UD Marketing Private Limited , Kolkata V. D.C.I.T.,Circle-1(2), Kolkata

ITA 252/KOL/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4689 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 26-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Retrospective amendment; Assessment record
• Section: 133A; 250; 251; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, HONBLE ACCOUNTANT MEMBER & SRI ABY T. VARKEY, HONBLE JUDICIAL MEMBER) ITA NO. 252/KOL/2020 ASSESSMENT YEAR: 2014-15 UD MARKETING PRIVATE LIMITED................................................................................APPELLANT P-25, TRANSPORT DEPOT ROAD KOLKATA 700 088 [PAN : AAACT 9784 B ] VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(2), KOLKATA................................RESPONDENT APPEARANCES BY: SHRI MANOJ KATARUKA/ SHRI SANJIB BARBORA, A/RS, APPEARED ON BEHALF OF THE ASSESSEE. SMT. RANU BISWAS, ADDL.CIT D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 9 TH , 2020 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 30 TH , 2020 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 1 KOLKATA, (HEREINAFTER THE LD.CIT(A)), PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 27/01/2020, FOR THE ASSESSMENT YEAR 2014-15, ON THE FOLLOWING GROUNDS:- 1. THE ASSESSING OFFICERS ORDER IS ILLEGAL AND BAD IN LAW IN REDUCING THE APPELLANTS REFUND CLAIMED PER RETURN OF RS.10,04,104/- TO RS.4,36,227/- 2. THE ASSESSING OFFICER ERRED IN DISALLOWING THE DEDUCTION CLAIMED UNDER SECTION 35(1)(II) OF THE INCOME-TAX ACT, 1961 AND THE CIT(A) WAS WRONG IN CONFIRMING THE SAME BY IGNORING A BINDING JURISDICTIONAL HIGH COURT DECISION AS WELL AS THAT OF THE APEX COURT. 3. THE ORDER VIOLATES THE EXPLANATION TO THE SAID SUB-SECTION. THEREFORE THE DISALLOWANCE IS VOID AB-INITIO. 4. THE APPELLANT MAY BE ALLOWED TO URGE FURTHER GROUNDS AT THE TIME OF HEARING. 2. THE ASSESSEE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 30/11/2014 DECLARING TOTAL INCOME OF RS.1,21,01,180/-. THE ASSESSEE MADE A CLAIM U/S 35(1)(II) OF THE ACT, FOR A DONATION OF RS.17,50,000/- MADE TO M/S. HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION (HHBHRF). THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE GOVERNMENT OF INDIA HAS WITHDRAWN THE NOTIFICATION CLASSIFYING HHBHRF AS A RESEARCH FOUNDATION U/S 35(1)(II) OF THE ACT, VIDE F.NO. 203/10/2015/ITA.II DT. 05.09.2016, FOR VARIOUS REASONS, A LIST OF WHICH IS MENTIONED IN THE ASSESSMENT ORDER. 2.1. THE ASSESSEE CARRIED THE MATTER IN APPEAL. BEFORE THE LD. FIRST APPELLATE AUTHORITY, THE ASSESSEE RELIED ON T RAJDA POLYMERS VS. DCIT IN ITA NO. 333/KOL/2017, ASSESSMENT YEAR 2013 08/11/2017. THE LD. CIT(A) DISTINGUISHED THIS JUDGMENT BY HOLDING AS FOLLOWS: THE APPROVAL WAS RESCINDED ON THE BASIS SURVEY OPERATIONS U/S 133A OF THE ACT WERE CONDUCTED ON 27.1.2015 IN THE PREMISES OF HHBHRF BY THE DIRECTORATE OF INVESTIGATION, KOLKATA. DURING THE SURVEY, IT WAS FOUND THAT M/S HERBICURE HEALTHCARE BIO- HERBAL RESEARCH FOUNDATION (HHBHRF) WAS ENGAGED IN COLLECTING BOGUS DONATIONS U/S 35(1)(II) OF OF 175% OF THE AMOUNTS ACTUALLY PAID BY SUCH BENEFICIARIES. M/S HERBICURE HEALTHCARE BIO HERBAL RESEARCH FOUNDATION HAS SUBSEQUENTLY MADE AN APPLICATION BEFORE THE SETTLEMENT COMMISSION IN WHICH IT HAD DISCLOSED ADDITIONAL INCOME AND ADMITTED TO THE MODUS OPERANDI OF VARIOUS TRANSACTIONS CARRIED OUT BY THEM. IT IS CLEAR FROM THE GAZETTED NOTIF 06.09.2016 THAT THE CENTRAL GOVERNMENT HAD NOT WITHDRAWN THE APPROVAL U/S 35(1)(II) OF THE I.T. ACT, 1961 WITH RETROSPECTIVE EFFECT BUT THE GAZETTE NOTIFICATION SPECIFICALLY STATES THAT IT SHALL BE DEEMED THAT THE SAID NOTIFICATION HAS NOT B ACT, 1961 OR ANY OTHER LAW OF THE TIME BEING IN FORCE. IN THIS RESPECT, THE CASE LAWS OF THE JURISDICTIONAL ITAT CITED BY THE A/R OF THE APPELLANT ARE DISTINGUISHED AS THIS WAS NOT THE CASE OF RETROSPECT IVE WITHDRAWAL OF NOTIFICATION BUT THE CASE WHERE IT WAS DEEMED THAT SUCH NOTIFICATION WAS NOT ISSUED AT ALL AFTER A CAREFUL CONSIDERATION OF THE RELEVANT ASSESSMENT RECORDS AND THE SUBMISSION OF THE APPELLANT, THE DISALLOWANCE OF RS.17,50,000/ I.T. ACT, 1961 IS, HEREBY, CONFIRMED. THIS GROUND OF APPEAL FAILS AND IS THEREFORE NOT ALLOWED. 3. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK RUNNING I DREW THE ATTENTION OF THE BENCH TO ALL THE DOCUMENTS EVIDENCING DONATION MADE TO HHBHRF AND THE NOTIFICATIONS WHICH GRANTED EXEMPTION TO THE INSTITUTION. HE SUBMITTED THAT THE NOTIFICATION SO ISSUED WITHDRAWING THE PERMISSION AT A LATER DA EFFECT THE CLAIM OF THE ASSESSEE U/S 35(1)(II) OF THE ACT. HE RELIED ON THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF IN ITA NO. 2346/KOL/2018, ASSESSMENT YEAR 2013 JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF REPORTED IN (2002) 258 ITR 529 (SC) SECTION 35CCA OF THE INCOME PROGRAMMES - SOCIETY WHICH HAD ITS OBJECT TO CARRY OUT APPROVED RURAL DEVELOPMENT PROGRAMME - APPROVED BY PRESCRIBED AUTHORITY DEDUCTION UN DER SECTION 35CCA EVEN THOUGH APPROVAL GRANTED BY PRESCRIBED AUTHORITY WAS WITHDRAWN WITH RETROSPECTIVE EFFECT - WHETHER ONCE ASSESSEE FULFILS ALL CONDITIONS LAID DOWN UNDER SECTION 35CCA FOR CLAIMING DEDUCTION OF AMOUNT DONATED, THERE IS NO OB 2 THE ASSESSEE CARRIED THE MATTER IN APPEAL. BEFORE THE LD. FIRST APPELLATE AUTHORITY, THE ASSESSEE RELIED ON T HE DECISION OF THE ITAT KOLKATA BENCH IN THE CASE OF RAJDA POLYMERS VS. DCIT IN ITA NO. 333/KOL/2017, ASSESSMENT YEAR 2013 THE LD. CIT(A) DISTINGUISHED THIS JUDGMENT BY HOLDING AS FOLLOWS: THE APPROVAL WAS RESCINDED ON THE BASIS OF INPUTS RECEIVED BY THE INVESTIGATION WING KOLKATA. SURVEY OPERATIONS U/S 133A OF THE ACT WERE CONDUCTED ON 27.1.2015 IN THE PREMISES OF HHBHRF BY THE DIRECTORATE OF