2019 (6) TMI 1484 - AT - Income Tax

Weighted deduction u/s 35(1)(ii) - whether the assessee /donar could be denied weighted deduction u/s 35(1)(ii) due to the subsequent withdrawal of recognition by CBDT with retrospective effect ? - HELD THAT - Provisions of section 35(1)(ii) of the Act vide its Explanation reproduced here in above clearly proves that the donor (i.e assessee herein) cannot be affected due to subsequent withdrawal of recognition with retrospective effect. Therefore respectfully following the provisions of the Act and the decisions of the Coordinate Benches of ITAT we apply the same findings which are applicable mutatis mutandis in the present case. Therefore we direct the AO to grant deduction u/s 35(1)(ii) of the Act to the assessee as claimed by him for the year under consideration. - Decided in favour of assessee.

Summary

Issues Involved:
1. Denial of deduction claimed under Section 35(1)(ii) of the Income Tax Act for donations made to 'School of Human Genetic and Population Health, Kolkata'.
2. Validity of subsequent withdrawal of recognition with retrospective effect by the CBDT and its impact on the donor's entitlement to deduction.

Issue-Wise Detailed Analysis:

1. Denial of Deduction under Section 35(1)(ii):
The assessee challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which denied the deduction claimed under Section 35(1)(ii) of the Income Tax Act for donations made to 'School of Human Genetic and Population Health, Kolkata' (SHGPH). The assessee argued that this issue was already covered by a series of decisions made by the Coordinate Benches of ITAT Mumbai. The Tribunal noted that similar grounds had been decided in favor of the assessee in previous cases, such as M/s Motilal Dahyabhai Jhaveri Vrs. ACIT and Kitchen Essentials vrs. ACIT. The Tribunal emphasized that the provisions of Section 35(1)(ii) clearly indicate that the donor cannot be affected by the subsequent withdrawal of recognition with retrospective effect. Therefore, the Tribunal directed the Assessing Officer (AO) to grant the deduction claimed by the assessee.

2. Validity of Subsequent Withdrawal of Recognition with Retrospective Effect:
The Tribunal examined whether the assessee could be denied the weighted deduction under Section 35(1)(ii) due to the subsequent withdrawal of recognition by the CBDT with retrospective effect. The Tribunal referred to the decision in the case of DCIT vrs. Maco Corporation (I) Pvt. Ltd., where it was held that the withdrawal of recognition with retrospective effect does not affect the donor's entitlement to the deduction. The Tribunal also considered the decisions of the Hon'ble Supreme Court in CIT vs Chotatingrai Tea and State of Maharashtra vs Suresh Trading Company, which supported the assessee's claim. The Tribunal concluded that the assessee could not be penalized for the subsequent actions of the donee institution and directed the AO to grant the deduction as claimed.

In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the AO to grant the deduction under Section 35(1)(ii) of the Income Tax Act for the donations made to SHGPH, despite the subsequent withdrawal of recognition by the CBDT with retrospective effect. The appeal was allowed with no order as to cost.