AMERICAN SPRING & PRESSING WORKS PVT. LTD.,MUMBAI vs. DCIT - 12(1)(1), MUMBAI

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in sustaining the disallowance of claim of assessee u/s.35(1)(ii) of the Act.

We have heard rival submissions and perused the materials available on record. The assessee is a private limited company engaged in the business of manufacturing and sale of agricultural equipments and implements. The original return of income was electronically filed for the A.Y.2010-11 on 30/09/2010 declaring total income of Rs.215,36,770/-. This return was duly processed u/s.143(1) of the Act on 15/04/2011. Subsequently this assessment was sought to be reopened by issuance of notice u/s.148 of the Act on 23/03/2015. In response thereto, the assessee vide letter dated 27/03/2015 stated that the return filed originally on 30/09/2010 may be treated as return in response to notice issued u/s.148 of the Act. The reasons recorded for reopening the assessment was communicated to the assessee vide letter dated 14/05/2015. During the course of re-assessment proceedings, the ld. AO observed that assessee had claimed weighted deduction of Rs. 5 lakhs u/s.35(1)(ii) of the Act @ 125% of contribution of Rs.4 lakhs made to M/s. Aspee Agricultural Research and Development Foundation. The assessee was directed to furnish the approval obtained from the Income Tax department by the recipient of donation in order to justify the claim of deduction u/s.35(1)(ii) of the Act in the hands of the assessee. The assessee submitted that the Donee Institution is recognised by Ministry of Science and Technology, Department of Science and Industrial Research, Technology Bhawan, New Delhi. The assessee submitted that since the Donee Institution was enjoying the recognition up to 2004 and thereafter had sought for renewal of the same by way of preferring the application before the CBDT and that the CBDT had not acted on the said application.

M/s.American Spring & Pressing Works Pvt. Ltd., In respect of deduction claimed by the assessee u/s.35(1)(ii) of the Act, the ld. AO observed that the assessee would be entitled for such deduction only when the DIT (Exemption) had issued approval to the said research association subject to fulfilment of conditions regarding application, its income for scientific research purposes, its accumulation and use u/s.11(2)/11(3) of the Act. The ld. AO observed that in the instant case, the assessee has not submitted such approval given by DIT (Exemption) to the Donee Institution. The ld. AO also gathered information from the Jurisdictional DIT (Exemption) of the Donee Institution which revealed the fact that the application for approval u/s.10(21) of the Act has been rejected vide order dated 2/11/2012 by CBDT. Based on these facts, the ld. AO proceeded to disallow the claim of weighted deduction u/s.35(1)(ii) of Rs.5 lakhs while completing the assessment in the hands of the assessee. This was upheld by the ld. CIT(A).

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 28/01/2022 by way of proper mentioning in the notice board.