NADIA DISTRICT CENTRAL CO-OPERATIVE BANK LTD.,NADIA vs. THE LD. PR. CIT, KOLKATA 1, KOLKATA

Shri Miraj D. Shah, ld. AR appeared on behalf of the assessee and Shri S.B.Chakraborthy, ld.Sr. DR appeared on behalf of the revenue.

It was submitted by the ld.AR that in the course of assessment the AO had disallowed the assessee's donation of Rs.7 lakhs made to M/s Herbicure health Care Bio Herbal Research Foundation (HHBRF) which have the approval u/s.35(1)(ii) of the Act. It was the submission that consequently the disallowance made was to an extent of Rs.12,25,000/-. it was the submission that on appeal, ld. CIT(A) without considering the submissions of the assessee nor the reply to the remand report confirmed 2 ITANo.361/KOL/20235 the action of the AO. it was the submission that the issue was now squarely covered by the decision of the Hon'ble Jurisdictional High Court of Kolkata in the case of Pr.CIT Vs JP Financial Services Pvt. Ltd. in ITAT/153/2023 IA No: GA/2/2023, dated 02.08.2023, wherein the Hon'ble High Court has held as follows :- B. Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in giving relief to the assessee by allowing the claim of bogus donations under Section 35(1)(ii) by stating that the CBDT had recognized such bogus entry providing concerns namely M/s. Herbicure Healthcare Bio-Herbal Research Foundation under section 35(1)(ii) whereas on the contrary such approval and recognition had been withdrawn by the CBDT vide Gazettee Notification S.O. 2882(E) dated 6th September, 2016 and O.M. vide F. No. 203/09/2015/ITA.II dated 21st September, 2016 considering the nature of unscrupulous activities carried on by these donee concerns ? We have heard Mr. Om Narayan Rai, learned standing counsel along with Mr. Soumen Bhattacharjee, learned Advocate for the appellant/revenue. The short issue which falls for consideration in this appeal is whether the Tribunal was right in allowing the deductions claimed by the assessee under Section 35(1)(ii) of the Act for the donation to a organization who initially enjoyed a registration under Section 35(1) of the Act, which was subsequently withdrawn with retrospective effect. The learned Tribunal followed the decision of a co-ordinate Bench of the Tribunal dated 27.07.2018 in the case of Narbheram Vishram in I.T.A. Nos. 42&43/Kol/2018. Apart from certain factual similarities the Tribunal in the said decision has also taken note of the decisions of the Hon'ble Supreme Court holding that there is no provision for withdrawal of recognition under Section 35(1)(ii) of the Act. The view taken by the learned Tribunal in the impugned order is supported by the decision of the Hon'ble Division Bench of this Court in the case of Commissioner of Income Tax Versus General Magnets Ltd.; (2002) 256 ITR 471 wherein the Court after taking note of various decisions namely CIT v. Ethelbari Tea Co. (1931) Ltd., [2002] 256 ITR 470 (Cal), B.P. Agarwalla and Sons Ltd. v. CIT [1994] 208 ITR 863 (Cal), K.M. Scientific Research Centre v. Lakshman Prasad [1998] 229 ITR 23, Seksaria Biswan Sugar Factory Ltd.v. IAC [1990] 184 ITR 123, CIT v. Bhartia Cutler Hammer Co.[1998] 232 ITR 785, Chotatingrai Tea Estate Pvt. Ltd. v. CIT [1999] 236 ITR 644, held that for the mistake committed by the department the assessee should not suffer. The withdrawal of approval to the society for retrospective effect is itself bad and no assessee should suffer for the mistake of the department. The department has power of withdrawal but in such cases withdrawal can be only with prospective effect. Further it was held that if the donation to the approved society is genuine, in that case withdrawal with retrospective effect does not affect the right of 3 ITANo.361/KOL/20235 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. In the light of the above, the order passed by the learned Tribunal does not call for any interference.

It was the submission that the addition as made by the ld. AO and as confirmed by the ld. CIT(A) is liable to be deleted.

In reply, ld. Sr. DR vehemently supported the order of the ld. CIT(A) and the ld. AO. It was the submission that the registration granted to M/s Herbicure health Care Bio Herbal Research Foundation was now withdrawn.

I have considered the rival submissions. As the donation has been made by the assessee to M/s Herbicure health Care Bio Herbal Research Foundation u/s.35(1)(ii) of the Act and the issue is now squarely covered by the Hon'ble Jurisdictional High Court in the case of J.P. Financial Services Pvt. Ltd. (supra), respectfully following the same, the addition as made by the AO and as confirmed by the ld. CIT(A) is liable to be deleted and I do so.

In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 01/07/2025. (जाजज माथन) (GEORGE MATHAN) न्यानयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 01/07/2025 Prakash Kumar Mishra, Sr.P.S.