INVESTIGATION, KOLKATA. DURING THE SURVEY, IT WAS FOUND THAT M/S HERBICURE HERBAL RESEARCH FOUNDATION (HHBHRF) WAS ENGAGED IN COLLECTING BOGUS DONATIONS U/S 35(1)(II) OF THE ACT FROM BENEFICIARIES TO ENABLE THEM TO CLAIM WEIGHTED DEDUCTION OF 175% OF THE AMOUNTS ACTUALLY PAID BY SUCH BENEFICIARIES. M/S HERBICURE HEALTHCARE BIO HERBAL RESEARCH FOUNDATION HAS SUBSEQUENTLY MADE AN APPLICATION BEFORE THE SETTLEMENT COMMISSION IN WHICH IT HAD DISCLOSED ADDITIONAL INCOME AND ADMITTED TO THE MODUS OPERANDI OF VARIOUS TRANSACTIONS CARRIED OUT BY THEM. IT IS CLEAR FROM THE GAZETTED NOTIF 06.09.2016 THAT THE CENTRAL GOVERNMENT HAD NOT WITHDRAWN THE APPROVAL U/S 35(1)(II) OF THE I.T. ACT, 1961 WITH RETROSPECTIVE EFFECT BUT THE GAZETTE NOTIFICATION SPECIFICALLY STATES THAT IT SHALL BE DEEMED THAT THE SAID NOTIFICATION HAS NOT B EEN ISSUED FOR ANY TAX BENEFITS UNDER THE INCOME ACT, 1961 OR ANY OTHER LAW OF THE TIME BEING IN FORCE. IN THIS RESPECT, THE CASE LAWS OF THE JURISDICTIONAL ITAT CITED BY THE A/R OF THE APPELLANT ARE DISTINGUISHED AS THIS WAS NOT THE CASE OF IVE WITHDRAWAL OF NOTIFICATION BUT THE CASE WHERE IT WAS DEEMED THAT SUCH NOTIFICATION AFTER A CAREFUL CONSIDERATION OF THE RELEVANT ASSESSMENT RECORDS AND THE SUBMISSION OF THE APPELLANT, THE DISALLOWANCE OF RS.17,50,000/ - ON ACCOUNT OF EXPENDITURE MADE U/S 35(1)(II) OF THE I.T. ACT, 1961 IS, HEREBY, CONFIRMED. THIS GROUND OF APPEAL FAILS AND IS THEREFORE NOT ALLOWED. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK RUNNING I DREW THE ATTENTION OF THE BENCH TO ALL THE DOCUMENTS EVIDENCING DONATION MADE TO HHBHRF AND THE NOTIFICATIONS WHICH GRANTED EXEMPTION TO THE INSTITUTION. HE SUBMITTED THAT THE NOTIFICATION SO ISSUED WITHDRAWING THE PERMISSION AT A LATER DA EFFECT THE CLAIM OF THE ASSESSEE U/S 35(1)(II) OF THE ACT. HE RELIED ON THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF RAJDA POLYMERS (SUPRA) AND RAJ KARAN DASSANI IN ITA NO. 2346/KOL/2018, ASSESSMENT YEAR 2013 -14, ORDER DT. MA Y 8 JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. CHOTATINGRAI TEA & ORS. REPORTED IN (2002) 258 ITR 529 (SC) , WHEREIN IT WAS HELD AS FOLLOWS:- SECTION 35CCA OF THE INCOME -TAX ACT, 1961 - RURAL DEVELOPMENT ASSES SEE HAD MADE DONATION OF CERTAIN AMOUNT TO A SOCIETY WHICH HAD ITS OBJECT TO CARRY OUT APPROVED RURAL DEVELOPMENT SOCIETY GRANTED A CERTIFICATE WHICH HAD ALSO BEEN APPROVED BY PRESCRIBED AUTHORITY - WHETHER ASSESSEE WAS ENTITLED TO DER SECTION 35CCA EVEN THOUGH APPROVAL GRANTED BY PRESCRIBED AUTHORITY WAS WITHDRAWN WITH RETROSPECTIVE EFFECT - HELD, YES WHETHER ONCE ASSESSEE FULFILS ALL CONDITIONS LAID DOWN UNDER SECTION 35CCA FOR CLAIMING DEDUCTION OF AMOUNT DONATED, THERE IS NO OB ITA NO. 252/KOL/2020 ASSESSMENT YEAR: 2014-15 UD MARKETING PRIVATE LIMITED THE ASSESSEE CARRIED THE MATTER IN APPEAL. BEFORE THE LD. FIRST APPELLATE