Dy. Commissioner of Income Tax , Circle-16(1), Hyderabad V. Laan Research Private Limited , Hyderabad

ITA 1664/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5521 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 15-09-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 14-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 143(3); 12AA

Judgement Text

ITA NO 1664 OF 2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.1664/HYD/2019 ASSESSMENT YEAR: 2016-17 DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1), HYDERABAD. VS. M/S. LAAN RESEARCH PRIVATE LIMITED, FLAT NO.510, PLOT NO.5,6,7,8,9,10,11,12, NANAKRAMGUDA, SERILINGAMPALLY, HYDERABAD, TELANGANA 500008. PAN NO.AACCL2053M. (APPELLANT) (RESPONDENT) REVENUE BY: SRI SWAROOP MANNAVA - DR ASSESSEE BY : NONE DATE OF HEARING: 15/09/2021 DATE OF PRONOUNCEMENT: 17/09/2021 ORDER PER S. S. GODARA, J.M. THIS REVENUES APPEAL FOR A.Y 2016-17 AGAINST THE ORDER OF THE CIT(A)-4, HYDERABAD IN APPEAL NO.10271 /18- 19/ACIT. CIR.16(A)/CIT(A)-4/HYD/2019-20, DATED 19.0 1.2019 INVOLVING PROCEEDINGS UNDER SECTION 143(3) OF INCO ME TAX ACT, 1961 (IN SHORT, THE ACT). NONE APPEARED AT THE ASSESSEES BEHEST. CASE FILE PERUSED. WE ACCORDINGLY PROCEEDED EX-PARTE. ITA NO 1664 OF 2019 2 2. COMING TO THE REVENUES SOLE SUBSTANTIVE GRIEVAN CE THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING SECTION 35(1)(II) DISALLOWANCE OF RS.1,75,00,000/- MADE IN THE COURSE OF ASSESSMENT DATED 21.12.2018, WE NOTE THAT THE LOWER APPELLATE DISCUSSION TO THIS EFFECT READS AS UNDER : 4. THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF CONSULTANCY SERVICES. DURING THE ASSESSMENT PROCEEDINGS, THE AO EXAMINED THAT THE APPELLANT COMPANY HAS CLAIMED EXPENDITURE ON SCIENT IFIC RESEARCH ULS 35(1)(II) OF THE ACT TOWARDS PAYMENT MADE TO APPROV ED ASSOCIATION, NAMELY M.S MATRIVANI INSTITUTE OF EXPERIMENTAL RESE ARCH AND EDUCATION, AND THE APPELLANT COMPANY CLAIMED DEDUCTION @ 175% AT RS.1,75,00,000/- AGAINST THE EXPENDITURE ON THIS AC COUNT WAS AT RS.1,00,00,000/-, MADE AS DONATION TO M/S. MAITRIV ANI INSTITUTE OF EXPERIMENTAL RESEARCH AND EDUCATION, KOLKATA. THE AO HAS REQUESTED THE INSTITUTE FOR CERTAIN INFORMATION SUCH AS INCOM E TAX RETURNS, LEDGER ACCOUNT AND BANK ACCOUNT STATEMENT, FOR WHICH THE A R HAS NOT RESPONDED. HOWEVER, THE APPELLANT COMPANY FURNISHED THE COPY OF CERTIFICATE OF REGISTRATION OF SOCIETIES, WEST BENG AL, COPY OF MINISTRY OF SCIENCE AND TECHNOLOGY, NEW DELHI ACCORDING RECOGNI TION FROM 28.01.2014 TO 31.03.2017, AND FACTUM OF PUBLICATION OF SUCH GRANT OF RECOGNITION IN THE OFFICIAL GAZETTE OF INDIA. THE A PPELLANT COMPANY HAS PRODUCED BEFORE THE AA THAT THE AMOUNT OF RS.1,00,0 0,000/- WAS REMITTED TO THE ABOVE INSTITUTE THROUGH UTR NO. HDF C R52016011272851276 THROUGH HDFC BANK ACCOUNT TO THE CREDIT OF THE INSTITUTE'S AXIS BANK ACCOUNT NO. 915010062746816. THE AO ALSO OBSERVED THAT THE MINISTRY OF FINANCE, DEPARTMENT O F REVENUE CBDT VIDE NOTIFICATION NO.78/2016 IN F.NO.203/29/2005/ITA.II DATED 6 TH SEPTEMBER, 2016 WHICH STATED THAT THE CENTRAL GOVER NMENT HAS RESCINDED THE NOTIFICATION OF THE GOVERNMENT OF IND IA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE NO.229/2007 DATED 21 ST AUGUST, 2007 WITH EFFECT FROM 1 ST APRIL, 2004, AND SHALL BE DEEMED THAT THE SAID NOT IFICATION HAS NOT BEEN ISSUED FOR ANY TAX BENEFITS UNDER THE INCOME TAX ACT, 1961 OR ANY OTHER LAW OF THE TIME BEING IN FORCED. THE C BDT, VIDE MEMORANDUM DATED 21 ST SEPTEMBER, 2016, HAS CONVEYED THAT THE CENTRAL GOVERNMENT HAD WITHDRAWN THE NOTIFICATION G RANTING APPROVAL U/S 35(1)(II) OF THE ACT TO M/S MATRIVANI INSTITUTE OF EXPERIMENTAL RESEARCH AND EDUCATION, KOLKATA. IN LIGHT OF THE AB OVE NOTIFICATION, THE AA DISALLOWED DEDUCTION U/S 36(1)(II) OF THE ACT, T HE TOTAL WEIGHTED DEDUCTION CLAIMED BY THE APPELLANT AT RS.1,75,00,00 0/- AND ADDED TO THE INCOME RETURNED. 4.1 THE AR, VIDE THE SUBMISSIONS MADE BEFORE ME, HA S EXPLAINED IN DETAIL, ALONG WITH DOCUMENTARY EVIDENCE THAT MATRIV ANI INSTITUTE OF EXPERIMENTAL RESEARCH AND EDUCATION WAS A REGISTERE D SOCIETY U/S 12AA OF THE ACT AND ITS SCIENTIFIC RESEARCH FACILIT IES WERE VERY MUCH APPROVED U/S 35(1)(II) OF THE ACT BY THE CENTRAL GO VERNMENT WHEN THE APPELLANT COMPANY MADE THE DONATION TO THIS INSTITU TE, AND IT WAS VALID FROM ASST. YEAR 2004-05 ONWARDS. THE AR QUOTED EXPL ANATION TO SEC 35(1)(II) OF THE ACT IN THIS REGARD. THE AR FURTHER STATED THAT THE AA, ITA NO 1664 OF 2019 3 WITHOUT CONSIDERING THE SAME, HAS DISALLOWED THE WE IGHTED DEDUCTION CLAIMED BY THE APPELLANT COMPANY U/S 35(1)(II) OF T HE ACT FOR THE DONATION OF RS.1,00,00,000/- REMITTED ON AN APPROVED INSTITU TE M/S MAITRIVANI INSTITUTE OF EXPERIMENTAL RESEARCH AND EDUCATION. K OLKATTA. THE CONTENTION OF THE AR IS THAT THE APPELLANT COMPANY HAS DONATED THE AMOUNT TO THE SAID SOCIETY ON 1IH JANUARY, 2016 FOR THE ASSESSMENT YEAR 2016-17 AND CLAIMED THE SAME AMOUNT AS EXEMPTI ON U/S 35(1)(II) OF THE ACT. THE NOTIFICATION WAS ISSUED BY THE CENTRAL GOVERNMENT ON 21 ST SEPTEMBER, 2016, THEREFORE THE APPELLANT COMPANY CA NNOT RECOVER THE SAID AMOUNT ONCE PAID TO THE SOCIETY, AS THE NOTIF ICATION IS ONLY PROSPECTIVE AND CANNOT BE RETROSPECTIVE. MOREOVER, THE DONATION MADE TO THE SAID SOCIETY WAS WITH AN INTENTION TO CLAIM DED UCTION U/S 35(1)(II) OF THE ACT. THE AR PLACED RELIANCE ON THE ITAT JUDGEME NT PRONOUNCED IN THE CASE OF DCIT, CIRCLE-12(1) VS. M/S MACO CORPORATION (INDIA) PVT. LTD. DATED 14 TH MARCH, 2018, WHICH IS BASED ON THE SAME GROUNDS. 4.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER, SUBMISSIONS OF THE AR AND SEC 35(1)(II) OF THE ACT IN DETAIL. THE TAXATION LAWS (AMENDMENT) ACT, 2006, WITH RETROSPECTIVE EFFECT FR OM 01.04.2006, HAS INTRODUCED AN EXPLANATION TO SEC 35 OF THE ACT AS U NDER :- THE DEDUCTION, TO WHICH THE ASSESSEE IS ENTITLED IN RESPECT OF ANY SUM PAID TO A RESEARCH ASSOCIATION, UNIVERSITY, COL LEGE OR AT ER INSTITUTION TO WHICH CLAUSE (II) OR CLAUSE (III) AP PLIES, SHALL NOT BE DENIED MERELY ONE GROUND THAT, SUBSEQUENT TO THE PA YMENT OF SUCH SUB BY THE ASSESSEE, THE APPROVAL GRANTED TO T HE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTI ON REFERRED TO IN CLAUSE (II) OR CLAUSE (III) HAS BEEN WITHDRAWN. HENCE, THE AFORESAID PROVISIONS OF THE ACT ARE VERY CLEAR THAT THE PAYER (THE ASSESSEE HEREIN) WOULD NOT GET AFFECTED IF THE RECOGNITION GRANTED TO THE PAYEE HAD BEEN WITHDRAWN SUBSEQUENT TO THE DATE OF CONTRIBUTION BY THE ASSESSEE. HENCE, NO DISALLOWANCE U/S 35(1)(I I) OF THE ACT COULD BE MADE IN THIS CASE. IN MANY JUDICIAL CASES, WHERE A DONATION IS MADE BY AN ASSESSEE TO AN APPROVED INSTITUTION AND CLAIM ED DEDUCTION, THE SUBSEQUENT WITHDRAWAL OF THE APPROVAL OF SUCH INSTI TUTION WOULD NOT ENTITLE THE DEPARTMENT TO DISALLOW THE DEDUCTION TO THE ASSESSEE. AS FAR AS THE ELIGIBILITY OF THE APPELLANT IS CONCERNED, T HE AO HAS NOT EXPRESSED IN THE ENTIRE ASSESSMENT ORDER THAT THE APPELLANT I S NOT ELIGIBLE TO CLAIM WEIGHTED DEDUCTION OF DONATION PAID U/S 35(1)(II) O F THE ACT. AS PER THE DOCUMENTS PRODUCED AT THE TIME OF APPELLATE PROCEED INGS, IT IS OBSERVED THAT THE APPELLANT COMPANY HAS MADE DONATION DURING THE RELEVANT ASSESSMENT YEAR AND DURING THE RELEVANT ASST. YEARS , THESE CONCERNS WERE DULY APPROVED CONCERNS U/S 35(1)(II) OF THE AC T, AND THE SUBSEQUENT WITHDRAWAL OF APPROVAL OF SUCH CONCERNS WOULD NOT ENTITLE THE DEPARTMENT TO DISALLOW THE GENUINE CLAIM OF DON ATION PAID BY THE APPELLANT. IN THE ABOVE CASE LAW, IT WAS ALSO HELD THAT THE WITHDRAWAL OF RECOGNITION U/S 35(1)(II) OF THE ACT IN THE HAND S OF THE PAYEE ORGANIZATIONS WOULD NOT AFFECT THE RIGHTS AND INTER ESTS OF THE APPELLANT COMPANY FOR CLAIM OF WEIGHTED DEDUCTION U/S 35(1)(I I) OF THE ACT. SINCE THE AR HAS EXPLAINED THAT THE APPELLANT COMPANY HAS PAID THE DONATION BASED ON THE PROFILE OF THE ORGANIZATION, AND ALSO PRODUCED DOCUMENTARY EVIDENCES, I AM OF THE CONSIDERED OPINI ON THAT THE DISALLOWANCE MADE BY THE AO OF RS.1,75,00,000/- U/S 35(1)(II) IS NOT ITA NO 1664 OF 2019 4 CORRECT AND HENCE BE DELETED. THEREFORE, THE APPEA L RAISED ON THIS GROUND IS ALLOWED. 3. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN REVERSING THE IMPUGNED SEC.3 5(1)(II) DISALLOWANCE DESPITE THE FACT THAT THE CBDTS NOTIF ICATION HAD CANCELLED THE SPECIFIED RECIPIENTS INSTITUTIONS R EGISTRATION. WE FIND NO MERIT IN THE REVENUES INSTANT SOLE GRIEVAN CE SINCE THE CIT(A) HAS CONSIDERED AMENDMENT IN SEC.35 W.E.F. 01 .04.2006 (SUPRA) THAT THE IMPUGNED DEDUCTION WOULD NOT BE DE NIED MERELY ON THE GROUND THAT THE CORRESPONDING REGISTRATION O F THE ABOVE INSTITUTE HAS BEEN SUBSEQUENTLY WITHDRAWN. WE THER EFORE EXPRESS OUR FULL CONCURRENCE WITH THE LEARNED CIT(A)S ACTI ON IN DELETING THE SEC.35(1)(II) DISALLOWANCE. ORDERED ACCORDINGLY . 4. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER HYDERABAD, DATED 17 TH SEPTEMBER, 2021. TYNM/SPS COPY TO: S.NO AD DR ES S ES 1 M /S. LAAN RESEARCH PRIVATE LIMITED, FLAT NO.510, PLOT N O.5,6,7,8,9,10, 11,12, NANAKRAMGUDA, SERILINGAMPALLY, HYDERABAD, TE LANGANA 500008. 2 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1), HYDERABAD. 3 CIT (A) - 4 , HYDERABAD 4 PR. CIT 4, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER