TMI Blog2001 (7) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal was justified in law in holding that the approval given under section 35CCA of the Income-tax Act, 1961, to the society for integral development could not be withdrawn retrospectively by the competent authority? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the order under section 263 of the Income-tax Act, 1961, passed by the Commissioner?" In compliance with our direction the aforesaid questions are referred for our opinion. During the course of original assessment, the assessee claimed deduction of Rs. 80,000 under section 35CCA of the Income-tax Act, 1961. That was allowed by the Assessing Officer. Thereafter on scrutiny of the assessment records, the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and that too, not by the Board but by the prescribed authority other than the Board. The Tribunal was justified in allowing the claim of the assessee restoring the order of the Assessing Officer. Learned counsel for the Revenue, Mr. Mullick submits that on the date of the order under section 263, the approval granted to the concerned society was withdrawn and once that approval has been withdrawn on the date of the order of the Commissioner, there is nothing wrong in the order of the Commissioner. He placed reliance on the decision of this court in the case of CIT v. Bankam Investment Ltd. [1994] 208 ITR 208 (Cal). On the other hand, learned counsel for the assessee, Mr. Khaitan submits that the subsequent decision of this court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the approval to the society by the Government with retrospective effect, that does not mean that the order of the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. The notice issued by the Commissioner of Income-tax under section 263 was quashed. In K.M. Scientific Research Centre v. Lakshman Prasad [1998] 229 ITR 23, the issue before the Allahabad High Court was that once the approval was granted whether that can be revoked with retrospective effect. The Allahabad High Court has taken the view that the exemption which has been granted under sections 10(21) and 35, that cannot be withdrawn with retrospective effect. In Seksaria Biswan Sugar Factory Ltd. v. IAC [1990] 184 ITR 123, the Bombay High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment was made, as the approval to the society has been withdrawn to the society under section 35CCA with retrospective effect, i.e., with effect from December 13, 1982, by an order dated March, 1987. For our consideration in this case the issue is when the approval exemption to the society has been withdrawn with retrospective effect, can the order of the Assessing Officer be said to be erroneous or prejudicial to the interests of the Revenue; our answer will be in the negative. When the assessee has paid donation to the society which held valid approval under section 35CCA of the Act and that has not been withdrawn not only in the accounting year but till the assessment was made. That approval to society withdrawn in March, 1987, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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