HE DECISION OF THE ITAT KOLKATA BENCH IN THE CASE OF RAJDA POLYMERS VS. DCIT IN ITA NO. 333/KOL/2017, ASSESSMENT YEAR 2013 -14 ORDER DT. THE LD. CIT(A) DISTINGUISHED THIS JUDGMENT BY HOLDING AS FOLLOWS: - OF INPUTS RECEIVED BY THE INVESTIGATION WING KOLKATA. SURVEY OPERATIONS U/S 133A OF THE ACT WERE CONDUCTED ON 27.1.2015 IN THE PREMISES OF HHBHRF BY THE DIRECTORATE OF INVESTIGATION, KOLKATA. DURING THE SURVEY, IT WAS FOUND THAT M/S HERBICURE HERBAL RESEARCH FOUNDATION (HHBHRF) WAS ENGAGED IN COLLECTING BOGUS ACT FROM BENEFICIARIES TO ENABLE THEM TO CLAIM WEIGHTED DEDUCTION OF 175% OF THE AMOUNTS ACTUALLY PAID BY SUCH BENEFICIARIES. M/S HERBICURE HEALTHCARE BIO - HERBAL RESEARCH FOUNDATION HAS SUBSEQUENTLY MADE AN APPLICATION BEFORE THE SETTLEMENT COMMISSION IN WHICH IT HAD DISCLOSED ADDITIONAL INCOME AND ADMITTED TO THE MODUS OPERANDI OF VARIOUS TRANSACTIONS CARRIED OUT BY THEM. IT IS CLEAR FROM THE GAZETTED NOTIF ICATION DATED 06.09.2016 THAT THE CENTRAL GOVERNMENT HAD NOT WITHDRAWN THE APPROVAL U/S 35(1)(II) OF THE I.T. ACT, 1961 WITH RETROSPECTIVE EFFECT BUT THE GAZETTE NOTIFICATION SPECIFICALLY STATES THAT IT SHALL BE EEN ISSUED FOR ANY TAX BENEFITS UNDER THE INCOME -TAX ACT, 1961 OR ANY OTHER LAW OF THE TIME BEING IN FORCE. IN THIS RESPECT, THE CASE LAWS OF THE JURISDICTIONAL ITAT CITED BY THE A/R OF THE APPELLANT ARE DISTINGUISHED AS THIS WAS NOT THE CASE OF IVE WITHDRAWAL OF NOTIFICATION BUT THE CASE WHERE IT WAS DEEMED THAT SUCH NOTIFICATION AFTER A CAREFUL CONSIDERATION OF THE RELEVANT ASSESSMENT RECORDS AND THE SUBMISSION OF THE OF EXPENDITURE MADE U/S 35(1)(II) OF THE I.T. ACT, 1961 IS, HEREBY, CONFIRMED. THIS GROUND OF APPEAL FAILS AND IS THEREFORE NOT ALLOWED. THE LD. COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK RUNNING I NTO 86 PAGES AND DREW THE ATTENTION OF THE BENCH TO ALL THE DOCUMENTS EVIDENCING DONATION MADE TO HHBHRF AND THE NOTIFICATIONS WHICH GRANTED EXEMPTION TO THE INSTITUTION. HE SUBMITTED THAT THE NOTIFICATION SO ISSUED WITHDRAWING THE PERMISSION AT A LATER DA TE WOULD NOT EFFECT THE CLAIM OF THE ASSESSEE U/S 35(1)(II) OF THE ACT. HE RELIED ON THE ORDER OF THIS RAJ KARAN DASSANI VS. ITO Y 8 TH , 2019 AND THE CIT VS. CHOTATINGRAI TEA & ORS. RURAL DEVELOPMENT SEE HAD MADE DONATION OF CERTAIN AMOUNT TO A SOCIETY WHICH HAD ITS OBJECT TO CARRY OUT APPROVED RURAL DEVELOPMENT SOCIETY GRANTED A CERTIFICATE WHICH HAD ALSO BEEN WHETHER ASSESSEE WAS ENTITLED TO DER SECTION 35CCA EVEN THOUGH APPROVAL GRANTED BY HELD, YES WHETHER ONCE ASSESSEE FULFILS ALL CONDITIONS LAID DOWN UNDER SECTION 35CCA FOR CLAIMING DEDUCTION OF AMOUNT DONATED, THERE IS NO OB LIGATION ON PART OF ASSESSEE TO SEE THAT AMOUNT IS ACTUALLY UTILISED FOR PURPOSE FOR WHICH IT WAS DONATED 5. THE LD. D/R, ON THE OTHER HAND, SUBMITTED THAT IT IS NOT MERE WITHDRAWAL OF THE RECOGNITION GRANTED TO HHBHRF BUT IT WAS A RESCINDING OF THE EARLIER NOTIFICATION GRANTING RECOGNITION DUE TO VARIOUS MIS BENCH TH ROUGH THE ORDER OF THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER AND RELIED UPON THE SAME. 6. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS: 7. THE ONLY REASON WHY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) REFUSED DEDUCTION TO THE ASSESSEE WAS THE WITHDRAWAL OF RECOGNITION GRANTED U/S 35(1)(II) OF THE ACT TO HHBHRF. THIS ISSUE WAS C CASE RAJDA POLYMERS (SUPRA) 5.5. MOREOVER, WE FIND THAT THE PROVISIONS OF EXPLANATION TO COMES TO THE RESCUE OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE SAID EXPLANATION IS REPRODUCED BELOW:- SECTION 35(1)(II) RESPECT OF ANY SUM PAID TO A RESEARCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION TO WHICH CLAUSE (II) OR CLAUSE (III) APPLIES, SHALL NOT BE DENIED MERELY ON THE GROUND THAT, SUBS GRANTED TO THE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION REFERRED TO IN CLAUSE (II) OR CLAUSE (III) HAS BEEN WITHDRAWN. IN THE INSTANT CASE, THE LD DR ARGUED THAT THE RECOGNITION WITHDRAWN IN THE CASE OF HHBRF BY THE CBDT WITH RETROSPECTIVE EFFECT. IN RESPONSE TO THIS, THE LD AR ARGUED THAT ON THE DATE ON WHICH DONATION WAS GIVEN, THE NOTIFICATION U/S 35(1)(II) OF THE ACT WAS IN FORCE AND VALID AND THER FIND THAT THE LD CITA HAD IGNORED THE PROVISIONS OF THE ACT (I.E THE EXPLANATION TO 35(1)(II) OF THE ACT) BY MERELY STATING THAT HHBRF H HON'BLE SETTLEMENT COMMISSION, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA , ADDITIONAL INCOME AND ADMITTED TO THE MODUS OPERANDI OF VARIOUS TRANSACTIONS CARRIED OUT BY THEM. BUT THIS IN OUR CONSIDERED OPINION, WOULD NOT DONEE GOES TO HON'BLE ITA NO.333/KOL/2017 RAJDA POLYMERS A.YR.2013 COMMISSION AND DECLARES SOME ADDITIONAL INCOME THEREON, IT DOES NOT AUTOMATICALLY IMPLEAD THE ASSESSEE HEREIN ON THE NEGAT THEREON. THERE CANNOT BE ANY MALAFIDE THAT COULD BE ATTRIBUTED ON THE ASSESSEE HEREIN. WE FIND THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF AND HAD MADE PROPER DUE DILIGENCE BEFORE GRANTIN G DONATION TO HHBRF WHICH WAS DULY RECOGNIZED U/S 35(1)(II) OF THE ACT AT THE TIME OF GIVING DONATION. WE HOLD THAT IF THE SUBSEQUENT NOTIFICATION CANCELLED THE REGISTRATION U/S 35(1)(II) OF THE ACT, THE SAME DOES NOT AFFECT THE DONATION MADE BY THE ASSESS NOTIFICATION WAS IN FORCE. THE BONAFIDE BELIEF OF THE ASSESSEE DONOR AT THE TIME OF GRANTING DONATION TO AN INSTITUTION ON THE BASIS OF RECOGNITION THEN AVAILABLE, CANNOT BE DISTURBED BY SUBSEQUENT EVENT. THIS IS MORE CLEARLY SPELT OUT IN 3 ON PART OF ASSESSEE TO SEE THAT AMOUNT IS ACTUALLY UTILISED FOR PURPOSE FOR WHICH IT WAS DONATED - HELD, YES THE LD. D/R, ON THE OTHER HAND, SUBMITTED THAT IT IS NOT MERE WITHDRAWAL OF THE RECOGNITION GRANTED TO HHBHRF BUT IT WAS A RESCINDING OF THE EARLIER NOTIFICATION GRANTING