Tushar Chawda, Kolkata V. I.T.O., Ward - 31(4), Kolkata , Kolkata

ITA 2362/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1313 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IMLIMERM JAMIR
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Business income; Assessment record
• Section: 11

Judgement Text

ITA NO.2362/KOL/2017 TUSHAR CHAWDA A.Y.2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] ITA NO.2362/KOL/2017 ASSESSMENT YEAR : 2014-15 TUSHAR CHAWDA -VERSUS- I.T.O., WARD-31 (4 ) KOLKATA KOLKATA (PAN: ABVPC 9414 A) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI MIRAJ D.SHAH, AR FOR THE RESPONDENT: SHRI IMLIMERM JAMIR, ADDL. CIT DATE OF HEARING : 07.03.2018. DATE OF PRONOUNCEMENT : 21.03.2018. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-9, KOLKATA RELATING TO A.Y. 2014-15. 2. IN THIS CASE THE ASSESSEE HAD PAID AN AMOUNT OF RS.15,00,000/- AS DEDUCTION U/S 35(1)(II) OF THE I.T.ACT, 1961 (ACT) TO SCHOOL OF H UMAN GENETICS AND POPULATION HEALTH AND CLAIMED WEIGHTED DEDUCTION U/S 35 OF THE ACT [175% OF 1500000] AMOUNTING TO RS.26,25,000/- FROM INCOME UNDER THE H EAD BUSINESS. 3. THE AO REJECTED THIS CLAIM BY OBSERVING AS FOLLO WS :- FROM THE SUBMISSIONS OF THE ASSESSEE, IT IS CLEAR THAT THE ASSESSEE MADE THE DONATION WITH A MOTIVE TO GET A HUGE DEDUCTION FROM BUSINESS INCOME ONLY TO REDUCE THE TOTAL INCOME FOR AVOIDING THE PAYMENT OF TAX. FURTHER, THE .ASSESSEE HAS FAILED TO SUBSTANTIATE THE PAYMENT OF DONATION SATISFACTORILY. IT IS CLEAR THAT THE DONATION, MADE BY THE ASSESSEE, WAS A BOGUS PAY MENT AND TO GET SOME BENEFIT FOR WHICH THE ASSESSEE CHOSE THIS PARTICULAR ORGANI ZATION AND PARTICULAR FY. THE ASSESSEE MUST HAVE GOT SOME BENEFIT IN LIEU OF DON ATION PAYMENT OF RS.15,00,000/-. HENCE, THE WEIGHTED DEDUCTION CLAIM ED U/S.35 AMOUNTING TO RS. RS.26,25,000/- FROM INCOME UNDER THE HEAD BUSINESS IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE AY 2014-15 . 4. THE LD. CIT(A) HAD REJECTED THE CONTENTIONS OF T HE ASSESSEE BY OBSERVING AS FOLLOWS :- ITA NO.2362/KOL/2017 TUSHAR CHAWDA A.Y.2014-15 2 4.1. 1 HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE RELEVANT ASSESSMENT RECORDS. THE M/S SCHOOL OF GENETICS AND POPULATION HEALTH, KOLKATA HAD BEEN GRANTED APPROVAL U/S 35(1)(II) OF THE I.TA CT, 1961 VIDE NOTIFICATION NO. 4/201O/F. O. 203/64/2009/ITAT DATED 28.01.2010 IN THE OFFICIAL GAZETTED BY THE CENTRAL GOVERNMENT. ANY EXPENDITURE TO SUCH NOTIFIE D .INSTITUTION WHICH HAS AS ITS OBJECT THE UNDERTAKING OF SCIENTIFIC RESEARCH I S ELIGIBLE FOR WEIGHTED DEDUCTION EQUAL ONE AND THREE FOURTH TIMES OF ANY SUM PAID. HOWEVER, THE MINISTRY OF FINANCE (DEPARTMENT OF RE VENUE ) (CENTRAL BOARD OF DIRECT TAXES) VIDE NOTIFICATION NO. 82/2016/F.NO. 2 03/64/2009/IT A.I1 DATED 15.09.2016 IN THE GAZETTE OF INDIA: EXTRA ORDINARY HAD RESCINDED THE NOTIFICATION GRANTING APPROVAL BY THE CENTRAL GOVER NMENT TO THE APPELLANT FOR THE PURPOSE OF CLAUSE (II) OF SUB SECTION (1) OF SE CTION 35 OF THE I.T. ACT, 1961, READ WITH RULE 5C AND 5E OF THE INCOME TAX RULE, 19 62. THE NOTIFICATION READS AS FOLLOWS: ''MINISTRY OF FINANCE, (DEPARTMENT OF REVENUE) (CEN TRAL BOARD OF DIRECT TAXES) NOTIFICATION NEW DELHI, THE 15 TH SEPTEMBER, 