TMI Blog2021 (7) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company is engaged in the business as buyers, purchasers, sellers, distributors, importers, exporters, traders or otherwise dealers of tobacoo, tobacco leaves, beedies, cigars, cigarettes, pan masala, tobacco masala, tobacco powder, tobacco pastern agro-based products, flowers, etc. 4. In the course of assessment the Assessing Officer examined the claim of expenditure under section 35(1)(ii) of the Act. He noted that the assessee debited a sum of ₹ 10 crores to P L account on account of contribution u/s 35(1)(ii) and clubbed it as part of figure of contribution u/s 35 AC (total of ₹ 23 crores) under the head Administrative, Selling, Distribution Other expenses and on which deduction has been claimed u/s. 35(l)(ii) of the Act @ 175%. He noted that the payment was made to an institute by the name School of Human Genetics and Population Health (SHGPH), Kolkata. That a Survey action u/s. 133A of the Act, was conducted at the office premises of SHGPH on 27.01.2015. That during the course of survey, it emerged that School of Human Genetics and Population Health is engaged in accepting bogus donation u/s 35(l)(ii) of the Act through various brokers in lieu of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that deduction shall not be denied merely on the ground that subsequent to the payment, the approval has been withdrawn. 6. The Assessing Officer observed that while the assessee's contention of Explanation to Sec 35(l)(ii), deserves merit, it covers situations in which the approval granted to institutions are subsequently withdrawn for failing to fulfill the requirements as envisaged to be eligible for approval u/s 35(1)(ii). That the situation obtaining in the case of SHGPH is based on pure illegality and misuse of the beneficient provisions of the Act which are meant to promote Scientific research. That hence assessee's contention is rejected. Hence Assessing Officer made disallowance of ₹ 17,50,00,000 7. Upon assessee s appeal learned CIT(A) confirmed the Assessing Officer s action. He inter alia relied upon the same search proceedings as that by the Assessing Officer. He further referred that he had taken into consideration the CBDT notification of withdrawal dated 15.9.2016 wherein it is noted that M/s. SHGPH has not taken any scientific research action. 8. Against the above order assessee is in appeal before us. 9. We have heard both the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the rival submissions and perused the materials available on record, we note that the assesses has challenged disallowance of weighted deduction of ₹ 4,81,25,0007- for A.Y. 2013-14 and disallowance of weighted deduction of ₹ 10,50,00,000/-, for A.Y. 2014-15, 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' (hereinafter referred to as 'Matrivani') and 'The School of Human Genetics and Population Health' (hereinafter referred to as 'SHG'). The Assessee Firm in A.Y. 2014-15, made donation of Rs,2,00,00,000/ to Matrivani and Rs,4,00,00,000/ to SHG and claimed weighted deduction of ₹ 10,50,00,000 under section 35(l)(ii) of the Income Tax Act, 1961, being 175% of the aggregate sum of ₹ 6,00,00,000/-(Rs,2,00,00,000 + Rs,4,00,00,000) donated to these two institutes which were approved by the Central Government for the purposes of section 35(1) (ii) of the Act read with Rule 5C and SE of the Income Tax Rules, 1962. In the assessment year 2013-14, the assessee claimed weighted deduction of ₹ 4,81,25,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in lieu of the alleged bogus donation after deducting their commission. We note that the statements of the various parties and persons were recorded behind the back of the assessee and the Assessing Officer did not allow opportunity of cross examination. We note that in absence of opportunity of cross-examination no reliance could be made on such statements to draw any adverse inference against the assessee firm. The assessee firm denied its knowledge of the statements made by these institutes which were relied on by the Investigation Wing and the Assessing Officer. We note that not providing the opportunity of cross-examination is against the principle of natural justice and for that we rely of-the judgment of Hon'ble Delhi High Court in the case of CIT vs. Dharam Pal Prern Chand Ltd. [2007] 295 ITR 105, 108 (del). We note that on identical facts, the similar proposition was upheld by the Coordinate Bench of Kolkata in the case of Rajda Polymers, ITA No.333/Kol/2017,for Assessment Year 2013-14 wherein it was held as follows: 10. ....Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted deduction u/s 35(1 )(ii) of the Act, for that we rely on the judgment of the Coordinate Bench, Kolkata, in the case of M/s Maco Corporation India (P) Ltd, ITA No.l6/Kol/2017, for Assessment Year 2013-14, wherein it was held as follows: 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration fill 01.10.2004; and lastly. Section 21 of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section I2AAC3) of the Act w.e.f. 01.10.2004. 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. In fact the assessee's case h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payee has taken place subsequent to the payment by the assessee. The assessee s case duly follows under section 35(1)(ii) of the Act which read as under :- Section 35(1)(ii) : an amount equal to one and one half times of any sum paid to a research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research : Provided that such association, university, college or other institution for the purposes of this clause- (A) is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and (B) such association, university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government : Provided further that where any sum is paid to such association, university, college or other institution in a previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, the deduction under this clause shall be equal to the sum so paid; 13. Hence the payee was duly approved when the payment was done. By no stretch of imagination it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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