RECOGNITION DUE TO VARIOUS MIS - DEEDS DONE BY THAT ORGANISATION. HE TOOK THIS ROUGH THE ORDER OF THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER AND RELIED WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS: - THE ONLY REASON WHY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) REFUSED DEDUCTION TO THE ASSESSEE WAS THE WITHDRAWAL OF RECOGNITION GRANTED U/S 35(1)(II) OF THE ACT TO HHBHRF. THIS ISSUE WAS C ONSIDERED BY THE KOLKATA BENCH OF THE TRIBUNAL IN THE WHEREIN IT HAS BEEN HELD AS FOLLOWS:- 5.5. MOREOVER, WE FIND THAT THE PROVISIONS OF EXPLANATION TO SECTION 35(1)(II) COMES TO THE RESCUE OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE SAID EXPLANATION IS - EXPLANATION THE DEDUCTION, TO WHICH THE ASSESSEE IS ENTITLED IN RESPECT OF ANY SUM PAID TO A RESEARCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION TO WHICH CLAUSE (II) OR CLAUSE (III) APPLIES, SHALL NOT BE DENIED MERELY ON THE GROUND THAT, SUBS EQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESSEE, THE APPROVAL GRANTED TO THE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION REFERRED TO IN CLAUSE (II) OR CLAUSE (III) HAS BEEN WITHDRAWN. IN THE INSTANT CASE, THE LD DR ARGUED THAT THE RECOGNITION U/S 35(1)(II) OF THE ACT WAS WITHDRAWN IN THE CASE OF HHBRF BY THE CBDT WITH RETROSPECTIVE EFFECT. IN RESPONSE TO THIS, THE LD AR ARGUED THAT ON THE DATE ON WHICH DONATION WAS GIVEN, THE NOTIFICATION U/S 35(1)(II) OF THE ACT WAS IN FORCE AND VALID AND THER EFORE THE DEDUCTION CLAIMED BY THE ASSESSEE WAS IN ORDER. WE FIND THAT THE LD CITA HAD IGNORED THE PROVISIONS OF THE ACT (I.E THE EXPLANATION TO OF THE ACT) BY MERELY STATING THAT HHBRF H AD SUBSEQUENTLY DECLARED BEFORE THE HON'BLE SETTLEMENT COMMISSION, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA , ADDITIONAL INCOME AND ADMITTED TO THE MODUS OPERANDI OF VARIOUS TRANSACTIONS CARRIED OUT BY THEM. BUT THIS IN OUR CONSIDERED OPINION, WOULD NOT SERVE THE PURPOSE OF THE REVENUE. MERELY BECAUSE THE DONEE GOES TO HON'BLE ITA NO.333/KOL/2017 RAJDA POLYMERS A.YR.2013 COMMISSION AND DECLARES SOME ADDITIONAL INCOME THEREON, IT DOES NOT AUTOMATICALLY IMPLEAD THE ASSESSEE HEREIN ON THE NEGAT IVE SIDE AND THE EXPRESS PROVISIONS OF THE ACT CANNOT BE IGNORED THEREON. THERE CANNOT BE ANY MALAFIDE THAT COULD BE ATTRIBUTED ON THE ASSESSEE HEREIN. WE FIND THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF AND HAD MADE PROPER DUE DILIGENCE BEFORE G DONATION TO HHBRF WHICH WAS DULY RECOGNIZED U/S 35(1)(II) OF THE ACT AT THE TIME OF GIVING DONATION. WE HOLD THAT IF THE SUBSEQUENT NOTIFICATION CANCELLED THE REGISTRATION U/S 35(1)(II) OF THE ACT, THE SAME DOES NOT AFFECT THE DONATION MADE BY THE ASSESS NOTIFICATION WAS IN FORCE. THE BONAFIDE BELIEF OF THE ASSESSEE DONOR AT THE TIME OF GRANTING DONATION TO AN INSTITUTION ON THE BASIS OF RECOGNITION THEN