SSL EXPORTS LTD., ,HOWRAH vs. DCIT, CIRCLE - 3(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA (Virtual Court) (Before Sri J. Sudhakar Reddy, Accountant Member & Sri Aby T. Varkey, Judicial Member) I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd.......………………..….....................................................................................Appellant [PAN: AAECS 3943 H] Vs. DCIT, Circle-3(1), Kolkata............................................................................................Respondent

Appearances by: Sh. Subash Agarwal, Adv., appeared on behalf of the Assessee. Sh. Supriyo Pal, Addl. CIT, appeared on behalf of the Revenue. Date of concluding the hearing : September 3rd, 2020 Date of pronouncing the order : October 21st, 2020 ORDER Per J. Sudhakar Reddy, AM: This appeal is filed by the assessee directed against the order of the Learned Commissioner of Income Tax (Appeals)-5, Kolkata, [hereinafter the “CIT(A)”], passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dated 31.10.2018 for the Assessment Year 2013-14. 2. The sole ground of appeal is against the disallowance of the claim made by the assessee u/s 35(i)(ii) of the Act. The facts of the case are brought out by the ld. CIT(A) from page-1 to 5 of the order. This is for the sake of brevity we do not extract the same. Suffice to say that the assessee had made donation of ₹65 lakhs to M/s. School of Human Genetics and Population Health (hereinafter ‘SHG&PH’ for short), a Trust which was approved by the Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, dated 26.01.2009 u/s 35(i)(ii) of the Act r.w. Rule 5C and 5E of the Income Tax Rules, 1962 from the AY 2008-09 onwards in the category of “Other Institution” project engaged in research activities vide F.No.203/64/2009/ITA-II dated 20.01.2009.

2 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. 3. The AO disallowed the claim made by the assessee u/s 35 of the Act by holding as follows:

a) Information was received from the Pr. DIT(Inv.) vide letter dated 09.10.2015 that a survey action u/s 133A was carried on dated 27.01.2015 at the registered/Administrative offices of SHG&PH, MIER&E and HHBRF and these institutions were engaged in bogus donation through various brokers for a commission. The Investigation Wing stated that the bogus donations were taken by cheques/RTGS and after taking commission, the same were routed back to the donor in the form of cash after passing the same through 3-4 layers of bogus billing or other accommodation entries. The assessee was issued a show cause notice by the AO as to why this claim should not be disallowed. Thereafter the AO concluded as follows:

“It is clearly prove in the statement of Smt. Samadrita Mukherjee Sardar {Secretary of SHG&PH} that The assessee / company M/s SSL Export Limited made donation through cheque, RTGS amounting Rs. 65,00,000/- and Simultaneously, SHG&PH issue cheque in the name of Some companies whose name in the statement of Smt. Samadrita Mukherjee Sardar given to provide bogus billing entry to the donor party. The total amount of donation is received back by M/s SSL Export Limited. . The assessee was asked to furnish supporting documents in this regard. But the assessee failed to produce any proper details, nor any justification was given. As such, the total amount of Rs. l,13,75,000/-{ That was claimed deduction u/s 35(i)(ii)} is disallowed and added back to the total income of the assessee company. Penalty u/s 271(l)(c) r.w.s 274 of the IT Act,1961 is being issued separately for furnishing inaccurate particulars and concealment of income.” 4. Aggrieved, the assessee carried the matter in appeal. The first appellate authority held as follows:

“I have considered the submission of the appellant and perused the relevant assessment records. The survey operation were conducted in the case of M/s School of Genetics and Population Health, Kolkata during which the functionaries of the institute had given statement admitting accepting bogus donation for commissions. The names of the brokers for facilitated the transactions were also disclosed in the statements. The M/S School of Genetics and Population Health, Kolkata had been granted approval u/s 35(l)(ii) of the I.T. Act, 1961 vide Notification No. 4/2010/F. No. 203/64/2009/ITA.II dated 28.01.2010 in the Official Gazetted by the Central Government. Any expenditure to such Notified Institution which has as its object the undertaking of scientific research is eligible for weighted deduction equal one and three fourth times of any sum paid. However, the Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) vide Notification No. 82/2016/F. No. 203/64/2009/ITA.II dated 15.09.2016 in The Gazette of India: Extra Ordinary had rescinded the Notification granting approval by the Central Government to the appellant for the purpose of clause (ii) of sub section (1) of section 35 of the I.T. Act, 1961, read with Rule 5C and 5E of the Income-tax Rule, 1962. The approval was rescinded on the basis of inputs received by the Investigation Wing Kolkata. The Notification reads as follows:

