of Peoples Act, 1951 or an electoral trust. The newsletter Rashtravadi is neither a trust. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and after deduction of tax at source u/s. 194C. It is submitted that the expenditure were laid out or expended wholly and exclusively for the purpose of the business of the appellant and therefore the same are allowable deduction u/s. 37(1) or section 80GGC of the Income-tax Act, 1961. 4. The ld. CIT (A) allowed the deduction after observing and holding as under:- 3.3 The provisions of section 80GGC brought into the statute w.e.f. 11.09.2003 and amended w.e.f. 01.04.2014, requires that any person shall be allowed deduction in respect of any amount of contribution made by her in the previous year to a political party or an electoral trust, except by way of cash. For the purposes of this section, political party, means a political party re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so notes, that the assessee did not have any B siness activity beyond sub-contracting work however, this appears to be not borne out by facts. The appellant has, during the year received sub-contracts from various companies viz. IRB Infrastructure Pvt. Ltd., MEP Infrastructure Developers Pvt. Ltd, Ideal Road Builders Pvt. Ltd., Baramati Tollways Pvt. Ltd. Certain of these parties were related concerns u/s 40A(2)(b), as evidenced from annexure-2 of form 3CB. But related parties together account for only 26.63% of the total expenditure on contracts incurred by the appellant and, therefore, 73.37% of the total expenditure has been incurred for work done for independent and unrelated parties. Therefore, it is not correct to hold that even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer for verification. If the assessee has made donation to a political party as defined u/s. 80GGC, the assessee is eligible to claim deduction under the provisions of aforesaid section. The Assessing Officer shall decide this issue after examining the documents on record and after affording opportunity of hearing to the assessee, in accordance with law Accordingly, ground No. 1 raised in appeal by the Revenue is allowed for statistical purpose. 6. In the set aside proceedings, ld. AO has analysed invoices and found that assessee made payment to newspaper / newsletter Rashtravadi for publishing colour advertisements. Nowhere, the bills mentioned that the payment made to the newspaper is donation to the party even though the newspa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. From the records, it appears that the claim was made on the basis of auditor s note who had given the detailed reasoning for making such a claim that it is allowable u/s. 80GGC. The explanation given to this effect reads as under:- It is submitted that the auditor in notes to accounts at point no. 2.2 has specifically stated that during the year the assessee has debited in the books of accounts of A.N. Enterprises Rs. 10,50,000/- under the head Advertisement Expenses being Advertisements in monthly Magazines These are treated as disallowable u/s. 37(2B) but are allowable u/s. 80GGC of the Income-tax Act, 1961 , which is verifiable from page no. 14 of the paper book. Further the auditor in clause 17 of Form No. 3CD has quantified the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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