AVAILABLE, CANNOT BE DISTURBED BY SUBSEQUENT EVENT. THIS IS MORE CLEARLY SPELT OUT IN THE PROVISIONS OF THE ACT ITSELF BY WAY OF AN ITA NO. 252/KOL/2020 ASSESSMENT YEAR: 2014-15 UD MARKETING PRIVATE LIMITED ON PART OF ASSESSEE TO SEE THAT AMOUNT IS ACTUALLY UTILISED FOR PURPOSE FOR THE LD. D/R, ON THE OTHER HAND, SUBMITTED THAT IT IS NOT MERE WITHDRAWAL OF THE RECOGNITION GRANTED TO HHBHRF BUT IT WAS A RESCINDING OF THE EARLIER NOTIFICATION DEEDS DONE BY THAT ORGANISATION. HE TOOK THIS ROUGH THE ORDER OF THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER AND RELIED WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES THE ONLY REASON WHY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) REFUSED DEDUCTION TO THE ASSESSEE WAS THE WITHDRAWAL OF RECOGNITION GRANTED U/S 35(1)(II) OF THE ONSIDERED BY THE KOLKATA BENCH OF THE TRIBUNAL IN THE SECTION 35(1)(II) OF THE ACT ALSO COMES TO THE RESCUE OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE SAID EXPLANATION IS EXPLANATION THE DEDUCTION, TO WHICH THE ASSESSEE IS ENTITLED IN RESPECT OF ANY SUM PAID TO A RESEARCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION TO WHICH CLAUSE (II) OR CLAUSE (III) APPLIES, SHALL NOT BE DENIED MERELY ON THE EQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESSEE, THE APPROVAL GRANTED TO THE ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION REFERRED TO IN CLAUSE U/S 35(1)(II) OF THE ACT WAS WITHDRAWN IN THE CASE OF HHBRF BY THE CBDT WITH RETROSPECTIVE EFFECT. IN RESPONSE TO THIS, THE LD AR ARGUED THAT ON THE DATE ON WHICH DONATION WAS GIVEN, THE NOTIFICATION U/S 35(1)(II) OF THE EFORE THE DEDUCTION CLAIMED BY THE ASSESSEE WAS IN ORDER. WE FIND THAT THE LD CITA HAD IGNORED THE PROVISIONS OF THE ACT (I.E THE EXPLANATION TO SECTION AD SUBSEQUENTLY DECLARED BEFORE THE HON'BLE SETTLEMENT COMMISSION, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA , ADDITIONAL INCOME AND ADMITTED TO THE MODUS OPERANDI OF VARIOUS TRANSACTIONS CARRIED OUT BY THEM. BUT SERVE THE PURPOSE OF THE REVENUE. MERELY BECAUSE THE DONEE GOES TO HON'BLE ITA NO.333/KOL/2017 RAJDA POLYMERS A.YR.2013 -14 SETTLEMENT COMMISSION AND DECLARES SOME ADDITIONAL INCOME THEREON, IT DOES NOT AUTOMATICALLY IMPLEAD IVE SIDE AND THE EXPRESS PROVISIONS OF THE ACT CANNOT BE IGNORED THEREON. THERE CANNOT BE ANY MALAFIDE THAT COULD BE ATTRIBUTED ON THE ASSESSEE HEREIN. WE FIND THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF AND HAD MADE PROPER DUE DILIGENCE BEFORE G DONATION TO HHBRF WHICH WAS DULY RECOGNIZED U/S 35(1)(II) OF THE ACT AT THE TIME OF GIVING DONATION. WE HOLD THAT IF THE SUBSEQUENT NOTIFICATION CANCELLED THE REGISTRATION U/S 35(1)(II) OF THE ACT, THE SAME DOES NOT AFFECT THE DONATION MADE BY THE ASSESS EE WHEN THE SAID NOTIFICATION WAS IN FORCE. THE BONAFIDE BELIEF OF THE ASSESSEE DONOR AT THE TIME OF GRANTING