9911796707
TMI Blog2024 (7) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in both the years should be allowed. Assessee appeal allowed. - Shri B.R. Baskaran (AM) And Shri Sunil Kumar Singh (JM) For the Assessee : Ms. Ridhisha Jain For the Department : Shri H. M. Bhatt (Sr. DR) ORDER PER B.R. BASKARAN (AM) :- Both appeals filed by the assessee are directed against the orders passed by the Ld CIT(A), NFAC, Delhi and they relate to the assessment years 2014-15 2015-16. 2. In both the appeals, the assessee is aggrieved against the decision of the learned CIT(A) in confirming the disallowance of deduction claimed u/s 35(1)(ii) of the Income Tax Act, 1961 (hereinafter the Act ). 3. The assessee is a partnership firm and is engaged in the business of export of dyes and dye intermediates, chemicals and allied industrial goods. In the financial year relevant to the assessment year 2015-16, the assessee had given donation of Rs. 55,00,000/- to M/s. Matrivani Institute of Experimental Research Education, Kolkata towards scientific research. Accordingly, the assessee claimed weightage deduction u/s 35(1)(ii) @ 175% of the donation amount, which worked out to Rs. 96,25,000/-. In the financial year relevant to the assessment year 2014-15, the assessee had donate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly brought out the modus operandi adopted by these two institutions in issuing bogus donations in lieu of receiving commission. Since it is found that both these institutions are involved in issuing bogus donations receipts, the learned CIT(A) was justified in confirming the disallowance of deductions claimed by assessee u/s 35(1)(ii) of the Act in both the years. 6. We notice that the issue is squarely covered against the Revenue by the decision of the ITAT in the case of Sopariwala Exports Pvt. Ltd. (ITA No.2039/Mum/2018 vide order dated 17.6.2021) has decided the identical issue in favour of the assessee by observing as under :- 11. Upon careful consideration we note that identical issue was decided in favour of the assessee in the aforesaid decisions of the ITAT. We may refer to the decision in the case of Kitchen Essentials (supra) as under:- We have heard the rival submissions and perused the material on record including the decisions cited by the Id. AR. The undisputed facts are that the assessee has made donations of Rs. 50 lakhs to the The School of Human Genetics and Population Health and claimed deduction u/s. 35(1)(ii) of the Act equal to Rs. 87,50,000/- being 175% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4,81,25,000/- under section 35(1) (ii) of the Act, which is 175% of the amount of donation being the sum of Rs. 2,75,00,0007- in respect of the donation given to 'The School of Human Genetics and Population Health'. We note that the Notifications to this effect, that these two institutions viz. 'Matrivani' and 'SHG', were approved by the Central Government for the purpose of section 35(1)(ii) of the Act, was published in the Gazette of India. However, the deduction claimed by the assessee was denied by the Assessing Officer on the basis of the allegations contained in the report of the Investigation Wing of Kolkata that the said donations were bogus. The reasons stated therein, in short, were that statements of some key persons of these two donee institutions were recorded by the Investigation authority in course of survey proceedings in their cases. The said key person, in their statements, accepted to have received donations from various entities in lieu of cash returned to them after deducting commission there from. 14. We note that, during the course of hearing, before us, the Id Counsel for the assessee submitted that, the sums paid to Matrivani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confirmed that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupla fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon'ble Supreme Court in Kader Khan sons (supra). Moreover, we note that if the AO was hell bent determined to disallow the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Id 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(l)(ii) of the Act. Hence we hold that the withdrawal of recognition u/s 35(l)(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/s35(1)(H) of the Act. 16. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the various judicial precedents relied upon hereinabove, we direct the Id AO to grant deduction u/s 35(1 )(ii) of the Act, in the sum of Rs. 4,81,25,000/- for A. Y, 2013-14 and in the sum of Rs. 10,50,00,000/-, for A. Y. 2014-15, as claimed by him under section 35(l)(ii) of the Act in respect of the amounts of donations made to two Institutions viz. 'Matrivani Institute Experimental Research Education' and The School of Human Genetics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e withdrawn. Accordingly, following the above said precedent and noting that it is not the case that Hon'ble Bombay High Court has reversed the decision, we set aside the order of authorities below. The assessee is therefore held to be eligible for deduction under section 35(1)(ii) of the Act. 7. In the instant case also, the AO has relied upon the report given by the Investigation wing. He did not make any independent enquiry to prove that the view expressed by the Investigation wing would be applicable to the assessee. The AO has not brought any material to disprove the evidences furnished by the assessee with regard to the donations paid by it to the institutions. There is also no proof to show that the cheque paid by the assessee has been ploughed back by way of cash to the assessee. It is settled proposition that the subsequent withdrawal of recognition granted u/s 35(1)(ii) will not be a bar for granting deduction to the donations paid earlier. Accordingly, for the reasons discussed above and also following the decision of the co-ordinate bench referred supra, we hold that the claim made by the assessee u/s 35(1)(ii) of the Act in both the years should be allowed. 8. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
