TMI Blog2021 (2) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... slature is clear that the donors should not be made suffer on account of fraud committed by the donee organization Hon ble Supreme Court in the case of CIT vs. Chotatingrai Tea Ors.[ 2002 (10) TMI 3 - SUPREME COURT] following the decision of CIT vs. Bhartia Cutler Hammer Co.,[ 1997 (12) TMI 91 - CALCUTTA HIGH COURT] held that notwithstanding the fact that the approval granted earlier to the Research Organization was withdrawn subsequent to the payment of donation, the deduction cannot be withdrawn in the hands of the donors. Also see National Leather Cloth Manufacturing Co. vs. Indian Council of Agricultural Research Ors., [ 1999 (10) TMI 55 - BOMBAY HIGH COURT] The above judgements of the Hon ble Supreme Court in the case of Chotatingrai Tea Ors. (supra) was rendered much prior to the insertion of the Explanation to section 35(1)(ii) of the Act and the Explanation inserted by the Finance Act, 2006 w.e.f. 01.04.2006 which means that the Parliament is deemed to have knowledge of the above judicial precedents and accepted the dictum laid therein. Therefore, this clearly establishes the legislative intent of Parliament to allow the deduction u/s 35(1)(ii) in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956. It is engaged in the business of transport solutions. The return of income for the assessment year 2013-14 was filed on 29.09.2013 disclosing the income of ₹ 3,07,22,727/-. The said return of income was selected for scrutiny under CASS and the assessment was completed by the Assistant Commissioner of Income Tax, Circle-9, Pune ( the Assessing Officer for short) vide order dated 23.03.2016 at a total income of ₹ 5,35,97,730/-. While doing so, the Assessing Officer disallowed the claim for deduction u/s 35(1)(ii) of the Act of ₹ 2,18,75,000/- and another disallowance on account of lorry expenses of ₹ 10,00,000/- was also made. 4. The facts relating to the disallowance of claim u/s 35(1)(ii) of the Act with which we are concerned are as follows : During the previous year relevant to the assessment year under consideration, the appellant company made donation of ₹ 1,25,00,000/- to one organization called School of Human Genetics and Population Health (hereinafter called as SHGPH). The Assessing Officer in order to verify the genuineness of the claim conducted enquiry with the said organization by issuing notice u/s 133(6) of the Act vide let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d organization. 6. On receipt of the said explanation, the Assessing Officer had expressed inability to offer the opportunity of cross-examination of Secretary, SHGPH on the citing the inconvenience and tedious nature instead the appellant company was directed by the Assessing Officer to produce the Secretary of SHGPH. Finally, the summons u/s 131 of the Act were issued on 26.02.2016 to the Secretary, SHGPH, Mrs. Samadrita Mukherjee Sardar was directed to appear in his office on 17.03.2016 with a view to offer an opportunity of cross-examination of the appellant. However, though the appellant was present on the said date i.e. 17.03.2016 none from the SHGPH was attended. However, the Assessing Officer disallowed the claim for deduction u/s 35(1)(ii) of the Act, drawing adverse inferences against the appellant. 7. Being aggrieved by the above assessment order, the appellant preferred an appeal before the ld. CIT(A), who vide his impugned order confirmed the action of the Assessing Officer taking note of the fact that the rescinding of approval granted by the Central Board of Direct Taxes (CBDT) vide Notification No.4 of 2010 bearing F.No.203/64/2009/ITA-II with retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the fraudulent activities of providing the accommodation entries for donors and the assessee had failed to discharge primary the onus cast upon it. He further submitted that the doctrine of promissory estoppels has no application to tax concessions and the very fact that vide Notification dated 28.01.2010 rescinded the approval granted to the donee organization with retrospective effect. It was further submitted that the case laws relied on by the appellant company has no application to the facts of the present case, inasmuch as, there is no allegation of fraud against the assessee in those cases. 11. We heard the rival submissions and perused the material on record. The only issue involved in the present appeal relates to the claim for deduction u/s 35(1)(ii) of the Act. During the previous year relevant to the assessment year under consideration, the appellant made a donation of ₹ 1,25,00,000/- to SHGPH. This is undisputed fact. It is a matter of record that the appellant demonstrated before lower authorities that the claim made is bona-fide by stating the circumstances under which donation was made by showing the material in support of the activities carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers conferred under clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 read with Rule 5e and 5E of the Income-tax Rules, 1962, the Central Government hereby rescinds the notification of the Government of India, Ministry of Finance, Department of Revenue number 4/2010 dated 28.01.2010 published in Gazette of India , Part 11, Section 3, Sub-section (ii) dated 28.01.2010 vide S.O. 348 with effect from 1st April, 207 and shall be deemed that the said notification has not been issued for any tax benefits under the Income-tax Act, 1961 or any other law of the lime being in force [Notification No. 82/2016/F.No.203/64/2009/ITA-ll] Deepshikha Sharma, Director. 13. To decide the issue in appeal, the above Notification is required to be read with the Explanation inserted by the Finance Act, 2006 w.e.f. 01.04.2006 as amended from time to time, which reads as under :- Expenditure on scientific research. 35. (1) In respect of expenditure on scientific research, the following deductions shall be allowed- (i) (ii) an amount equal to one and one half times of any sum paid to a research association which has as its object the undertaking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of fraud committed by the donee organization. 15. Further, the Hon ble Supreme Court in the case of CIT vs. Chotatingrai Tea Ors., 258 ITR 529 following the decision of the Hon ble Calcutta High Court in the case of CIT vs. Bhartia Cutler Hammer Co., 232 ITR 785 held that notwithstanding the fact that the approval granted earlier to the Research Organization was withdrawn subsequent to the payment of donation, the deduction cannot be withdrawn in the hands of the donors. The Hon ble Jurisdictional High Court in the case of National Leather Cloth Manufacturing Co. vs. Indian Council of Agricultural Research Ors., 241 ITR 482 also held to the same effect. 16. We notice that the above judgements of the Hon ble Supreme Court in the case of Chotatingrai Tea Ors. (supra) was rendered much prior to the insertion of the Explanation to section 35(1)(ii) of the Act and the Explanation inserted by the Finance Act, 2006 w.e.f. 01.04.2006 which means that the Parliament is deemed to have knowledge of the above judicial precedents and accepted the dictum laid therein. Therefore, this clearly establishes the legislative intent of Parliament to allow the deduction u/s 35(1)(ii) in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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