TMI Blog2020 (1) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... Herbicure Health Care Bio Herbal Research Foundation (in short, HHCBHRF). 3. The brief facts of the case are that the A.O. observed that the assessee had given donation to Herbicure Health Care Bio Herbal Research Centre of ₹ 30.00 lacs and claimed deduction U/s 35(1)(ii) of ₹ 52.50 lacs in the computation of income. A search and seizure action was conducted on the said entity and report received from Investigation Wing in Kolkata brought out the modus operandi of the Trust taking donations and returning the amount in cash. The A.O. observed that the Central Government had retrospectively withdrawn the approval for deduction u/s 35(1)(ii) granted to the institution vide notification No. 79.2016/F No. 203/135/ITA dated 06/09/2016. Accordingly, the A.O. disallowed ₹ 52.50 lacs u/s 35(1)(ii) of the Act. By the impugned order, the ld. CIT(A) confirmed the action of the A.O., against which the assessee is in further appeal before the ITAT. 4. At the outset, the ld AR of the assessee placed on record the order of the ITAT Kolkata Benches in the case of DCIT Vs. M/s Desmet Reagent Pvt. Ltd. in ITA No. 15/Kol/2017 dated10/10/2018 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of Sec. 35(1)(ii) of the Act as on the date of receipt of donation and retrospective cancellation of approval of the concerned institution, the deduction claimed in respect of donation cannot be denied. This view of ours has been approved by the Hon ble Bombay High Court in Seksaria Biswan Sugar Factory Ltd. and Another vs. Inspecting Assistant Commissioner and Others (1990) 184 ITR 123 and this view this Tribunal has been consistently taken when application of weighted deduction claimed against M/s. HHBHRF has come before us. Moreover, our view is fortified by the Explanation given u/s. 35(1)(ii) of the Act is reproduced under: Section 35(1)(ii) - Explanation. The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn. So the explanation given in the statute itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial Research Organisation (SIRO) by Ministry of Science Technology, Govt. of India. M/s. Herbicure was also recognized vide gazette notification no. 35/2008 dated 14.03.2008 issued by CBDT, Ministry of Finance u/s. 35(1)(ii) of the Act (Paper book page 23). The Ld. AR drew our attention to letter dated 01.02.2013 by M/s. Herbicure which is evident from page 21 of the paper book wherein the said M/s. Herbicure has requested the assessee for donation u/s. 35(1)(ii) of the Act. A perusal of the letter shown that M/s. Herbicure has claimed itself to be a non profitable scientific research institute carrying out research, drug testing and other allied activities as per the objective of the Ministry of Science Technology, Govt. of India seeking generous donation and has given its details like name, certificate of incorporation, 12A registration, gazette notification u/s. 35(1)(ii) of the Act, renewal of SIRO dated 31.03.2015 vide order dated 13.08.2012 in Memo No. 14/444/2006TUV by the Ministry of Science Technology, Govt. of India. FCRA registration renewal of 80G which was renewed vide certificate of exemption u/s. 80G(5)(vi) of the Act vide No. DIT(E)/438/8E/155/04-05 dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entities with whom the said transactions are being made. Your attention is further been drawn to the computer extracts taken out of the tally which was found in your e-mail. These pages are related to the bank book of Herbicure Healthcare Bio-Herbal Research Foundation wherein it is clearly reflected that the amount of ₹ 25 lakh (in two trenches) received from OCL India Ltd on 15.07.2011, ₹ 25 lakh received from OCL India Ltd. on 11.08.2011 17.08.2011 are immediately being transferred to A.S. Enterprises which is a paper company on the same dates. Similar trend is visible in the case of Donations received from other parties where just immediately after the receipt of donation amount the same is being transferred to the account of any paper company. In view of the same you are once again being given an opportunity to speak the truth and explain the transaction reflected from your bank book as above. Ans. Sir, I wish to state that our concern Herbicure Health are Bio-Herbal Research Foundation was incorporated in the year 2003 u/s 25 of the Companies Act, 1956 which was recognized in 2006-07 as a scientific and industrial research o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned by m in response to question no.7 of this statement. After this payment is made to any of the paper / bogus companies on account of bogus purchase/expenses on the advice of Mr Kishan Bhawasingka. The remaining transaction is also managed on paper by him only which happens in the form of routing of the donation amount through his bogus/paper companies in 2 to 3 layer. Finally, cheque of the donation amount (after deducting the cut of commission charged by us and broker Mr Kishan Bhawasingka) is given back to the original beneficiary who gave donation to us. Sometimes, the amount is withdrawn at 3rd or 4th level and cash is given back to the original beneficiary (after deducting the cut of commission charged by us and broker Mr Kishan Bhawasingka) who gave donation to us. In this entire process of providing entry in the form of bogus Donation to different beneficiary Companies/ Individuals a commission of 5 % approx is charged by us which is the actual donation we receive front that particular donor in reality. The commission of almost 5 to 8 % is charged by Mr. Kishan Bhawnsingka for facilitating the said accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee firm has answered that Dr. Bhuban Chakraborty, a Cardiologist friend introduced them to M/s. Herbicure and to question no. 15 as whether the partners have visited the office of M/s. Herbicure to which the partners answered that they had visited the premises of M/s. Herbicure on two occasions and for question no. 16 as to whether the partners were satisfied with the work of scientific research carried on by the said M/s. Herbicure, the partners of the assessee firm had replied that during their visit at Pailan and Baral they were satisfied with the scientific research work and for question no. 17 the partners replied that they had seen the certificate issued by Govt. of India and also have gone through the research paper of the people working there. For question no. 20 they have given the name of the doctor who was a Cardiologist who introduced them to M/s. Herbicure. We note that the AO enquired about Dr. Bhuban Chakraborty s address for which the partner replied that the doctor resides at Kshudiram Sarani, Rathtala, Kolkata. For question no. 21 as to whether they knew about the Directorate of Investigation, Kolkata carried out survey u/s. 133A and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndly be waived on compassionate ground. I am attaching the current medical prescription/advice along with MRI reports for your kind record. However, the information as submitted above may please recorded as my witness. 10. Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta 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 plac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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