DONATION TO AN INSTITUTION ON THE BASIS OF RECOGNITION THEN AVAILABLE, CANNOT BE DISTURBED BY THE PROVISIONS OF THE ACT ITSELF BY WAY OF AN EXPLANATION TO SECTION 35(1) OF DEDUCTION U/S 35(1)(II) OF THE ACT IS NOT IN ORDER. WE ALSO HIGH COURT IN THE CAS ES OF KUMAR KANKARIA VS CIT REPORTED IN 251 ITR 707 (CAL) HAD HELD THAT THERE WAS NO POWER TO CANCEL THE REGISTRATION RETROSPECTIVELY. HENCE EVEN ON THIS COUNT, THE DEDUCTION CLAIMED U/S 35(1)(II) OF THE ACT BY THE ASSESSEE DESERVES TO BE ALLOWED. 8. CONSISTENT WITH THE VIEW TAKE FORCE ON THE DATE OF PAYMENT OF DONATION, THE CLAIM OF DONATION HAS TO BE ALLOWED. THE STATEMENT OF THE LD. D/R THAT IT IS NOT A WITHDRAWAL BUT A RESCINDING OF RECOGNITION, IS NOT SUPPORTED BY ANY DOCUMENTS/ ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE SD/- [ABY T. VARKEY] JUDICIAL MEMBER DATED : 30.09.2020 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. UD MARKETING PRIVATE LIMITED P-25, TRANSPORT DEPOT ROAD KOLKATA 700 088 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 4 SECTION 35(1) OF THE ACT. HENCE EVEN AS PER THE PROVISIONS OF THE ACT, THE DENIAL OF DEDUCTION U/S 35(1)(II) OF THE ACT IS NOT IN ORDER. WE ALSO FIND THAT THE HON'BLE JURISDICTIONAL ES OF B.P.AGARWALLS & SONS LTD VS CIT REPORTED IN 208 ITR 863 ( REPORTED IN 251 ITR 707 (CAL) HAD HELD THAT THERE WAS NO POWER TO CANCEL THE REGISTRATION RETROSPECTIVELY. HENCE EVEN ON THIS COUNT, THE DEDUCTION CLAIMED U/S 35(1)(II) OF THE ACT BY THE ASSESSEE DESERVES TO BE ALLOWED. CONSISTENT WITH THE VIEW TAKE N THEREIN, AS THE RECOGNITION IN QUESTION WAS IN FORCE ON THE DATE OF PAYMENT OF DONATION, THE CLAIM OF DONATION HAS TO BE ALLOWED. THE STATEMENT OF THE LD. D/R THAT IT IS NOT A WITHDRAWAL BUT A RESCINDING OF RECOGNITION, IS NOT SUPPORTED BY ANY DOCUMENTS/ EVIDENCE. THUS, WE ALLOW THIS GROUND OF APPEAL OF THE IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 30 TH DAY OF SEPTEMBER, 2020. [ J. SUDHAKAR REDDY AC COUNTANT MEMBER UD MARKETING PRIVATE LIMITED OF INCOME TAX, CIRCLE -1(2), KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES ITA NO. 252/KOL/2020 ASSESSMENT YEAR: 2014-15 UD MARKETING PRIVATE LIMITED OF THE ACT. HENCE EVEN AS PER THE PROVISIONS OF THE ACT, THE DENIAL FIND THAT THE HON'BLE JURISDICTIONAL REPORTED IN 208 ITR 863 ( CAL) AND JAI REPORTED IN 251 ITR 707 (CAL) HAD HELD THAT THERE WAS NO POWER TO CANCEL THE REGISTRATION RETROSPECTIVELY. HENCE EVEN ON THIS COUNT, THE DEDUCTION CLAIMED U/S N THEREIN, AS THE RECOGNITION IN QUESTION WAS IN FORCE ON THE DATE OF PAYMENT OF DONATION, THE CLAIM OF DONATION HAS TO BE ALLOWED. THE STATEMENT OF THE LD. D/R THAT IT IS NOT A WITHDRAWAL BUT A RESCINDING OF RECOGNITION, IS NOT EVIDENCE. THUS, WE ALLOW THIS GROUND OF APPEAL OF THE SD/- J. SUDHAKAR REDDY ] COUNTANT MEMBER TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES