TMI Blog2017 (4) TMI 1495X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the donation, M/s. Herbicure confirmed the voluntary donation of ₹.1 lakhs from the assessee. A copy of the trust s Corporation Bank statement in which the donation received was also sent by the trust. Based on the sworn statement of the Founder Director Shri Swapan Ranjan Das Gupta of M/s. Herbicure, wherein, he has admitted that his organization accept the donation and giving back of the same to the donor after deducting a commission @ 5% on the donation amount - Department has not made any effort to get any valid evidence that the organization has given back the donation to the donor after deducting a commission @ 5% on the donation amount. AO is directed to ascertain the means as well as actual amount repaid by the donee to the assessee and decide the issue afresh after giving sufficient opportunities of hearing to the assessee. Thus, the ground raised by the assessee is partly allowed for statistical purposes. Disallowance made u/s 14A - AO has made the disallowance over and above the dividend income earned by the assessee - HELD THAT:- As relying on M/S. CHETTINAD LOGISTICS PVT. LTD. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] appropriate to remit the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s Herbicure by the Office of the Director of Income Tax (Inv.), Kolkata during the course of survey under section 133A of the Act on 27.01.2015 at M/s. Herbicure. In the sworn statement, the Founder Director Shri Swapan Ranjan Das Gupta of M/s. Herbicure has admitted that his organization accept the donation and giving back of the same to the donor after deducting a commission @ 5% on the donation amount. In view of the above, the assessee was show-caused as to why the claim made under section 35(1)(ii) of the Act should not be disallowed along with copy of affidavit. The assessee has submitted before the Assessing Officer that the assessee has made donation directly to the done by cheque and not received back any cash or cheques from the donee. With regard to the approach of Shri Kishan Bhawasingka to adopt the prevalent practice of scientific and research organisations of giving accommodation entries on commission to different beneficiaries in the garb of donation, the assessee has strongly contended that the donation was given directly to the donor through cheque and the assessee was not one of the beneficiary as mentioned in that sworn statement. However, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35(1)(ii) of the Act. Thus, the assessee paid donation of ₹.1,00,000 lakhs to the above institution. This fact was not under dispute. Since the assessee as given donation, claimed deduction of 175% as exempt as admissible under the provisions of section 35(1)(ii) of the Act. 7. The Assessing Officer denied the claim of the assessee on the ground that the above approval of the Central Government has been withdrawn retrospectively vide S.O. 2882(E) dated 06.09.2016 and the ld. CIT(A) confirmed the same. The Institution was enjoying the approval of the prescribed authority at that time and the assessee made donation was also not under dispute, the disallowance made by the Assessing Officer cannot be sustained under law. Our observation is duly fortified by the decision of Hon ble Bombay High Court in the case of Seksaria Biswan Sugar Factory 184 ITR 123. The purport of the decision of Hon ble Bombay High Court was that when the institution was enjoying the approval within the meaning of section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income from rent, sale of investments, dividend and interest-For AY 2009-10, assessee had reported a loss of specified amount-Assessee declared tax exempt income in the form of dividend to the tune of ₹ 48,90,000-Assessee volunteered ₹ 2,97,440 as attributable u/s14A for the purpose of disallowance-AO on the basis of his own understanding of Rule 8D of the Income Tax Rules disallowed the sum u/s 14A read with Rule 8DAssessee claimed that the entire tax exempt income of ₹ 48,90,000 was lower than the disallowance-CIT(A) and ITAT upheld AO's order-Held, in case of CIT(A) v. Taikisha Engineering India Ltd., it was held by present court that in view of the peculiar wording of Section 14A (2) that computation or disallowance of the assessee, or claim that no expenditure was incurred for earning exempt income should be examined with reference to the accounts and only if the assessee's explanation was unsatisfactory, can the AO proceed further-In the present case, firstly it was not disclosed by the AO that the appellant/assessee's claim for attributing ₹ 2,97,440 as a disallowance u/s 14A had to be rejected-Secondly, there appears to have been no scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as to whether any interest bearing borrowed funds were used in making the advances and expenditure in the case of Castle Breweries. This factual exercise has to be carried out by the Assessing Officer after giving due opportunity to the assessee of being heard. The Assessing Officer may make the disallowance of interest u/s. 14A only if it is found that interest bearing borrowed funds were used to acquire shares in the companies or for making advances to Castle Breweries. We, therefore, restore this issue to the file of the Assessing Officer with the above directions. The ground is treated as partly allowed. 9. The aforesaid shows that the Tribunal after holding in principle the applicability of Sec. 14A, has further directed the Assessing Officer to ascertain from the facts of the case as to how much interest bearing borrowings was utilized to acquire shares in the companies and the matter is relegated to the Assessing Officer. As per the language in Sec. 14A, the enquiry has to be undertaken by the Assessing Officer which has been so ordered by the Tribunal. Hence, it can be said that the Tribunal has exercised the discretion where rights of both sides are kept open for adm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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