IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI BEFORE S HRI S. RIFAUR RAHMAN (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 3712 /MUM/2018 ASSESSMENT Y EAR: 2012 - 13 M/S POOJA HARDWARE PVT. LTD., FLAT NO. A - 102, SAI DARSHAN BLDG. NO. 10, PREM NAGA R, OFF S.V. ROAD, BORIVALI (W), MUMBAI - 400092 PAN: AAECP2624G VS. THE ASSISTANT COMMISSIONER OF INCOME TAX 13(1)(1), AAYAKAR BHAVAN, M.K. MARG, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. DINKLE HARIA (A R) REVENUE BY : SHRI KUM AR PADMA P ANI BOR A ( DR ) DATE OF HEARING: 19 /09 /201 9 DATE OF PRONOUNCEMENT: 28 / 10 /201 9 O R D E R PER RAM LAL NEGI, JM THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL AGAINST THE ORDER DATED 05.03.2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 21 (FOR SHORT THE CIT(A) , MUMBAI , FOR THE ASSESSMENT YEAR 2012 - 13 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. IN THIS CASE, THE ASSESSE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 4 , 02 , 09,744/ - . THE AO COMPLETED THE ASSESSMENT U/S 143 (3) OF THE A CT. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM KOLKATA DIRECTORATE OF INVESTIGATION TO THE EFFECT THAT THE THREE INSTITUTIONS , NAMELY SCHOOL OF HUMAN GENETICS & POPULATION HEALTH (SHG & PH), MATRRVANI INSTITUTE OF EXPE RIMENTAL RESEARCH & EDUCATION ( MIER & E) AND HERBICURE HEALTH CARE BIO HERBAL RESEARCH FOUNDATION (HHNBRF) , IN CONNIVANCE WITH THE DONOR S /BENEFICIARIES USED TO 2 ITA NO . 3712 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 HELP THE DONOR S /BENEFICIARIES BY RECEIVING MONEY AS DONATION AND RETURNING THE SAME TO THE BENEFICIARIES AFTER TAKI NG THEIR COMMISSION. AS PER INFORMATION, THE ASSESSEE WAS ONE OF THE BENEFICIARIES AND ALLEGEDLY MADE DONATION OF RS . 1,00,00,000/ - . BASED ON THE SAID INFORMATION , THE CASE WAS REOPENED U /S 147 OF THE ACT BY ISSUING NOTICE U/S 148. AFTER OBTAINING DETAILS AND EXPLANATION S FROM THE ASSESSE E , THE REJECTED THE CLAIM OF DEDUCTION U/S 35(1)(II) @ 175% OF THE DONATION AND MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CI T (A) AFTER HEARING THE ASSESSE DISMISSED THE ASSESSEES APPEAL AND CONFIRMED THE ADDITION MADE BY THE AO . THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER PASSED BY THE LD. CIT (A). 3 . THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUNDS : - A) REOPENING OF ASSESSMENT 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 21, MUMBAI [CITA)] ERRED ON FACTS AND IN LAW IN NOT DEALING WITH THE ADDITIONAL GROUNDS 1 AND 2 WHEREBY THE APPELLANT HAD CHALLENGED T HE REOPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT. 2. THE APPELLANT PRAYS THAT THE CIT (A) MAY BE DIRECTED TO DEAL WITH THE GROUNDS OF REOPENING OF ASSESSMENT AND AS THE SAID ISSUE WOULD GO TO THE ROOT OF THE MATTER, THE ORDER PASSED BY THE CIT (A) MAY BE SET ASIDE. 3. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT PRAYS THAT YOUR HONOUR HOLD THAT THE REOPENING OF ASSESSMENT ON THE ALLEGED GROUND THAT THE DONATION GIVEN BY THE APPELLANT TO THE SCHOOL OF HUMAN GENETICS & POPULATION HEALTH AMOUNTING TO RS. 1,00,00,000/ - WAS BOGUS DONATION, IS BAD IN LAW. B) PRINCIPLES OF NATURAL JUSTICE VIOLATED 4 THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE PRINCIPLES OF NATURAL JUSTICE WERE NOT VIOLATED ON THE AO NOT GIVING THE APPELLANT AN OPPORT UNITY TO CROSS EXAMINE THE PARTIES WHOSE STATEMENTS THE AO WAS RELYING ON. 3 ITA NO . 3712 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 5 AS THE PRINCIPLES OF NATURAL JUSTICE ARE VIOLATED, THE APPELLANT PRAYS THAT YOUR HONOUR HOLD THAT THE ORDER IS BAD IN LAW. C) DISALLOWANCE DEDUCTION CLAIMED U/S 35(1)(II) OF RS. 1 ,75,00,000/ - . 6. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE AO HOLDING THAT THE DONATION OF RS. 1,00,00,000/ - GIVEN TO THE SCHOOL OF HUMAN GENETICS & POPULATION HEALTH WAS PAID BACK TO THE APPELLANT AFTER DEDUCTING A COMMISSION AND HENCE THE A PPELLANT WAS NOT ENTITLED TO DEDUCTION U/S 35(1)(II) OF RS. 1,75,00,000/ - . 7. THE APPELLANT PRAYS THAT YOUR HONOUR THAT THE APPELLANT IS ENTITLED TO DEDUCTION U/S 35(1)(II) OF RS. 1,75,00,000/ - WITH RESPECT TO DONATION GIVEN TO THE SCHOOL OF HUMAN GENETICS & POPULATION HEALTH OF RS. 1,00,00,000/ - . D) WITHOUT PREJUDICE, NOT ALLOWING DEDUCTION U/S 80G 8. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (A) ERRED IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO DEDUCTION U/S 80G WITH RESPECT TO DONATION OF RS . 1,00,00,000/ - GIVEN TO THE SCHOOL OF HUMAN GENETICS & POPULATION HEALTH. 9. IF YOUR HONOUR IS NOT INCLINED TO ALLOW DEDUCTION U/S 35(1)(II), THE APPELLANT PRAYS THAT THE AO MAY BE DIRECTED TO ALLOW DEDUCTION U/S 80G. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE IT A T, MUMBAI IN THE CASE OF MAHESH C. THAKKER VS. ACIT, ITA NO. 5121 & 5122/MUM/2018 . IN THE SAID CASE, THE ASSESSE HAD FURNISHED THE DETAILS OF DONATIO N GIVEN TO SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH AMOUNTING TO RS. 3,00,000/ - AND CLAIMED DEDUCTION U/S 35(1)(II) OF THE ACT AMOUNTING TO RS. 5.25 LACS AND ITS RETURN OF INCOME. THE AO RELYING ON THE REPORT OF ENQUIRY CONDUCTED BY DDIT REJECTED T HE CLAIM OF THE ASSESSE ON THE GROUND THAT THE DONATION RECEIVED BY THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH WERE NEVER UTILIZED FOR THE PURPOSE OF SCIENTIFIC RESEARCH AND SET TING UP OF NEW INFRASTRUCTURE. THE FIRST APPELLATE AUTHORITY CONFIRMED THE FINDINGS OF THE AO. HOWEVER, IN THE 4 ITA NO . 3712 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 FURTHER APPEAL, THE TRIBUNAL DELETED THE ADDITION CONFIRMED BY THE LD. CIT (A) . THE CONTENTION OF THE ASSESSEES IN THE SAID CASE WAS THAT AT THE TIME OF MAKING DONATION TO THE SAID INSTITUTION, THE INSTITUTION WAS HAVING ALL REQUISITE CERTIFICATE/APPROVALS, RECOGNITIONS, NECESSARY FOR IT BEING ELIGIBLE TO RECEIPT DONATION U/S 35(1) (II) OF THE ACT. THE ITAT DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSE HOLDING THAT SUBSEQUENT WITHDRAWAL OF RECOGNITION DOES NOT AFFECT CLAIM OF THE ASSESSE. THE ASSESSE E RELIED ON THE FOLLOWING DECISION OF THE MUMBAI AND KOLKATA BENCHES OF THE ITAT: 1. MAHESH C. THAKKER VS. ACIT (5121 & 5122/M/2018). 2. M/S GUJARAT AGROCHEM PVT. LTD. VS. ACIT ( 2224/M/2019). 3. M/S MOTILAL DAHYABHAI JHAVERI SONS VS. ACIT ( 3453 & 1584/M/2019). 4. URNISH JEWELLERS VS. ACIT ( 1583/M/2019) 5. DCIT VS. M/S MOCO CORPORATION (INDIA) P. LTD. ( 16/KOL/2017). 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) STRONGLY SUPPORTING THE CONCURRENT FINDINGS OF THE AUTHOR ITIES BELOW, SUBMITTED THAT SINCE THE CBDT HAD WITHDRAWN THE NOTIFICATION GRANTING APPROVAL U/S 35(1)(II) OF THE INCOME TAX TO THE SCHOOL OF HUMAN GENETICS AND POPULATION HEALTH, KOLK ATA W.E.F. 01.04.2007 VIDE M.O.F. NO. 203/09/2015/ITA - II DATED 21.09.2016 ON THE BASIS OF THE REPORT OF INVESTIGATION CONDUCTED BY THE INVESTIGATION WING, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE AO. THE LD. DR, HOWEVER, ADMITTED THAT THE MUMBAI BENCH OF ITAT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF TH E ASSESSEE IN THE CASE OF MAHESH C. THAKKER VS. ACIT (SUPRA) 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE PARTIES . I N THE CASE OF MAHESH C. THAKKER VS. ACIT (SUPRA), T HE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSE HOLDING AS UNDER: - 6. IN VIEW OF THE ABOVE SUBMISSIONS, IT WAS CLAIMED THAT EXACTLY ON IDENTICAL ISSUES THE CO - ORDINATE BENCH OF THIS TRIBUNAL B BENCH KOLKATA IN THE CASE OF DCIT VS. MACO CORPORATION (INDIA) 5 ITA NO . 3712 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 PVT. LTD. IN ITA NO. 16/KOL/2017 VIDE ORDER DATED 14.03.2018 FOR AY 2013 - 14 HAS CONSIDERED THE ISSUE IN REGARD TO VERY SAME TRUST I.E. SGHPH AND HOLDS THAT PRIOR TO THE DATE OF DONATION UNDER CANCELLATION OF REGISTRATION H AS HAPPENED AND THERE IS ABSOLUTELY NO PROVISION OF WITHDRAWAL OF RECOGNITION UNDER SECTION 35(1)(II) OF THE ACT. HENCE, ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING IN PARA 8.1 AND 8.5 AS UNDER: - 8.1. THE BRIEF FACT PERTAINING TO SGHPH ARE AS UNDER: - A) SGHPH WAS RECOGNIZED VIDE GAZETTE NOTIFICATION DATED 28.1.2009 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT IN SHORT), MINISTRY OF FINANCE (DEPARTMENT OF REVENUE), GOVERNMENT OF INDIA, U/S 35(1)(II) OF THE ACT. B) SGHPH WAS ALSO RECOGNIZED AS A S CIENTIFIC INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY MINISTRY OF SCIENCE & TECHNOLOGY, GOVERNMENT OF INDIA. THE RENEWAL OF RECOGNITION AS SIRO BY THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH UNDER THE SCHEME ON RECOGNITION OF SCIENTIFIC AND INDUSTR IAL RESEARCH ORGANISATION , 1988 WAS MADE FOR THE PERIOD FROM 1.4.2010 TO 31.3.2013 VIDE COMMUNICATION IN F.NO. 14/473/2007 - TU - V DATED 17.6.2010. 8.2. AT THE OUTSET, WE FIND THAT THE TAXATION LAWS (AMENDMENT) ACT, 2006 WITH RETROSPECTIVE EFFECT FROM 1.4.20 06 HAD INTRODUCED AN EXPLANATION IN SECTION 35 OF THE ACT WHICH READS AS UNDER: - SECTION 35(1)(II) 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, SUBSEQUENT 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. 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)(II) OF THE ACT COULD BE MADE IN THE INSTANT CASE. 6 ITA NO . 3712 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 7. SIMILARLY, THE ANOTHER CO - ORDINATE BENCH OF THIS TRIBUNAL, JAIPUR BENCH, IN THE CASE OF P.R. ROLLING MILLS PVT. LTD. VS. DCIT IN ITA NO. 529/JP/2019 VIDE O RDER DATED 05.07.2018 FOR AY 2014 - 15 HAS CONSIDERED THE SAME TRUST/ INSTITUTE I.E. SHG&PG AND ALLOWED THE CLAIM OF THE ASSESSEE. THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL IN THE PRESENT CASE ALSO, RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH, WE ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 35(1)(II) OF THE ACT. 8. SIMILAR, ARE THE FACTS IN AY 2014 - 15, HENCE TAKING A CONSISTENT VIEW WE ALLOW THE CLAIM OF ASSESSEE IN THIS YEAR ALSO. 7. THE ISSUE INVOLVED IN THE PRESENT CASE IS IDENTICAL TO THE ISSUE INVOLVED IN THE CASE OF MAHESH C. THAKKER VS. ACIT . SINCE, THIS ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN FAVOUR OF THE ASSESSE E IN THE AFORESAID CASE , WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW FROM THE VIEW ALREADY TAKEN BY THE COORDINATE BENCH . HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF MAHESH C. THAKKER VS. ACIT (SUPRA), WE ALLOW GROUND NO 6 & 7 OF THE ASSESSEES APPEAL AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. 8. SI NCE, WE HAVE ALLOWED THE CLAIM OF THE ASSESSEE U/S 35(1)(II) OF THE ACT, WE DO NOT DEEM IT NECESSARY TO ADJUDICATE GROUND NO. 1 TO 5 CHALLENGING THE ORDER ON LEGAL GROUNDS AND GROUND NO. 8 & 9 TAKEN AS ALTERNATIVE GROUNDS WITHOUT PREJUDICE TO GROUND NO. 6 AND 7. I N THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2012 - 2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER , 2019 . SD/ - SD/ - ( S. RIFAUR RAHMAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 28 / 10 / 201 9 ALINDRA, PS 7 ITA NO . 3712 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT( A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI