Loading judgment…
Facts
The assessee claimed a deduction under section 35AC for donations made to M/s BIOVED Research Society. The CIT(A) upheld the disallowance, stating that the society's registration was cancelled. The cancellation was based on a survey report indicating bogus donations and subsequent non-compliance by the society. The Tribunal examined whether the CIT(E)'s order cancelling the registration and consequently disallowing the deduction was justified.
Held
The Tribunal held that the cancellation of the society's registration was done without proper procedure, as the assessee was not given an opportunity to cross-examine witnesses or confront materials. Furthermore, relying on various judicial pronouncements, the Tribunal found that even if the registration was cancelled retrospectively, the deduction under section 35AC should not be denied if the approval was valid at the time of donation. The Tribunal also noted that the deduction under section 35(1)(ii) was allowed by a coordinate bench for donations to the same society.
Key Issues
Whether the disallowance of deduction under section 35AC is justified when the registration of the donee society was cancelled without following due process and the donation was made when the society had valid approval. Whether subsequent cancellation of approval with retrospective effect can deny the benefit of deduction to the assessee.
Sections Cited
35AC, 35(1)(ii), 133A, 12AA, 115BBC, 143(3), 68, 35CCA, 148, 35(1)(ii), 35CCA, 263
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHI PRABHASH SHANKAR
The Only effective ground raised by the assessee relates to challenging the order of Commissioner of Income-tax (Appeals) in upholding the disallowance of deduction claimed under section 35AC of the Act.
2. The Ld.AR reiterated the same arguments as were raised by him before the lower authorities and also submitted that the Ld.CIT(A) erred in upholding the disallowance of the deduction of Rs.52,50,000/- claimed under section 35AC in 2 303/Mum/2025 Atlantis IT Solution, Mumbai respect of donations made to M/s BIOVED Research Society which is duly approved under section 35(1)(ii) of the Income-tax Act, 1961 whereas on the contrary, the Ld.DR relied on he orders passed by the revenue authorities.
We have heard the counsels for both the parties, perused the materials placed on record, judgements cited before us and the orders passed by the revenue authorities. From the records we notice that as per the facts of the present case, the disallowance of deduction under section 35AC of the Act was made on the ground that M/s BIOVED Research Society and claimed a weighted deduction of Rs.52,50,000/- being 175% of Rs.30 lakhs. It was found that Investigation Wing, Kolkata conducted a survey under section 133A of the Act in case of several entities, wherein it was found that bogus donations were paid to certain trusts and societies. Therefore, while referring to the report of Investigation Wing wherein it was noted that many corporate / non corporate entities had paid bogus donations to certain trusts / societies and one of these trusts / societies was M/s BIOVED Research Society and, therefore, Commissioner of Income-tax(Exemption) cancelled the registration granted under section 12AA of the said society with effect from 01/04/2010 vide his order dated 28/02/2017.
Accordingly, considering the order passed by the Ld.CIT(E), the Assessing Officer also disallowed deduction claimed by the assessee under section 35AC of the Act.
So, from the orders passed by the revenue authorities, we notice that the only ground / basis for disallowing deduction under section 35AC of the Act in the case of the assessee is cancellation of registration of M/s BIOVED Research Society by the Ld.CIT(E). However, in this regard we notice that the co-ordinate bench of ITAT in had set aside the order of cancellation of 3 303/Mum/2025 Atlantis IT Solution, Mumbai registration and restored the registration of M/s BIOVED Research Society under section 12A vide its order dated 08th January, 2018 by observing as under:-
“5. We have considered the rival submissions. In exercising the powers under section 12AA(3) for cancellation of registration under section 12A/12AA by Pr.CIT/CIT, following conditions have to be satisfied.
(1) That the Trust or Society has already been granted registration under section 12AA(1)(b) of the 17 Act.
(2) W.E.F. 01.06.2001 registration has been granted at any time under section 12A as stood before Amendment by Finance Act, 2 of 1996.
(3) The Commissioner subsequently found and satisfied that- (a) Activities of such Trust or Institution are not genuine or (b) Are not being carried out in accordance with the objects of the Trust or Institution, 5.1 In the present case, assessee has already been granted registration under section 12A vide oder dated 30th August, 2007, w.e.f. 01.04.2003 and approval under section 80G(5) vide order dated 10th February, 2010. The assessee has also been granted approval under section 35(1)(ii) of the LT. Act by the Government of India Notification dated 01.02.2008 w.e.f. 01.04.2007 for carrying out scientific research. It is not in dispute that notification dated 01.02.2008 of the Government of India have not been withdrawn or have not been reported in have been withdrawn. Learned Counsel for the Assessee placed on record detailed material to show that assessce has been carrying out scientific research activities till date. Learned Counsel for the Assessee submitted that assessee has not received any donation from any of the party as mentioned in the report of the Investigation and has also not re- donated any amount subject to commission. The copies of the balance sheet from AYs 2011-2014 to 2017-2018 have been filed on record. In A.Υ. 2013-2014 Α.Ο. made additions on account of anonymous donations under section 115BBC of the 1.T. Act in the order under section 143(3) which have been set aside and deleted by the Id. CIT(A), Allahabad, vide order dated 16th May, 2017 and benefit under section 11 have be allowed to the assessee. In subsequent year also assessee has received donations which have been applied towards implementation of research and development work. The Id. CIT(E) has issued show cause notice tot cancellation of registration on 13.02.2017 for compliance on 28.02.2017 and according to id CIT delivered to the assessee on 18.02.2017. However, according to Learned Counsel for the Assessee due to shortage of the time, adjournment was moved but there is no reference of the same in the impugned order. Any how, even if, it may be taken as correct that show cause notice is delivered upon the assessee on 18.02.2017, there was hardly any sufficient time to make compliance
4 303/Mum/2025 Atlantis IT Solution, Mumbai before Id. CIT(E) on 28.02.2017. It is also not clear from the order of the Id. CIT(E) whether any correspondence or information received from Investigation Wing, Varanasi Lucknow and Id. CIT(E), Kolkata have been confronted to the assessee before taking action in the matter Nothing is brought to our notice, if any information or material received from Id. CIT(E), Kolkata Investigation Wing was ever supplied to the assessee for comments of the assessee. The impugned order is silent regarding this fact. Therefore, it is clear that whatever information was received by the Ld CIT(E), Kolkata or Investigation Wing, was not supplied to the assessee. Therefore, any material collected at the back of the assessee cannot be read in evidence against the assessee. We rely upon the decision of the Hon’ble Supreme Court in the case of Kishin Chand Chellaram v. CIT [1980] 4 Taxman 29/125 11R 713. It, therefore stands clear that except the report received from Investigation Wing. Kolkata, Id CIT(E), Kolkata or Investigation Wing of Varanasi or Lucknow, there were no other material with the Ld.CIT(E) to assume that assessee was indulged in receiving unaccounted money in the garb of fund or re-donating the funds subject to commission. The ld.D.R. has not produced any material on record to justify the findings of the ld.CIT(E) to assume that assessee was indulged in receiving unaccounted money in the garb of fund or re- donating the funds subject to the assessee cancelling the registration. May be the assessee did not appear before ld.CIT(E) for re-consideration but the facts noted above clearly prove that ld.CIT(E) merely on assumption and presumption and without confronting any material to the assessee, has passed the impugned order in haste within the period of 10 days from the alleged delivery of the notice upon the assessee. Identical matter has been considered by the ITAT, Lucknow Bench in the case of Fateh Chand Charitable Trust (tupra), in which the issue was, cancellation of registration under section 12AA(ii) of the I.T. Act. The Tribunal set aside the impugned order of the id CIT(E) and restore the registration under section 12AA of the L.T. Act and decided the appeal in favour of the assessee. The findings of the Tribunal in paras 13 to 23 are reproduced as under:-
"Having carefully examined the order of the Id Commissioner of Income Tax (Exemptions in the light of the rival submissions, we find that on receipt of certain information from the Id. Commoner of Income Tax (Exemptions), Kolkata: Id Commissioner of Income Tax (Exemptions) has notice under section 12AA(3) of the Act to the assessee on 13.11.2015 for compliance mm 24.11.2014 On 24.11.2015 the assessee sought adjournment and hearing was adjourned to 27.11.2015. On 27.11.2015 the assessee has filed a detailed reply to the charges leveled against it im show cause notice The assessee emphatically denied the allegations leveled against the assessee that it has recened a donation of Rs.1 crore through cheque after making payment of the same in cash to Mis Hermeure Health Care Bio Herbal Research Foundation. The reply filed by the assessee is available at pays 19 to 25 of the compilation of the assessee running into 7 pages and in para 8 of in, the assessee has specifically asked the Id. Commissioner of Income Tax that in case there is any authentic material available with him which could throw some light on this issue, the same may be given to the assessed so that specific' reply on the same could be submitted on it, besides denying the allegations leveked against him. For the sake of reference, we extract para 8 as under-
5 303/Mum/2025 Atlantis IT Solution, Mumbai 8. That your goodself has, in your notice dated 13/11/2015, alleged that the assessee has received a donation of Rs1,00,00,000/- from M/s Herbicure Health Care Bio Herbal Research Foundation in the A/Y 2011-12 by paying an amount of Rs. 1,00,00,000- in cash to M's Herbicure Health Care B Herbal Research Foundation itself This allegation is totally untrue as mithing of the sort has bee written or mentioned in the confirmation, given by Mis Herbicure Health Care Bin Herbal Research Foundation.
Till date no evidence to the contrary has been made available to the assessee which could substantiate your honour's allegation that the amount ofRs. 1,00,00,000/- was paid by the assessee in cash to the donor in exchange of donation received by cheque. However, in case, there is any authentic matchai available with your honour which could throw some light on this issue, the same may be given to the assessee so that a specific reply on the same could be submitted on it"
It is also evident from record that the report received from the Id. Commissioner of income Tax (Exemptions), Kolkata and the statement of Shri Swapan Ranjan Das Gupta. Director of Ms Herticurz Health Care Bio Herbal Research Foundation was simply shown to the assessee on 27 11.2015, but no opportunity was afforded to the assessee either to cross-examine the said witness or to make any further comments in this regard and the Id. Commissioner of Income Tax (Exemptions) has passed an order on the very same day cancelling the registration carlier granted to the assessee No doubt, the Id Commissioner of Income Tax (Exemptions) is empowered to cancel the registration as per provisions of section 12AA(3), where the Principle CIT is satisfied that the activities of such trust of institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be. But in the instant case Ld.Commissioner of Income Tax (Exemptions) has simply received information from the Ld.Commissioner of Income Tax (Exemptions), Kolkata that M/s Herbicure Health Care Bio Herbal Research Foundation was engaged in giving donations on receipt of cash through brokers, but nowhere it has been stated that M/s Herbicure Health Care Bio Herbal Research Foundation has paid donation to the assessee on receipt of cash of the equal a simply received information from the Id. Commissioner of Income Tax (Exemptions), Kolkata that Mis Herbicure Health Care Bio Herbal Research Foundation was engaged in giving donations on receipt of cash through brokers, but nowhere it has been stated that Mis Herbicure Health Care Bio Herbal Research Foundation has paid donation to the assessee on receipt of cash of the equal amount through brokers. Similar statement of Shri Swapan Ranjan Das Gupta was also made, but in that statement abo there was no reference of the assessee. The Id. Commissioner of Income Tax (Exemptions) has simply shown this information to the assessee on 27.11.2015, but did not offer any further opportunity to make his comments in this regard. The assessee has emphatically denied the charges leveled against it in its reply filed on 27.11.2015 that if the Id. Commissioner of Income Tax (Exemptions) has received any authentic material in this regard, the same may be provided to the assessee so that the assessee can make a proper reply. But without affording any further opportunity to the assessee the la Commissioner of Income Tax has passed an order of cancellation on the very same day.
6 303/Mum/2025 Atlantis IT Solution, Mumbai 15. It is settled position of law that any evidence collected at the back of the assessee cannot be used adversely unless and until it is confronted to the assessee and the assessee is allowed to cross examine the witness, if any.
16. Our attention was also invited to various judicial pronouncements in this regard and in the case of Andaman Timber Industries v. Commissioner of Central Excise, 62 taxmann.com 3, their Lordships of the Hon'ble Apex Court has categorically held that not allowing the assessee to cross-examine the witness by the adjudicating authority, though the statement of those witnesses were made hosts of the impugned order, is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely effected. Their Lordships have, however, held that it is to be borne in mind that the order of the Id. Commissioner of Income Tax was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statement and wanted to cross-examine, the adjudicating authority dad nut grant this opportunity to the assessee. The Hon'ble Apex Court accordingly held that in the testutus these two witnesses is discredited, there was no material with the Department on the basts of which it could justify its action.
17. We have also examined the arguments of the assessee that even if receipt of donation is to be treated as unexplained receipt under section 68 of the Act, the addition of the same cannot be made because the assessee itself has applied the entire receipts for the objects of the assessee-trust. In support of this proposition, our attention was invited to the judgment of the Honble jurisdictional High Court in the case of CIT v. Uttaranchal Welfare Society, 42 taxmann.com 361, in which their Lordships have held that section 68 of the Act has no application where assessee had disclosed donations as its income. While relying on this proposition of law, their Lordships have followed the view taken by Hon'ble Delhi High Court in the case of DIT (Exemptions) v. Keshav Social & Charitable Foundation. 27K TER 152 and the judgment of the Hon'ble Apex court in the case of S.R.M.M.CTM. Tiruppani Trust vs CIT 230 ITR 636, in which it was held that section 68 of the Act has no application in such cases where the assessee has disclosed donations as its income.
18. Similarly in the case of Director of Income Tax v. Hans Raj Samarak Society. 35 taxmann.com 1-42 their Lordships of the Hon'ble Delhi High Court has held that provisions of section 68 of the Act could not be applied as donation had already been shown by the assessee as income. 19. Similar views were also expressed by the Chennai Bench of the Tribunal in the case of Palmitam Welfare Trust v. DCIT (supra) in which it was held that merely because capitation fee was collected by the assessee-trust from students, the same would not constitute the violation of the provision of granting registration under section 12AA of the Act where there was no valid allegation against the assessee that the income of the trust has not been applied for educational activities, 20. Similar view was also expressed by the Hyderabad Bench of the Tribunal in the case of 18. N Rao (supra). 21. A reference was also made to the order of the Lucknow Bench of the Tribunal in the case of lone Tax Officer v. Sarswati Educational Charitable Trust in /LKW/2014 in which it was held that if the donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 of the 7 303/Mum/2025 Atlantis IT Solution, Mumbai Act cannot be invoked. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:-
"8. Though the Revenue has taken a plea that for anonymous donation provisions of section 1HSHIM of the Act can be invoked but in the instant case where he assessee has filed various documents to prove the identity of the donors, these donations cannot be called to be anonymous. So fue as applicability of provisions of section 68 of the Act is concerned, it has been held by sarunes High Courts including the jurisdictional High Court that once donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 of the Act cannot he invoked. Since we do not find any infirmity in the order of the id. CIT(A), we confirm the same he has adjudicated he issue in the tight of various judicial pronouncements. Accordingly we conform his order."
Undisputedly, the assessee has taken receipt of donation as part of its income and the same was applied for charitable purposes and these facts are borne out from the consolidated balance sheet of the assessee available at page 8 of the compilation of the assessee. The Revenue has not made vi a case that the donation received by the assessee was not taken as part of income and was applied for ne charitable purposes. The allegation of the Revenue is only that the donation was received by the assessee on making payment in cash to M/s Herbicure Health Care Bio Herbal Research Foundation but to substantiate this claim, no evidence was brought on record by the Revenue. It was simply an oral assertion and moreover the assessee was not afforded any opportunity to cross-examine the witness whose statement was relied on by the Id. Commissioner of Income Tax (Exemptions) for cancellation of registration under section 12AA of the Act earlier granted to the assessee. Even assuming, for the sake of argument, that if the assessee has received donation on making payment in cash and it may he his own money which was introduced in the trust through circuitous means, but i was applied the charitable purposes, therefore, it cannot be added under section 68 of the Act. Thus, even on merit, we do not find any force in the allegations raised by the Revenue. The Id. Commissioner of Income Tax (Exemptions) has cancelled the registration under section 12AA of the Act on the basis of conjunctures and surmises, as he has observed in his order that the assessee might have been charging capitation fec from the parents of the students, but in this regard no evidence was brought on record It is also obvious from the record that the Id. Commissioner of Income Tax (Exemptions) has passed an order on the same day when the assessee has furnished detailed explanation in writing and even without verifying the same. Therefore, we find no merit in the order of the Id. Commissioner of income Tax (Exemptions). Accordingly, we set aside the order of ld. Commissioner of Income Tax (Exemptions)
In the result, appeal of the assessee stands allowed"
In this case, similar issue of the material not confronted to the assessee was considered and decided m tasour of the assessee. It was also decided in this case when donation have been shown as income and applied the receipts for objects of the Assessee-Trust, no addition could be made against the assessee The facts in the presen case are similar to the case of Fateh Chand Charitable Trust (supra). Considering the above discussion in the light of material on record, it is clear that assessee has been carrying out scientific research activities as per ds objects. The donation received by the assessee have been used for the scientific research purpose only. There is no legal admissible evidence on record against the assessee that assessee received any 8 303/Mum/2025 Atlantis IT Solution, Mumbai donation from any company as alleged in the report of the Investigation Wing. No evidence of any unaccounted cash transactions conducted by the assessee were found. There is no evidence on record to show that assessee received of pod any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter nerely on presumption only.
In the case of Sharda Educational Trust v CIT [2014] 43 taxmann.com 95/147 ITD 271 (Agra-Trib.), it was held that in the absence of any examination of any student and their parents about payment of any money/capitation fees to the assessee trust and there being no corroborative evidence to prove receipt of any such amount, registration of assessee trust, could not be cancelled on the basis of paper seized during search. The Tribunal set aside the cancellation of registration and restored the registration. The order of Tribunal been confirmed by the Hon'ble Allahabad High Court by dismissing the departmental appeals in Income Tax Appeal No. 303 of 2013 in the case of CIT Sharda Educational Trust vide Judgment dated 07. 11. 2013. In view of the above discussion, we are of the view that the impugned order of Ld.CIT(E) cannot survive in Law. Therefore, there is no need to remand the matter to Ld.CIT(E) for fresh consideration. We accordingly set aside the impugned order dated 28.02.2017 and restore the registration under section 12AA of I.T. Act in favour of the assessee. Appeal of assessee allowed.
In the result, appeal of the assessee is allowed.” 6. Moreover, the co-ordinate bench of ITAT, Mumbai Bench in another case titled Vora FinancialServices (P) Ld v. Assistant Commissioner of Income-tax, Mumbai [2018] 96 taxmann.com 88 (Mumbai-Trib.) has dealt with identical circumstances, wherein disallowance of deduction claimed under section 35 of the Act was made on account of donation to the same society, i.e. M/s BIOVED Research Society and the same was allowed by the co-ordinate bench in the above case. Operative portion of the order of the co-ordinate bench of ITAT is reproduced hereinbelow:- “16. We have heard rival contentions on this issue and perused the record. The undisputed fact remains that the research society, viz., M/s Bioved Research Society was duly approved u/s 35(1)(ii) of the Act and the assessee has given the impugned donation of Rs.50.00 lakhs, when the approval was very much available. It is the contention of Ld A.R that the approval so granted has not been cancelled till date. The assessee has given donation during the financial year 2013-14.The Assistant Commissioner refers in his remand report about the survey conducted in the year 2015 in the hands of certain donors. Based on the survey findings, the assessment in the hands of Bioved Research Society has been completed on 29-03-2016. These facts show that the above said society was very much having approval in the financial year 2013-14.
9 303/Mum/2025 Atlantis IT Solution, Mumbai 17. It is also an undisputed fact that the revenue did not carry on any survey operations in the hands of the assessee. It is also not clear as to whether any survey operation was conducted in the hands of Bioved Research Society also. Be that as it may, the various case laws relied upon by the Ld A.R would show that the deduction claimed by the assessee u/s 35(1)(ii) cannot be rejected on the basis of subsequent events. The Hon’ble Bombay High Court was considering the issue of deduction claimed u/s 35CCA of the Act in the case of Ramdas Maneklal Gandhi (supra). The head notes of the said decision reads as under:-
“Section 35CCA of the Income tax Act, 1961 – Rural development programme, expenses for – Assessment year 1985-86 – Notice issued to withdraw deduction allowed under section 35CCA in respect of donation to an institution whose approval was withdrawn on 3-3- 1987 by prescribed authority with retrospective effect – Whether in view of well-settled law that assessee is entitled to rely upon certificate granted to an institution under section 35CCA for claiming deduction under that section, which was valid and subsisting when donation was made to it, there was no escapement of income of assessee on account of allowance of said deduction and, therefore, impugned notice had to be quashed and set aside – Held, yes.”
Though the above said decision was rendered by Hon’ble jurisdictional Bombay High Court in the context of validity of re-opening u/s 148 of the Act, yet the decision rendered by Hon’ble Bombay High Court makes it clear that the deduction can be claimed on the basis of approval granted to the research society, which was valid and subsisting when donation was made to it.
The Chennai bench of Tribunal has considered an identical issue in the case of Smt. Deviyani Dilip Patel (supra) and held that the rejection of weighted deduction in respect of donation cannot be denied when the institution was enjoying approval within the meaning of sec. 35(1)(ii) as on date of receipt of donation, no matter that the approval was cancelled subsequently with retrospective effect. It is pertinent to note that the Chennai bench of Tribunal has placed its reliance on the decision rendered by Hon’ble Bombay High Court in the case of Seksaria Biswan Sugar Factory Ltd vs. Inspecting Assistant Commissioner (1990)(184 ITR 123). In the case of Sekasaria Biswan Sugar Factory Ltd, the assessment was reopened to withdraw the deduction allowed u/s 35CCA of the Act on the basis of cancellation of approval with retrospective effect. The Hon’ble Bombay High Court expressed the view that the giving retrospective effect to the cancellation of approval was not valid. Accordingly the Hon’ble Bombay High Court held that the notice of reassessment was not valid.
The Hon’ble Calcutta High Court has considered an identical issue in the context of sec. 263 of the Act in the case of CIT Vs. General Magnets Ltd (253 ITR 471). In the above said case, the Ld CIT sought to cancel the deduction claimed u/s 35CCA of the Act on the basis of cancellation of approval made with retrospective effect. The following observations made by the Hon’ble High Court are relevant:-
“15. For our consideration in this case the issue is when the approval exemption to the society has been withdrawn with retrospective effect, can the order of the assessing officer be said to be erroneous or prejudicial to the interests of Revenue; our answer will be in the negative. When the assessee has paid 10 303/Mum/2025 Atlantis IT Solution, Mumbai donation to the society which held valid approval under Section 35CCA of the Act and that has not been withdrawn not only in the accounting year but till the assessment was made. That approval to society withdrawn in March, 1987, though with retrospective effect, the benefit under Section 35CCA cannot be denied.
For no fault of the assessee, he should not suffer and once the approval is given to the society under Section 35CCA and the assessee has paid the amount donation to that society, he cannot be denied the deduction for which he was entitled under the valid certificate issued by the society which is approved by the Department on the date of payment to that society.
Assuming by mistake the approval has been given to the wrong society. But for mistake of the department, why should the assessee suffer? That withdrawal of approval to the society with retrospective effect is itself bad. No assessee should suffer for mistake of the Department. The Department has the power of withdrawal but in such cases withdrawal can be only with prospective effect. If the donation to the approved society is genuine in that case withdrawal with retrospective effect does not affect the right of the assessee for deduction of the amount which has accrued to the assessee on the basis of the payment to an approved society under section 35CCA of the Act.”
Identical view was expressed by Hon’ble Calcutta High Court in the case of B.P.Agarwalla & sons Ltd (1994)(208 ITR 863).
In the instant case, the assessee has given the donation of Rs.50.00 lakhs to M/s Bioved Research Society. In the assessment order passed by the AO in the hands of the above said society, he has only recommended for cancellation of the approval granted u/s 35(1)(ii) of the Act. According to Ld A.R, the said approval has not been cancelled till date. Though the Survey proceedings conducted in the hands of certain donors, which revealed that the donations were bogus in nature, no such finding has been given in the hands of the assessee herein. Hence, we are of the view that the genuineness of payment of donations cannot be doubted in the instant case, particular in the absence of any material to support the view taken by the AO. Hence we agree with the contentions of Ld A.R that the AO was not justified in rejecting the claim of weighted deduction. We further notice that the Ld CIT(A) has placed reliance on the cancellation of registration granted u/s 12AA of the Act to M/s Bioved Research Society with retrospective effect. The registration granted u/s 12AA of the Act and the approval granted u/s 35(1)(ii) of the Act operates on different field. Hence we are of the view that the Ld CIT(A) was not justified in placing reliance on the order of cancellation of registration u/s 12AA of the Act.
Even if the approval is cancelled subsequently with retrospective effect, various case laws discussed above bring out the ratio that the weighted deduction claimed by the assessee u/s 35(1)(ii) of the Act cannot be denied, if there was valid and subsisting approval when the donation was given. In the instant case, it is the contention of Ld A.R that the approval was not cancelled till date. Before us, the revenue did not furnish any material to refute the contentions of Ld A.R.
22. In view of the foregoing discussions, we are of the view that there is no justification in rejecting the claim of weighted deduction claimed u/s 35(1)(ii) of the Act. Accordingly
11 303/Mum/2025 Atlantis IT Solution, Mumbai we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the weighted deduction claimed u/s 35(1)(ii) of the Act.”