3 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. "Ministry of Finance, (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, the 15th September, 2016, S.O. 2961(E)-ln exercise of the powers conferred under clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 read with Rule 5C and 5E of the Income-tax Rules, 1962, the Central Government hereby rescinds the notification of the Government of India, Ministry of Finance, Department of Revenue number 4/2010 dated 28.01.2010 published in Gazette of India , Part II, Section 3, Sub-section (ii) dated 28.01.2010 vide S.O. 348 with effect from 1st April, 2007 and shall be deemed that the said notification has not been issued for any tax benefits under the Income-tax Act, 1961 or any other law of the time being in force.” The above notification makes clear that the earlier notification No. 4/2010 dated 28.01.2010 shall be deemed not to have been issued for any income-tax benefits under the Income-tax Act. Therefore, the payment of Rs.65,00,000/- for the purpose of availing weighted deduction of 175% u/s 35(1)(ii) of the Act made to M/s School of Human Genetics and Population Health, Kolkata is denied. It may be clarified here that explanation to section 35(1)(iii) of the Income- tax Act shall not come to the rescue of the appellant as it relates, only to approvals which have been withdrawn subsequent to the payments made to Institutions to which clause (ii) or clause (iii) applies. In the case of M/s School of Human Genetics and Population Health, Kolkata, the notifications had been deemed not to have been issued for any tax benefits under the Income- tax Act, 1961 or any other law of the time being in force. Though the appellant made a donation of only Rs.65,00,000/-, however, he has claimed u/s 35(i)(i) and (ii) weighted deduction amounting to Rs.1,13,75,000/- from his return income. The disallowance is, therefore, restricted to the deduction claimed at Rs.1,13,75,000/-. After a careful consideration of the relevant assessment records and the submission of the appellant, the disallowance of Rs.1,13,75,000/- on account of expenditure made u/s 35(1)(i) and (ii) of the I.T. Act, 1961 is, hereby, confirmed. Tire Assessing Officer is directed accordingly.” 5. The ld. Counsel for the assessee Mr. Subash Agarwal submitted that the disallowance is bad in law. His submissions are summarised as follows:

a) From the copy of the statement of Smt. Samadrita Mukherjee Sardar, it can be seen that nowhere the name of the assessee appears.

b) In reply to question no. 8, Smt. Samadrita Mukherjee Sardar stated that their institute in doing activities of research in human genetics etc.

c) The assessee had made a donation to the said institute on a genuine belief that the funds donated were used for research/charitable activity. Misuse, in any, by the donee organization cannot lead to rejection of the claim made by the assessee.

d) Even if it is assumed that some adverse statements were on record, it was incumbent on the AO to confront the assessee with such adverse material/statement and also accord the assessee an opportunity of cross examination of the witness of the Revenue. When adverse material is not confronted to the assessee, then such material cannot be used as evidence, behind the back of the assessee.

4 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. e) Subsequent withdrawal of the registration granted u/s 35(1)(ii)(iii) by the authorities to “School of Human Genetics and Population Health” does not affect the claim of the assessee as the registration was in force as on the date of payment of donation. f) The Kolkata Benches of the ITAT have considered the facts that, the donee institute has approached the Settlement Commission on this issue of assessment made on them consequent to search and seizure operations on the donees, but have not drawn any adverse inference based on such material. Thus the claim of the assessee is not affected by the fact that the donee has approached the Settlement Commission. 6. The ld. Counsel for the assessee relied on the judgement of the jurisdictional High Court in the case of CIT vs. Bhartia Cutler Hammer Co. [1998] 232 ITR 785 (Calcutta) for the proposition that, even if an inference drawn by the AO is correct, yet the claim of the assessee cannot be disallowed on the ground that, as on the date of issuance of notice, the donee was non-existent or that they were not involved in desired activities. He also relied on the following case laws: i) Nirbhayram Vishram vs. DCIT, ITA No. 42 & 43/Kol/2018. ii) Zenith Credit Corporation vs. ITO, ITA No. 718/Kol/2018. iii) DCIT vs. Maco Corporation (India) Pvt. Ltd., ITA No. 16/Kol/2017. 7. The ld. DR on the other hand, submitted that he relies on the order of the AO as well as the ld. CIT(A) and the material gathered by the Investigation Wing of the Department. He submitted that records could be obtained from the Settlement Commission to examine as to whether the claim of the assessee is allowable or not. He submitted that the statement of Smt. Samadrita Mukherjee Sardar, the Secretary of SHG&PH clearly proves that the donations in question are bogus donations. He relied on the orders of the ld. CIT(A) and took this Bench through the same. He prayed that the donations were bogus donations and hence the claim has been rightly disallowed. 8. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and case laws cited, we hold as follows.

5 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. 9. We find that the issue in question has come up before the Kolkata Bench of the Tribunal in a number of cases. This Bench of the Tribunal in ITA No. 16/Kol/2017 AY 2013-14 in the case of DCIT vs. Maco Corporation (India) Pvt. Ltd. held as follows:

“8. We have heard the rival submissions and perused the materials available on record. The brief facts pertaining to HHBHRF are as under:- a) HHBHRF was registered u/s 12AA of the Act by the ld DIT(Exemptions), Kolkata with effect from 26.12.2003. b) HHBHRF was also recognized in the year 2006-07 as a scientific 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 Industrial Research Organisation , 1988 was made for the period from 1.4.2012 to 31.3.2015 vide communication in F.No. 14/444/2006-TU-V dated 13.8.2012. ITA No.16/Kol/2017 M/s Maco Corporation (India) Pvt. Ltd. A.Yr. 2013-14 c) HHBHRF was recognized vide Gazette Notification No. 35/2008 dated 14.3.2008 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance, Government of India, u/s 35(1)(ii) of the Act. 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 scientific 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 Industrial 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 1.4.2006 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. ITA No.16/Kol/2017 M/s Maco Corporation (India) Pvt. Ltd. A.Yr. 2013-14 8.3. 8.3 We find that there is no provision in section 35(1)(ii) of the Act to withdraw the recognition granted to the assessee therein. When there is no provision for withdrawal of recognition in the Act, the action of the revenue in withdrawing the recognition with retrospective effect from

