Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 470 - AT - Income TaxDisallowance of deduction u/s.35(1)(ii) towards donation given to M/s. School of Genetics and Population Health (SHG & PH) - subsequent withdrawal of approval with retrospective effect - Whether or not the subsequent cancellation of registration to SHG&PH vide CBDT order dated 15.09.2016 with retrospective effect can invalidate the assessee's claim of deduction under Sec. 35(1)(ii) - HELD THAT:- We find that the aforesaid research institution i.e, SHG&PH as on the date of giving of donation by the assessee was having a valid approval granted under the Act. On a perusal of the aforesaid 'Explanation' to Sec. 35(1)(ii) of the Act, it can safely be gathered that a subsequent withdrawal of such approval cannot form a reason to deny deduction claimed by the donor. As decided in Indian Council of Agricultural Research (1999 (10) TMI 55 - BOMBAY HIGH COURT] while dealing with an identical issue of denial of deduction under Sec. 35(1)(ii) of the Act due to a subsequent withdrawal of approval with retrospective effect, had observed, that such retrospective cancellation of registration will have no effect upon the deduction claimed by the donor, since such donation was given acting upon the registration when it was valid and operative. On a perusal of the aforesaid statutory provision i.e, Sec. 35(1)(ii) of the Act, as well as the ratio laid down in the aforesaid judicial pronouncements, it can safely be concluded that if an assessee acting upon a valid registration/approval granted to an institution had donated certain amount for which deduction is claimed, then, such deduction cannot be disallowed if at a later point of time the same is cancelled with retrospective effect. Also see M/S POOJA HARDWARE PVT. LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX – 13 (1) (1) , MUMBAI [2019 (10) TMI 1281 - ITAT MUMBAI].Thus we uphold the order of the CIT(A) who had vacated the disallowance of the assessee's claim for deduction u/s 35(1)(ii) - Decided in favour of assessee. Disallowance u/s.40A(2)(b) - payment of salary made to related party - HELD THAT:- A.O while working out the disallowance under the aforesaid statutory provision, had though observed that the payment of salary to the aforementioned two related parties in question was found to be excessive, but had fundamentally erred by not opining as to what as per him was the fair market value of the service which were being rendered by the aforementioned related persons, considering which the payments made to them by the assessee were to held as excessive. Before the CIT(Appeals) the state of affairs we find was no better, as he too without addressing the aforesaid fundamental and material requirement contemplated under Sec. 40A(2)(a) of the Act had though on an ad-hoc basis allowed some relief to the assessee, but had allowed the mistake of the AO to perpetuate. On the basis of our aforesaid observations, we are unable to concur with the view taken by either of lower authorities and holding a conviction that both of them had fundamentally erred in not appreciating the mandate of Section 40A(2)(a) of the Act in the right perspective, thus, set-aside the order of the CIT(Appeals) to the said extent and vacate the disallowance made by the A.O. - Decided against revenue.
|