2016, S.O. 2961(E)-IN EXERCISE OF THE POWERS CONFERRED UNDER CLAUSE (II) OF SUB-SECTI ON (1) OF SECTION 35 OF THE INCOME-TAX ACT, 1961 READ WITH RULE 5E AND 5E OF TH E INCOME-TAX RULES, 1962, THE CENTRAL GOVERNMENT HEREBY RESCINDS THE NOTIFIC ATION OF THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE N UMBER 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 1 ST APRIL, 207 AND SHALL BE DEEMED THAT THE SAID NOTIFICATION HAS NOT BEEN ISSU ED FOR ANY TAX BENEFITS UNDER THE INCOME-TAX ACT, 1961 OR ANY OTHER LAW OF THE LI ME BEING IN FORCE [NOTIFICA TION NO. 82/2016/F.NO.203/64/2009/ITA-LL] DEEPSHIKHA SHARMA, DIRECTOR.' THE ABOVE NOTIFICATION MAKES CLEAR THAT THE EARLIER NOTIFICATION.NO. 4/2010 DATED 28.01.2010 SHALL BE DEEMED NOT TO HAVE BEEN ISSUED FOR ANY INCOME- TAX BENEFITS UNDER THE INCOME-TAX ACT. THEREFORE, THE PAYMENT OF RS.15,00,000/- FOR THE PURPOSE OF AVAILING WEIGHTED DEDUCTION OF 175% U/S 35(1)(II) OF THE ACT MADE TO M/S SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH, KOLKATA IS DENIED. IT MAY BE CLARIFIED HERE THAT EXPLANATION TO SECTION 35(L) (III) OF THE INCOME-TAX ACT SHALL NOT COME TO THE RESCUE OF THE APPELLANT AS IT RELAT ES, ONLY TO APPROVALS WHICH HAVE BEEN WITHDRAWN SUBSEQUENT TO THE PAYMENT MADE TO IN STITUTIONS TO WHICH CLAUSE (II) OR CAUSE (III) APPLIES. IN THE CASE OF M/S SCH OOL OF HUMAN GENETICS AND POPULATION HEALTH, KOLKATA, THE NOTIFICATIONS HAD B EEN DEEMED NOT TO HAVE BEEN ISSUED FOR ANY TAX BENEFITS UNDER THE INCOME-TAX AC T, 1961 OR ANY OTHER LAW OF THE TIME BEING IN FORCE. THOUGH THE APPELLANT MADE A DONATION OF ONLY RS.15, ,00,000/-, HOWEVER, HE HAS CLAIMED U/S 35(1 )(I) AND (II) WEIGHTED DEDUCTION A MOUNTING TO RS.26,25,,000/- FROM HIS RETURN INCOME. THE DISALLOWANCE IS, THEREF ORE, RESTRICTED TO THE DEDUCTION CLAIMED AT RS.26,25,,000/-. ITA NO.2362/KOL/2017 TUSHAR CHAWDA A.Y.2014-15 3 5. AFTER HEARING RIVAL CONTENTIONS, I AM OF THE VIE W THAT THE ASSESSEE CANNOT SUFFER ON ACCOUNT OF WITHDRAWAL OF NOTIFICATION GIVEN TO M /S. SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH, KOLKATA GRANTING APPROVAL U/S 35 (1) (II) OF THE ACT. THIS RECOGNITION WAS ORIGINALLY GRANTED ON 28 TH JANUARY, 2010 AND RENEWED ON 17 TH JUNE, 2010 BY GOVERNMENT OF INDIA . MINISTRY OF SCIENCE A ND TECHNOLOGY. IN RESPONSE TO LETTER DATED 03.02.2014 GIVEN BY M/S. SCHOOL OF HUM AN GENETICS AND POPULATION HEALTH, TO THE ASSESSEE, DONATION OF RS.15,00,000/ - WAS MADE ON 31.03.2014 BY THE ASSESSEE. THE SAID AMOUNT WAS GIVEN TO THE DONEE ON 31.03.2014 AND WITHDRAWAL WAS ON 15.09.2016. I.E. AFTER 17 MONTHS FROM THE DATE O F DONATION MADE IN MARCH, 2014. SUCH WITHDRAWAL IN MY VIEW CANNOT TAKE AWAY THE VES TED RIGHT OF THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SECTION 35 (1) OF THE ACT. 6. THE TRIBUNAL IN THE CASE OF RAJDA POLYMERS VIDE ITA NO.333/KOL/2017 ORDER DATED 08.11.2017 AT PAGE 7 HAS HELD AS FOLLOWS :- 5.6. WE FIND THAT THE LD CITA HAD MADE AN OBSERVAT ION WHICH HAS BEEN HEAVILY RELIED UPON BY THE LD DR THAT THE ASSESSEES LINE OF BUSINESS HAS GOT NOTHING TO DO EVEN REMOTELY WITH THE HEALTHCARE OR HERBAL HEALTHCA RE INDUSTRY MUCH LESS IN THE AREA OF RESEARCH THEREON AND ACCORDINGLY THERE WAS NO NEED FOR THE ASSESSEE TO GIVE DONATION OF RS 14,00,000/- TO HHBR F . WE FIND THAT THIS ASPECT HAS BEEN DULY ADDRESSED BY THE ASSESSEE BY STATING THAT ONE CARDIOLOGIST DOCTOR HAD INTRODUCED THE ASSESSEE TO HHBRF AND DONATIONS W ERE GIVEN AFTER DUE SATISFACTION OF THE ASSESSEE BASED ON PERSONAL VISIT S TO THE TWO RESEARCH CENTRES OF HHBRF AND ACTIVITIES CARRIED ON BY THEM. MOREOVER , IT IS WELL SETTLED THAT IT IS ALWAYS THE PREROGATIVE OF THE ASSESSEE TO GIVE OR NOT TO GIVE ANY DONATION TO A PARTICULAR INSTITUTION, WHICH WISDOM CANNOT BE QUESTI ONED BY THE REVENUE. THE QUESTION OF BUSINESS EXPEDIENCY OF AN EXPENDITURE HA D TO BE VIEWED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT FROM THE VI EW POINT OF THE REVENUE. THE BUSINESSMAN KNOWS HIS INTEREST BEST. HOWEVER, IT CANNOT BE DENIED THAT THIS DONATION PAID TO HHBRF IS FREE FROM ANY SUSPICI ON. IT DEFINITELY LEADS TO FURTHER PROBE BY THE REVENUE, WHICH HAS BEEN CARRIED OUT BY THE REVENUE BY SUMMONING THE DIRECTOR OF HHBRF . THE SAID DIRECTOR SH RI SWAPAN RANJAN DASGUPTA, THOUGH COULD NOT APPEAR IN PERSON BEFORE THE LD AO FOR CROSS- EXAMINATION (WHICH WAS SOUGHT BY THE ASSESSEE) BUT HAD CONFIRMED IN WRITING THAT THE DONATIONS GIVEN BY THE ASSESSEE TO HHBRF W ERE GENUINE IN NATURE AND HAD FURTHER CONFIRMED THAT HHBRF HAD NOT PAID ANY CASH BACK TO ASSESSEE IN LIEU OF CHEQUE DONATIONS PAID TO THEM. THE REVENUE HAD LEFT THE MATTER AT THIS STAGE ITSELF AND DID NOT FURTHER PROBE INTO IT TO CHECK THE VERACITY OF THE CONFIRMATION ITA NO.2362/KOL/2017 TUSHAR CHAWDA A.Y.2014-15 4 MADE BY SHRI SWAPAN RANJAN DASGUPTA. THEREFORE, THE LD AO PROCEEDED TO MAKE THE ADDITION ONLY BASED ON THE STATEMENT RECORDE D FROM SWAPAN RANJAN DASGUPTA AT THE TIME OF SURVEY. IT MAY BE TRUE THAT IN THE SAID STATEMENT, SWAPAN RANJAN DASGUPTA MAY HAVE DEPOSED TO THE FACT THAT HHBRF WERE IN RECEIPT OF VARIOUS DONATIONS FROM VARIOUS PERSONS IN CH EQUES AND THE SAME WERE ROUTED BACK TO THE DONORS IN CASH AFTER RETAINING CERTA IN PORTION AS THEIR COMMISSION AND INTERMEDIARIES COMMISSION. THIS IS ONLY A GENERAL STATEMENT GIVEN BY SWAPAN RANJAN DASGUPTA ABOUT THE MODUS OPE RANDI CARRIED OUT BY HHBRF. BUT NOWHERE IN THE SAID STATEMENT OR IN THE SU BSEQUENT ENQUIRES / INVESTIGATION , IT CAME TO LIGHT THAT THE ASSESSEE HEREIN HAD INDEED RECEIVED BACK THE CASH IN LIEU OF CHEQUE DONATIONS GIVEN TO HHBRF . THIS SERVES AS A CLINCHING MISSING EVIDENCE IN THE ENTIRE GAMUT OF THIS CASE. 7. RESPECTFULLY APPLYING THE PROPOSITION OF LAW LA ID DOWN IN THIS CASE LAW TO THE FACTS OF CASE ON HAND AND AS THE DONATION TO SCHO OL OF HUMAN GENETICS AND POPULATION HEALTH WAS MADE WHILE IT WAS HOLDING T HE APPROVAL IN QUESTION, WE DIRECT THE AO TO GRANT THE SAID DEDUCTION AS CLAIMED. IN T HE RESULT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. O RDER PRONOUNCED IN THE COURT ON 21.03.2018. SD/- [ J.SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 21.03.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.TUSHAR CHAWDA, 16D, ASUTOSH MUKHERJEE ROAD, KOLK ATA-700020. 2. I.T.O., WARD-31 (4), KOLKATA. 3. C.I.T.(A)- 9, KOLKATA 4. C.I.T-11, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES ITA NO.2362/KOL/2017 TUSHAR CHAWDA A.Y.2014-15 5