TMI Blog2022 (11) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... e deduction and Rs.1.75 crore was added back to the income of the assessee. In first appeal, the assessee took the resort of ITAT, Jaipur Bench, Jaipur order dated 05-07-2018 whereby the appeal of the assessee for the assessment year 2012-13 was allowed by ld. CIT(A). It is noteworthy to mention when School of Human Genetics and Population Health (Research Organisation) before the Settlement Commission for the assessment year 2012-13, 2013-14 and 2014-15 had accepted that it did not carry out significant research work in the fields for which it was granted exemption/ approvals and the alleged donations received from the donors were refunded. All the judicial precedents available were even in the case of the assessee s own case and other relied upon judgments are prior to the decision of the settlement commission in the case of the party to whom the donation were given and also prior to the judgement of Honourable supreme court in case of CIT V Batanagar Education trust [ 2021 (8) TMI 139 - SUPREME COURT] where cancellation of registration of The Trust u/s 12 A as well as 80 G were upheld and this trust has also connection to the same society where the assessee has. Thus, when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t despite the fact that was established to be an accommodation entry taken from one M/s School of Human Genetics and Population Health which was confirmed during the survey action conducted u/s 133A by Investigation Wing of Kolkata.? (ii) Whether on the facts and in the circumstances of the case, the ld. CIT(A) is justified in allowing deduction of Rs.1,75,00,000/- made u/s 35 of the I.T. Act ignoring the fact that authorized signatories of M/s. SHG PH is unequivocal terms admitted that this institute was used for providing accommodation entries on commission basis. 4. The fact as culled out from the record is that the assessee company is incorporated in the year 1997. The assessee company since inception engaged in manufacturing of Angles Shapes Sections of Alloy and non Alloy Steel, mainly profile section for use in Automotive Industry, Angies TLT sector and general engineering purpose. In this case a notice under section 148 was issued on 09.03.2017 after recording the reasons with the prior approval of the competent authority. The reasons for issuing notice u/s. 148 are as extracted as under:- In this case, assessment for A.Y. 2012-13 was completed u/s 143(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/ to M/s School of Human Genetics and Population Health, Kolkata during the F.Y. 2011-12 and claimed weighted deduction of Rs 1,75,00,000/- In view of above facts it is clear that this was actually an accommodation entry. By such accommodation entry assessee reduced its taxable income and ultimately reduced legitimate tax liability, It is on the strength of the above information received after the completion of the original assessments u/s 143(3) vide order dated 31.03.2014 that I have sufficient reasons to believe that an amount of Rs. 1,75,00,000/- has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. 5. In response to notice u/s. 148, the assessee filed return of income on 05.04.2017 declaring total income at Rs. 5,93,16,890/- Notices u/s. 143(2)/142(1) of the act were issued which were duly served upon the assessee calling for relevant details. The assessee vide letter dated 03.10.2017 objected the issuance of notice u/s. 148 which was rejected by a speaking order dated 06.10.2017. Based on the reasons recorded and after affording proper opportunity to the assessee, the assessing officer has passed a detailed order wherein he has concluded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IBUNAL, JAIPUR BENCHES, JAIPUR Before: Shri Vijay Pal Rao, JM and Shri Bhagchand, AM ITA No. 529/JP/2018 Assessment Year 2014-15 7. The Bench have heard both the sides on the issues raised in appeal, perused the material available on the record and also considered the case laws relied upon. The assessee is a private limited company engaged in manufacturing of rolled steel products. Return of income was filed electronically on 26/09/2014. The assessee has claimed weighted deduction U/s 35(1)(ii) of the Act. The assessee had made donation to a institute engaged in Scientific Research. The authorities below has not allowed the deduction. The assessee had made donation of Rs. 1,00,00,000/- to School of Human Genetics Population Health, an institute engaged in scientific research and notified by the Central Board of Direct Taxes in terms of Section 35(1)(ii) of the Act vide notification No. 4/2010 dated 28/01/2010. The institute, whom the donation was made was in existence and notified during the F.Y. 2013-14 when the assessee has made donations. The CBDT has rescinded notification on 15/9/2016. Although, it has been made retrospective effect from 01/4/2007. This institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the association, university, college or other association, university, college or other institution, referred to in clause (ii) or clause (iii) has been withdrawn. The assessee has made donation i.e. on 13/01/2014, the institute was having a valid approval from the appropriate authorities and the assessee s claim cannot be denied. The Coordinate Bench of Kolkata ITAT in the case of M/s Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017, copy of which has been placed at page Nos. 82 to 91 of the paper book, wherein the donation was made to the same institute i.e. school of Human Genetics and Population Health, was held that in view of explanation to Section 35(1)(ii) of the Act, would not be withdrawn subsequently when recognition has been rescinded. Similarly the Coordinate Bench of Kolkata ITAT in the case of Saimed innovation Vs. ITO in ITA No. 2231/Kol/2016 order dated 13/09/2017 has held that weighted deduction claimed U/s 35(1)(ii) of the Act cannot be denied on the basis of statement recorded during the survey and no opportunity was provided to cross examine the third party, who has given such statement. Further in view of the decision of Hon ble Allahabad High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee further submitted that since there is no cash trail or middlemen statement is relied upon by the revenue and the payment made by the assessee when there is no such investigation initiated or pending and thus the donation given by the assessee is genuine and should be accepted as in the past by the order of the ITAT in assessee s own case. The ld. AR of the assessee further relied upon written submission and judgement as referred in this written submission. The same is extracted here in below for the sake of brevity: 1. The asssessee company is engaged in the manufacturing of rolled steel products. For AY 2012-13 it has filed its return of income and claimed deduction of section 35(1)(ii) in respect of donations made to the School of Human Genetics and Population Health (SHG PH) an Institution which is approved by the CBDT. The return was assessed u/s 143(3) and the deduction claimed by the assessee company was allowed by the AO. Later on notice u/s 148 was issued on the basis of so called recorded statement of key persons of the Institution to whom the donation was given by the assessee company. 2. The transaction of donation was through account payee cheque, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (iii) or to a company referred to in clause (iia)] has been withdrawn. 3. As the conditions prescribed u/s. 35(1)(ii) have been complied with, by the assessee company in respect of donations to the above mentioned institution. Therefore the company has claimed the deduction in ITR under section 35 (1)(ii) of the I.T. Act on the basis of the certificate granted to the Institutions by the CBDT. It is further submitted that. In the law, a process of registration of Institution u/s 35 is provided and the same reads as under: Provided that the research association, university, college or other institution referred to in clause (ii) or clause (iii) shall make an application in the prescribed form and manner to the Central Government for the purpose of grant of approval, or continuance thereof, under clause (ii) or, as the case may be, clause (iii): Provided further that the Central Government may, before granting approval under clause (ii) or clause (iii), call for such documents (including audited annual accounts) or information from the research association, university, college or other institution as it thinks necessary in order to satisfy itself about the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntific Research. The authorities below have not allowed the deduction. The assessee had made donation of Rs. 1,00,00,000/- to School of Human Genetics Population Health, an institute engaged in scientific research and notified by the Central Board of Direct Taxes in terms of Section 35(1)(ii) of the Act vide notification No. 4/2010 dated 28/01/2010. The institute, whom the donation was made was in existence and notified during the FY 2013-14 when the assessee has made donations. The CBDT has rescinded notification on 15/9/2016. Although, it has been made retrospective effect from 01/04/2007. This institute was validly recognized by the CBDT on the date of donation made by the assessee. The approval granted to the institute was very much in force at the time of donation made by the assessee. The assessee had no reason to disbelieve the operation of approval and notification of the institute. In such a situation, the deduction claimed by the assessee is justified. The subsequent notification by the CBDT rescinding the approval retrospectively shall not or should not affect the claim of the assessee. There was no information with the assessee regarding non genuinity or not observing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Population Health, was held that in view of explanation to Section 35(1)(ii) of the Act, would not be withdrawn subsequently when recognition has been rescinded. Similarly the Coordinate Bench of Kolkata ITAT in the case of Saimed innovation Vs. ITO in ITA No. 2231/Kol/2016 order dated 13/09/2017 has held that weighted deduction claimed U/s 35(1)(ii) of the Act cannot be denied on the basis of statement recorded during the survey and no opportunity was provided to cross examine the third party, who has given such statement. Further in view of the decision of Hon'ble Allahabad High Court in the case of CCE Vs. Shyam Traders 2016 (333) ELT 389 and the decision of Hon'ble 33 ITA 529/JP/2018 M/s P.R. Rolling Mills P. Ltd Vs DCIT Supreme Court in the case of Andaman Timber Industries (324) ELT 641 and the various other case laws relied upon by the Id. A.R., we find that the authorities below were not justified in denying claim of deduction U/s 35(1)(ii) of the Act to the assessee.. 6. The transaction is genuine as through banking channel and all the documents related to such transaction are furnished. In this case, assessee provided all the evidences that transaction hap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous brokers, entry operators, donees etc. misued the benefit conferred u/s 35(1)(ii) of the Act by undertaking bogus donations. The AO elaborately discussed the modus operandi of misusing the amount in the garb of donations to the School of Human Genetics and Population Health (Research Organisation) who subsequently disallowed the deduction and Rs.1.75 crore was added back to the income of the assessee. In first appeal, the assessee took the resort of ITAT, Jaipur Bench, Jaipur order dated 05-07-2018 whereby the appeal of the assessee for the assessment year 2012-13 was allowed by ld. CIT(A). It is noteworthy to mention when School of Human Genetics and Population Health (Research Organisation) before the Settlement Commission for the assessment year 2012-13, 2013-14 and 2014-15 had accepted that it did not carry out significant research work in the fields for which it was granted exemption/ approvals and the alleged donations received from the donors were refunded. The relevant extract of para 16 is reproduced as under:- 16. Before concluding, the Commission is of the view that as there is a clear admission by the appellant that in the years under reference it did not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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