6 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. 1.4.2007 is unwarranted. In this regard, the recent decision of the Hon'ble Supreme Court in the case of Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd vs CIT Gwalior reported in (2018) 90 taxmann.com 281 (SC) wherein it was held that :- 21. In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel the registration certificate granted under Section 12A of the Act. Second, the order passed under Section 12A by the CIT is a quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power vested in him under the Act to do so. In this case there was no such express power. 22. Indeed, the functions exercisable by the CIT under Section 12A are neither legislative and nor executive but as mentioned above they are essentially quasi judicial in nature. 23. Third, an order of the CIT passed under Section 12A does not fall in the category of "orders" mentioned in Section 21 of the General Clauses Act. The expression "order" employed in Section 21 would show that such "order" must be in the nature of a "notification", "rules" and "bye laws" etc. (see - Indian National Congress(I) v. Institute of Social Welfare [2002] 5 SCC 685. 24. In other words, the order, which can be modified or rescinded by applying Section 21, has to be either executive or legislative in nature whereas the order, which the CIT is required to pass under Section 12A of the Act, is neither legislative nor an executive order but it is a "quasi judicial order". It is for this reason, Section 21 has no application in this case. 25. The general power, under Section 21 of the General Clauses Act, to rescind a notification or order has to be understood in the light of the subject matter, context and the effect of the relevant provisions of the statute under which the notification or order is issued and the power is not available after an enforceable right has accrued under the notification or order. Moreover, Section 21 has no application to vary or amend or review a quasi judicial order. A quasi judicial order can be generally varied or reviewed when obtained by fraud or when such power is conferred by the Act or Rules ITA No.16/Kol/2017 M/s Maco Corporation (India) Pvt. Ltd. A.Yr. 2013-14 under which it is made. (See Interpretation of Statutes, Ninth Edition by G.P. Singh page 893). 26. ............ 27. It is not in dispute that an express power was conferred on the CIT to cancel the registration for the first time by enacting sub-Section (3) in Section 12AA only with effect from 01.10.2004 by the Finance (No.2) Act 2004 (23 of 2004) and hence such power could be exercised by the CIT only on and after 01.10.2004, i.e., (assessment year 2004-2005) because the amendment in question was not retrospective but was prospective in nature. 28. The issue involved in this appeal had also come up for consideration before three High Courts, namely, Delhi High Court in the case of DIT (Exemptions) v. Mool Chand Khairati Ram Trust [2011] 11 taxmann.com 42/199 Taxman 1/339 ITR 622, Uttaranchal High Court in the case of Welham Boys' School Society v. CBDT [2006] 285 ITR 74/[2007] 158 Taxman 199 and Allahabad High Court in the case of Oxford Academy for Career Development v. Chief CIT [2009] 315 ITR 382. 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration

7 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. till 01.10.2004; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004. We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. Infact the assessee's case herein falls on a much better footing than the facts before the Hon'ble Apex Court. In the case before Hon'ble Apex Court, the power of cancellation of registration us 12A of the Act was conferred by the Act on the ld CIT w.e.f. 1.10.2004 and the Hon'ble Apex Court held that prior to that date , no cancellation of registration could happen. But in the instant case, there is absolutely no provision for withdrawal of recognition u/s 35(1)(ii) of the Act . Hence we hold that the withdrawal of recognition u/s 35(1)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii) of the Act. 8.4 We also find that the co-ordinate bench of this tribunal in exactly similar facts had decided the issue in favour of the assessee in the following cases:- a) Rajda Polymers vs DCIT in ITA No. 333/Kol/2017 for Asst Year 2013-14 dated 8.11.2017. b) Saimed Innovation vs ITO in ITA No. 2231/Kol/2016 for Asst Year 2013-14 dated 13.9.2017. The findings of those decisions are not reiterated herein for the sake of brevity. 8.5. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the various judicial precedents relied upon hereinabove, we hold that the ld CITA had rightly deleted the disallowance u/s 35(1)(ii) of the Act in the sum of Rs 3,06,25,000/- made by the ld AO. Accordingly, the Grounds raised by the revenue are dismissed.” 10. In the case of Santosh Suresh Kumar Agarwal vs. ACIT in ITA No. 1162/Kol/2018 order dated 05.09.2018, the SMC Bench of the Tribunal held as follows:

“3. After hearing rival contentions, we find that an identical issue has been considered by the 'B' Bench of this Tribunal in the case of Narbheram Vishram vs. DCIT in ITA No. 42 & 43/Kol/2018; Assessment Year 2013-14 & 2014-15, orderdt. 27/07/2018, wherein an identical claim made of a donation to "The School of Human Genetics and Population Health", was disallowed by the Assessing Officer and the ld. CIT(A), upheld the same. The Tribunal at para 13 onwards held as follows:- "13. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that the assessee has challenged disallowance of weighted deduction of Rs.4,81,25,000/- for A.Y. 2013-14 and disallowance of weighted deduction of Rs.10,50,00,000/-, for A.Y. 2014- 15, claimed by him under section 35(1)(ii) of the Act in respect ofthe amounts of donations made to two Institutions viz. 'Matrivani Institute ExperimentalResearch & Education' (hereinafter referred to as 'Matrivani') and 'The School of HumanGenetics and Population Health' (hereinafter referred to as 'SHG'). The Assessee Firm in A.Y. 2014-15, madedonation of Rs,2,00,00,000/ to Matrivani and Rs,4,00,00,000/ to SHG and claimed weighted deduction of Rs.10,50,00,000 under section 35(1)(ii) of the Income Tax Act, 1961, being 175% of the aggregate sum of Rs.6,00,00,000/- (Rs,2,00,00,000 + Rs,4,00,00,000) donated to these two institutes which were approved bythe Central Government for the purposes of section 35(l)(ii) of the Act read with Rule 5C and5E of the Income Tax Rules, 1962. In the assessment year 2013-14, the assessee claimed weighted deduction of Rs.4,81,25,000/- under section 35(1) (ii) of the Act, which is 175% of the amount of donation being the sum of Rs.2,75,00,000/- in respect of the donation given to 'The School of HumanGenetics and Population Health'. We note that the Notifications to this effect, that these two institutions viz: 'Matrivani'

