M. Satnaliwala & Co. , Kolkata V. ITO, Ward - 22(4) , Kolkata

ITA 37/KOL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2782 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M SATNALIWALA
• Keywords: Retrospective amendment
• Section: 148

Judgement Text

I.T.A. NO. 37/KOL/2019 ( ASSESSMENT YEAR: 2011-2012) M. SATNAL IWALA & CO. 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) I.T.A. NO. 37/KOL/2019 ASSESSMENT YEAR: 2011-2012 M. SATNALIWALA & CO.,.............................. .......................................APPELLANT 62, BENTINCK STREET, KOLKATA-700 069 [PAN: AAFFM 3516 N] -VS.- INCOME TAX OFFICER,................................ ..............................RESPONDENT WARD-22(4), KOLKATA, 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700 0169 APPEARANCES BY: SHRI M. SATNALIWALA, A.R., FOR THE APPELLANT SHRI SANKAR HALDER, JCIT, SR. D.R., FOR THE RESPOND ENT DATE OF CONCLUDING THE HEARING : MAY 13, 2019 DATE OF PRONOUNCING THE ORDER : JUNE 07, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA ZONE) :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-6, KOLKATA DAT ED 28.12.2018 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.3,50,000/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER SEC TION 35(1)(II) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM OF PRACTICING CHARTERED ACCOUNTANTS. THE RETURN OF INCOME OF THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27.07.2011 DECLARI NG TOTAL INCOME OF RS.69,005/-. THE SAID RETURN WAS INITIALLY PROCESSE D BY THE ASSESSING OFFICER UNDER SECTION 143(1). THE ASSESSMENT, HOWEV ER, WAS SUBSEQUENTLY RE-OPENED BY HIM AND A NOTICE UNDER SECTION 148 WAS ISSUED BY HIM ON 31.03.2016 AFTER RECORDING THE REASONS. IN REPLY, A LETTER WAS FILED BY THE ASSESSEE STATING THAT THE RETURN FILED ORIGINALLY O N 27.07.2011 MAY BE I.T.A. NO. 37/KOL/2019 ( ASSESSMENT YEAR: 2011-2012) M. SATNAL IWALA & CO. 2 TREATED AS THE RETURN FILED IN COMPLIANCE TO THE NO TICE UNDER SECTION 148. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH ITS R ETURN, A SUM OF RS.2,00,000/- WAS DEBITED BY THE ASSESSEE ON ACCOUN T OF DONATION PAID TO M/S. HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUND ATION AND A WEIGHTED DEDUCTION OF RS.3,50,000/- WAS CLAIMED UND ER SECTION 35(1)(II) OF THE ACT. AS PER THE INFORMATION RECEIVED BY THE ASSESSING OFFICER, THE MINISTRY OF FINANCE VIDE NOTIFICATION DATED 06.09.2 016 AND DATED 21.09.2016 HAD WITHDRAWN THE RELEVANT NOTIFICATION GRANTING APPROVAL UNDER SECTION 35(1)(II) TO M/S. HERBICURE HEALTHCAR E BIO-HERBAL RESEARCH FOUNDATION WITH RETROSPECTIVE EFFECT FROM 01.04.200 7. CONSEQUENTLY THE DEDUCTION OF RS.3,50,000/- CLAIMED BY THE ASSESSEE UNDER SECTION 35(1)(II) FOR THE DONATIONS MADE TO M/S. HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION WAS DISALLOWED BY THE ASSESSING OFFICER AND ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTA L INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 147/143(3) OF THE ACT VIDE AN ORDER DATED 26.10.2017. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 147/143(3), AN APPEAL WAS FILED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE ON THE ISSUE UNDER CONSIDERATION WERE N OT FOUND ACCEPTABLE BY HIM, THE LD. CIT(APPEALS) CONFIRMED THE ADDITION OF RS.3,50,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 35(1)(II) OF THE ACT FO R THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 5 OF HIS IMPUGNED ORDER:- 5. GROUND NO. 2 THIS GROUND RELATES TO THE DISALLOWANCE OF DEDUCTION U/S. 35(1)(II). I HAVE EX AMINED THE WRITTEN SUBMISSIONS OF THE APPELLANT AS WELL AS REASSESSMENT ORDER. I HAVE FOUND THAT IN THE INSTAN T CASE, THE APPELLANT CLAIMED DEDUCT.ION U/S. 35(1)(II) OF THE ACT TO THE TUNE OF RS.3,50,000/- TOWARDS DONATION MADE TO M/S. HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION. THE AO DISALLOWED THE SAID CLAIM OF THE APPELLANT ON THE BASIS THAT THE MINISTRY OF FINANCE VIDE NOTIFICATION DATED' 06.09.2016 AND 21.09.2016 HAS WITHDRAWN THE RELEVANT NOTIFICATIONS GRANTING APPRO VAL I.T.A. NO. 37/KOL/2019 ( ASSESSMENT YEAR: 2011-2012) M. SATNAL IWALA & CO. 3 U/S. 35(1)(II) TO THE INSTITUTION, NAMELY HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION WITH RETROSPECTIVE EFFECT FROM 01.04.2007. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT FURN ISH ANY EXPLANATION REGARDING DISALLOWANCES OF CLAIM U/ S. 35(1)(II). DURING THE COURSE OF APPELLATE PROCEEDIN GS THE APPELLANT HAS PLACED UPON SOME JUDICIAL PRECEDENTS IN SUPPORT OF HIS CLAIM, HOWEVER, HE IS UNABLE TO GIVE ANY PROPER EXPLANATIONS REGARDING THE ALLOWABILITY OF S UCH DEDUCTION IN HIS CASE. FURTHER, I FIND THAT THE APP ELLANT NEITHER IN ANY PRECEDING YEAR NOR ANY SUBSEQUENT YE AR HAS MADE SUCH DONATION. THEREFORE, IN MY VIEW, THE CLAI M OF DEDUCTION U/S. 35(1)(II) IS UNDER DOUBT AND THE AO HAS RIGHTLY DENIED SUCH CLAIM OF' DEDUCTION U/S. 35(1)( II) OF THE ACT. HENCE, THIS GROUND IS DISMISSED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS POINTED O UT BY THE LD. COUNSEL FOR THE ASSESESE, EXPLANATION BELOW CLAUSE (III) OF SUB-SECTION (1) OF SECTION 35 IS CLEARLY APPLICABLE TO THE ISSUE INVOL VED IN THE PRESENT CASE. THE SAID EXPLANATION INSERTED BY THE TAXATION LAWS (AMENDMENT) ACT, 2016 WITH RETROSPECTIVE EFFECT FROM 01.04.2016 READ S AS UNDER:- 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 C LAUSE (II) OR CLAUSE (III) APPLIES, SHALL NOT BE DENIED M ERELY ON THE GROUND THAT, SUBSEQUENT TO THE PAYMENT OF SUCH SUM BY THE ASSESSEE, THE APPROVAL GRANTED TO THE ASSOCI ATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION REFERRED T O IN CLAUSE (II) OR CLAUSE (III) HAS BEEN WITHDRAWN. IT IS ALSO OBSERVED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF THE TRIBUNAL. IN ONE OF SUCH DECISIONS RENDERED IN THE CASE OF NARBHERAM VISHRAM VS.- DCIT (ITA NOS. 42 & 43/KOL/ 2018 DATED 27.07.2018), IT WAS HELD BY THE TRIBUNAL THAT THE W ITHDRAWAL OF RECOGNITION UNDER SECTION 35(1)(II) OF THE ACT IN T HE HANDS OF THE PAYEE ORGANIZATIONS WOULD NOT AFFECT THE RIGHTS AND INTER ESTS OF THE ASSESSEE TO I.T.A. NO. 37/KOL/2019 ( ASSESSMENT YEAR: 2011-2012) M. SATNAL IWALA & CO. 4 CLAIM WEIGHTED DEDUCTION UNDER SECTION 35(1)(II) OF THE ACT. TO THE SIMILAR EFFECT IS THE ANOTHER DECISION OF THE TRIBU NAL RENDERED IN THE CASE OF TUSHAR CHAWDA VS.- ITO (ITA NO. 2362/KOL/2017 D ATED 21.03.2018), WHEREIN IT WAS HELD THAT THE ASSESSEE COULD NOT SUF FER ON ACCOUNT OF WITHDRAWAL OF NOTIFICATION GIVEN TO M/S. SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH, KOLKATA GRANTING APPROVAL UNDER SECTION 35(1)(II) OF THE ACT. KEEPING IN VIEW THESE DECISIONS OF THE TRI BUNAL AS WELL AS EXPLANATION BELOW SECTION 35(1)(III) OF THE ACT, I AM OF THE VIEW THAT DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 35( 1)(II) CANNOT BE DENIED MERELY ON THE GROUND THAT THE APPROVAL TO TH E CONCERNED DONEE INSTITUTION GIVEN UNDER SECTION 35(1)(III) WAS SUBS EQUENTLY WITHDRAWN WITH RETROSPECTIVE EFFECT. IN THAT VIEW OF THE MATT ER, I DELETE THE DISALLOWANCE OF RS.3,50,000/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ASS ESSEES CLAIM FOR DEDUCTION UNDER SECTION 35(1)(III) AND ALLOW THIS A PPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 07, 2019 . SD/- (P.M. JAGTAP) VICE-PRESIDENT (KZ ) KOLKATA, THE 7 TH DAY OF JUNE, 2019 COPIES TO : (1) M. SATNALIWALA & CO. 62, BENTINCK STREET, KOLKATA-700 069 (2) INCOME TAX OFFICER, WARD-22(4), KOLKATA, 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700 0169 (3) COMMISSIONER OF INCOME TAX (APPEALS)-6, KOLKAT A, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.