8 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. and 'SHG', were approved by the Central Government for the purpose of section 35 (1) (ii) of the Act,was published in theGazette of India. However, the deduction claimed by the assessee was denied by the Assessing Officer on the basis of the allegations contained in the report of the Investigation Wing of Kolkata that the said donations were bogus. The reasons stated therein, in short, were that statements of some key persons of these two donee institutions were recorded by the Investigation authority in course of survey proceedings in their cases. The said key person, in their statements, accepted to have received donations from various entities in lieu of cash returned to them after deducting commission there from. 14. We note that, during the course of hearing, before us, the ld Counsel for the assessee submitted that, the sums paid to "Matrivani' and "SHG, were genuine donations and both of the Institutions were admittedly registered under section 12A of the Income Tax Act, 1961. We note that both of the said two Institutions viz, "Matrivani" and "SHG", are Sctentific Research Association approved as such by Central Government under section 35(1)(ii) of the Income Tax Act, 1961 vide Notification, bearing No. 229/2007 (F.No.203/135/2007/ITA-II) dated 21.08.2007 and Notification No. 4/2010 (F. No. 2B/A/2009,/ITA-II dated 28.01.2010 respectively, published in Official Gazette of India. The assessee categorically denied that it ever received back the amounts of donations in cash or in kind from the said Institutions and from any person whatsoever in lieu of the various amounts donated to these two institutions. We note that in the statements, of key persons and alleged brokers recorded by the Investigation Wing in course of survey proceedings, in their cases and the extracts of which was provided to the assessee in the show cause notice, the name of the assessee firm does not appear anywhere. It is to be noted that none of those persons implicate the assessee to have made bogus donations and that cash was paid to ITA No. 1162/Kol/2018 Assessment Year: 2011-12 Santosh Suresh Kumar Agarwal the donors assessee in lieu of the alleged bogus donation after deducting their commission. We note that the statements of the various parties and persons were recorded behind the back of the assessee and the Assessing Officer did not allow opportunity of cross examination. We note that in absence of opportunity of cross-examination no reliance could be made on such statements to draw any adverse inference against the assessee firm. The assessee firm denied its knowledge of the statements made by these institutes which were relied on by the Investigation Wing and the Assessing Officer. We note that not providing the opportunity of cross-examination is against the principle of natural justice and for that we rely of the judgment of Hon'ble Delhi High Court in the case of CIT vs. Dharam Pal Prem Chand Ltd. [2007] 295 ITR 105, 108 (del).We note that on identical facts, the similar proposition wasupheld by the Coordinate Bench of Kolkata in the case of Rajda Polymers, ITA No.333/Kol/2017,for Assessment Year 2013-14 wherein it was held as follows: "10.....Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confirmed that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by

9 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. Hon'ble Supreme Court in Kader Khan & sons (supra). Moreover, we note that if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri KishanBhawasingka as held by Hon'ble Supreme Court in Andaman Timber (supra). 11. In the light of the aforesaid facts and circumstances, we cannot sustain the order of the authorities below. Therefore, we set aside the impugned order and direct the AO to allow the deduction of Rs.26,28,500/- u/s. 35(1)(ii) of the Act. 15. Now, we deal with the arguments of ld DR for the Revenue. We note that the solitary grievance of the ld DR for the Revenue is that since the registration had been cancelled by the CBDT,with retrospective effect that is, with effect from 1st April 2007, by issuing notification dated 06.09.2016, for both the institutions viz: 'Matrivani' and 'The School of HumanGenetics and Population ITA No. 1162/Kol/2018 Assessment Year: 2011-12 Santosh Suresh Kumar Agarwal Health', therefore these institutions are not entitled to claim benefit under section 35 (1) (ii) of the Act. We note that the withdrawal of recognition u/s 35(1)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assesseeherein for claim of weighted deduction u/s 35(1)(ii) of the Act, for that we rely on the judgmentof the Coordinate Bench, Kolkata, in the case of M/s Maco Corporation India (P) Ltd, ITA No.16/Kol/2017, for Assessment Year 2013-14, wherein it was held as follows: "29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till 01.10.2004; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004. We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. Infact the assessee's case herein falls on a much better footing than the facts before the Hon'ble Apex Court. In the case before Hon'ble Apex Court, the power of cancellation of registration us 12A of the Act was conferred by the Act on the ld CIT w.e.f. 1.10.2004 and the Hon'ble Apex Court held that prior to that date , no cancellation of registration could happen. But in the instant case, there is absolutely no provision for withdrawal of recognition u/s 35(1)(ii) of the Act . Hence we hold that the withdrawal of recognition u/s 35(1)(ii) of the Act in the hands of the payee organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii) of the Act." 16. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the various judicial precedents relied upon hereinabove, we direct the ld AO to grant deduction u/s 35(1)(ii) of the Act, in the sum of Rs. 4,81,25,000/- for A.Y. 2013-14 and in the sum of Rs.10,50,00,000/-, for A.Y. 2014-15,as claimed by him under section 35(1)(ii) of the Act in respect ofthe amounts of donations made to two Institutions viz. 'Matrivani Institute ExperimentalResearch & Education' and'The School of HumanGenetics and Population Health'. Accordingly, the Grounds 1 to 4 raised by the assessee for A.Y. 2013-14 and the Grounds 1 to 5 raised by the assessee for A.Y. 2014-15 are allowed."

10 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. 3.1. The 'SMC' Bench of the Kolkata Tribunal in the case of Tushar Chawda vs. Income Tax officer in ITA No. 2362/Kol/2017; Assessment Year 2014-15, order dt. 21/03/2018, under identical circumstances held as follows:- "5. After hearing rival contentions, I am of the view that the assessee cannot suffer on account of withdrawal of notification given to M/s. School of Human Genetics and Population Health, Kolkata granting approval u/s 35 (1) (ii) of the Act. This recognition was originally granted on 28th January, 2010 and renewed on 17th June, 2010 by Government of India . Ministry of Science and Technology. In response to letter dated 03.02.2014 given by M/s. School of Human Genetics and Population Health, to the assessee, donation of Rs.15,00,000/- was made on 31.03.2014 by the assessee. The said amount was given to the donee on 31.03.2014 and withdrawal was on 15.09.2016. i.e. after 17 months from the date of donation made in March, 2014. Such withdrawal in my view cannot take away the vested right of the assessee for claiming deduction under Section 35 (1) of the Act. 6. The Tribunal in the case of Rajda Polymers vide ITA No.333/Kol/2017 order dated 08.11.2017 at page 7 has held as follows:- "5.6. We find that the ld CITA had made an observation which has been heavily relied upon by the ld DR that the assessee's line of business has got nothing to do even remotely with the healthcare or herbal healthcare industry much less in the area of research thereon and accordingly there was no need for the assessee to give donation of Rs 14,00,000/- to HHBRF . We find that this aspect has been duly addressed by the assessee by stating that one Cardiologist Doctor had introduced the assessee to HHBRF and donations were given after due satisfaction of the assessee based on personal visits to the two research centres of HHBRF and activities carried on by them. Moreover, it is well settled that it is always the prerogative of the assessee to give or not to give any donation to a particular institution, which wisdom cannot be questioned by the revenue. The question of business expediency of an expenditure had to be viewed from the point of view of the businessman and not from the view point of the revenue. The businessman knows his interest best. However, it cannot be denied that this donation paid to HHBRF is free from any suspicion. It definitely leads to further probe by the revenue, which has been carried out by the revenue by summoning the Director of HHBRF . The said Director Shri Swapan Ranjan Dasgupta, though could not appear in person before the ld AO for cross-examination (which was sought by the assessee) but had confirmed in writing that the donations given by the assessee to HHBRF were genuine in nature and had further confirmed that HHBRF had not paid any cash back to assessee in lieu of cheque donations paid to them. The revenue had left the matter at this stage itself and did not further probe into it to check the veracity of the confirmation made by Shri Swapan Ranjan Dasgupta. Therefore, the ld AO proceeded to make the addition only based on the statement recorded from Swapan Ranjan Dasgupta at the time of survey. It may be true that in the said statement, Swapan Ranjan Dasgupta may have deposed to the fact that HHBRF were in receipt of various donations from various persons in cheques and the same were routed back to the donors in cash after retaining certain portion as their commission and intermediaries' commission. This is only a general statement given by Swapan Ranjan Dasgupta about the modus operandi carried out by HHBRF. But nowhere in the said statement or in the subsequent enquires / investigation , it came to light that the assessee herein had indeed received back the cash in lieu of cheque donations given to HHBRF. This serves as a clinching missing evidence in the entire gamut of this case. 7. Respectfully applying the proposition of law laid down in this case law to the facts of case on hand and as the donation to " School of Human Genetics and Population Health" was made while it was holding the approval in question, we direct the AO to

11 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. grant the said deduction as claimed. In the result this issue is decided in favour of the assessee." 3.2. Similar view was taken by the 'B' Bench of the Tribunal in the case of DCIT vs. M/s. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017; Assessment Year 2013-14, order dt. 14/03/2018. 4. Consistent with the view taken therein, we allow this appeal of the assessee and direct the Assessing Officer to grant the necessary deductions.” 11. Similar view was taken in the case of Zenith Credit Corporation vs. ITO, ITA No. 718/Kol/2018 order dated 20.07.2018 by this Bench of the ITAT, Kolkata. In these cases the fact that the donee has approached the Settlement Commission were also considered and it was held that these facts do not affect the claim of the assessee for deduction u/s 35(1)(ii) of the Act. The case on hand, reliance was placed by the AO on the copy of statement of Smt. Samadrita Mukherjee Sardar, the Secretary of SHG&PH. In the statement, the name of the assessee is not mentioned as a company which had indulged in bogus donation. Copy of the statement was not given to the assessee. It is well settled that when adverse material is not given to the assessee, the same cannot be used against them. No opportunity of cross examination of the witness of the Revenue was granted. Thus, these statements cannot form evidence, based on which an addition can be sustained. 12. When the assessee had given a donation to the donee organization, the registration granted u/s 35(1)(ii)(iii) of the Act by the competent authority was in force. Just because this was withdrawn at a later date, the assessee to claim for deduction cannot be rejected. All these propositions have been laid down in the case law extracted above. Consistent with the view taken by different Benches of the ITAT on this very issue on similar facts, we hold that the assessee is entitled for deduction u/s 35(1)(ii) of the Act. In the result this ground of the assessee is allowed. 13. In the result, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 21st October, 2020. Sd/- Sd/- [Aby T. Varkey] [J. Sudhakar Reddy] Judicial Member Accountant Member Dated: 21.10.2020 Bidhan

12 I.T.A. No. 2670/Kol/2018 Assessment Year: 2013-14 SSL Exports Ltd. Copy of the order forwarded to: 1. SSL Exports Ltd., 2D, Compact Apartment, NS Road, Howrah-711 204. 2. DCIT, Circle-3(1), Kolkata. 3. CIT(A)-5, Kolkata. (sent through mail) 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. (sent through mail)