UD MARKETING PRIVATE LIMITED ,KOLKATA vs. D.C.I.T.,CIRCLE-1(2), KOLKATA

1. The Assessing Officer’s order is illegal and bad in law in reducing the Appellant’s refund claimed per return of Rs.10,04,104/- to Rs.4,36,227/-

Aggrieved the assessee is in appeal before us. Aggrieved the assessee is in appeal before us.

The ld. Counsel for the assessee filed a paper book running i The ld. Counsel for the assessee filed a paper book running i The ld. Counsel for the assessee filed a paper book running into 86 pages and drew the attention of the Bench to all the documents evidencing donation made to drew the attention of the Bench to all the documents evidencing donation made to drew the attention of the Bench to all the documents evidencing donation made to HHBHRF and the Notifications which granted exemption to the institution. He submitted HHBHRF and the Notifications which granted exemption to the institution. He submitted HHBHRF and the Notifications which granted exemption to the institution. He submitted that the Notification so issued withdrawing the permission at a later da that the Notification so issued withdrawing the permission at a later da that the Notification so issued withdrawing the permission at a later date would not effect the claim of the assessee u/s 35(1)(ii) of the Act. He relied on the order of this effect the claim of the assessee u/s 35(1)(ii) of the Act. He relied on the order of this effect the claim of the assessee u/s 35(1)(ii) of the Act. He relied on the order of this Bench of the Tribunal in the case of Bench of the Tribunal in the case of Rajda Polymers (supra) and Raj Karan Dassani Raj Karan Dassani vs. ITO in Assessment Year 2013 in ITA No. 2346/Kol/2018, Assessment Year 2013-14, order dt. May 8 y 8th, 2019 and the judgment of the Hon’ble Supreme Court in the case of judgment of the Hon’ble Supreme Court in the case of CIT vs. Chotatingrai Tea & Ors. CIT vs. Chotatingrai Tea & Ors. reported in (2002) 258 ITR 529 (SC) reported in (2002) 258 ITR 529 (SC), wherein it was held as follows:- “Section 35CCA of the Income Section 35CCA of the Income-tax Act, 1961 - Rural Development Rural Development Programmes - Assessee had made donation of certain amount to a see had made donation of certain amount to a society which had its object to carry out approved rural development society which had its object to carry out approved rural development society which had its object to carry out approved rural development programme - Society granted a certificate which had also been Society granted a certificate which had also been approved by prescribed authority approved by prescribed authority - Whether assessee was entitled to Whether assessee was entitled to deduction under section 35CCA even though approval granted by der section 35CCA even though approval granted by der section 35CCA even though approval granted by prescribed authority was withdrawn with retrospective effect prescribed authority was withdrawn with retrospective effect - Held, yes Held, yes - Whether once assessee fulfils all conditions laid down under section Whether once assessee fulfils all conditions laid down under section Whether once assessee fulfils all conditions laid down under section 35CCA for claiming deduction of amount donated, there is no ob 35CCA for claiming deduction of amount donated, there is no ob 35CCA for claiming deduction of amount donated, there is no obligation Assessment Year: 2014-15 UD Marketing Private Limited on part of assessee to see that amount is actually utilised for purpose for on part of assessee to see that amount is actually utilised for purpose for on part of assessee to see that amount is actually utilised for purpose for which it was donated - Held, yes” which it was donated

The ld. D/R, on the other hand, submitted that it is not mere withdrawal of the The ld. D/R, on the other hand, submitted that it is not mere withdrawal of the The ld. D/R, on the other hand, submitted that it is not mere withdrawal of the recognition granted to HHBHRF but it was a rescinding of the earlier notification recognition granted to HHBHRF but it was a rescinding of the earlier notification recognition granted to HHBHRF but it was a rescinding of the earlier notification granting recognition due to various mis granting recognition due to various mis-deeds done by that organisation. He took this deeds done by that organisation. He took this Bench through the order of the ld. CIT(A) as well as the Assessing Officer and relied rough the order of the ld. CIT(A) as well as the Assessing Officer and relied rough the order of the ld. CIT(A) as well as the Assessing Officer and relied upon the same.

We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities circumstances of the case, perusal of the papers on record, orders of the authorities circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows: below as well as case law cited, we hold as follows:- 7. The only reason why the Assessing Officer as well as the ld. CIT(A) refused The only reason why the Assessing Officer as well as the ld. CIT(A) refused The only reason why the Assessing Officer as well as the ld. CIT(A) refused deduction to the assessee was the withdrawal of recognition granted u/s 35(1)(ii) of the deduction to the assessee was the withdrawal of recognition granted u/s 35(1)(ii) of the deduction to the assessee was the withdrawal of recognition granted u/s 35(1)(ii) of the Act to HHBHRF. This issue was c Act to HHBHRF. This issue was considered by the Kolkata Bench of the Tribunal in the onsidered by the Kolkata Bench of the Tribunal in the case Rajda Polymers (supra) wherein it has been held as follows:- “5.5. Moreover, we find that the provisions of Explanation to 5.5. Moreover, we find that the provisions of Explanation to section 35(1)(ii) section 35(1)(ii) of the Act also comes to the rescue of the assessee. For the sake of convenience, the said Explanation is comes to the rescue of the assessee. For the sake of convenience, the said Explanation is comes to the rescue of the assessee. For the sake of convenience, the said Explanation is reproduced below:- Section 35(1)(ii) - Explanation The deduction, to which the assessee is entitl Explanation The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other respect of any sum paid to a research association, university, college or other 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 institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the 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 approv ground that, subsequent to the payment of such sum by the assessee, the approv 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 granted to the association, university, college or other institution referred to in clause granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn. (ii) or clause (iii) has been withdrawn. In the instant case, the ld DR argued that the recognition u/s 35(1)(ii) of the Act was In the instant case, the ld DR argued that the recognition u/s 35(1)(ii) of the Act was In the instant case, the ld DR argued that the recognition u/s 35(1)(ii) of the Act was withdrawn in the case of HHBRF b withdrawn in the case of HHBRF by the CBDT with retrospective effect. In response to this, the y the CBDT with retrospective effect. In response to this, the ld AR argued that on the date on which donation was given, the notification u/s 35(1)(ii) of the ld AR argued that on the date on which donation was given, the notification u/s 35(1)(ii) of the ld AR argued that on the date on which donation was given, the notification u/s 35(1)(ii) of the Act was in force and valid and therefore the deduction claimed by the assessee was in order. We Act was in force and valid and therefore the deduction claimed by the assessee was in order. We Act was in force and valid and therefore the deduction claimed by the assessee was in order. We find that the ld CITA had ignored the provisions of the Act (i.e the Explanation to find that the ld CITA had ignored the provisions of the Act (i.e the Explanation to find that the ld CITA had ignored the provisions of the Act (i.e the Explanation to Section 35(1)(ii) of the Act) by merely stating that HHBRF had subsequently declared before the of the Act) by merely stating that HHBRF had subsequently declared before the of the Act) by merely stating that HHBRF had subsequently declared before the Hon'ble Settlement Commis Hon'ble Settlement Commission, Department of Revenue, Government of India , additional sion, Department of Revenue, Government of India , additional income and admitted to the modus operandi of various transactions carried out by them. But income and admitted to the modus operandi of various transactions carried out by them. But income and admitted to the modus operandi of various transactions carried out by them. But this in our considered opinion, would not serve the purpose of the revenue. Merely because the this in our considered opinion, would not serve the purpose of the revenue. Merely because the this in our considered opinion, would not serve the purpose of the revenue. Merely because the donee goes to Hon'ble Rajda Polymers A.Yr.2013 es to Hon'ble ITA No.333/Kol/2017 Rajda Polymers A.Yr.2013 es to Hon'ble ITA No.333/Kol/2017 Rajda Polymers A.Yr.2013-14 Settlement Commission and declares some additional income thereon, it does not automatically implead Commission and declares some additional income thereon, it does not automatically implead Commission and declares some additional income thereon, it does not automatically implead the assessee herein on the negative side and the express provisions of the Act cannot be igno the assessee herein on the negative side and the express provisions of the Act cannot be igno the assessee herein on the negative side and the express provisions of the Act cannot be ignored thereon. There cannot be any malafide that could be attributed on the assessee herein. We find thereon. There cannot be any malafide that could be attributed on the assessee herein. We find thereon. There cannot be any malafide that could be attributed on the assessee herein. We find that the assessee was under the bonafide belief and had made proper due diligence before that the assessee was under the bonafide belief and had made proper due diligence before that the assessee was under the bonafide belief and had made proper due diligence before granting donation to HHBRF which was duly recognized u/s 35(1)(ii) o granting donation to HHBRF which was duly recognized u/s 35(1)(ii) of the Act at the time of f the Act at the time of giving donation. We hold that if the subsequent notification cancelled the registration u/s giving donation. We hold that if the subsequent notification cancelled the registration u/s giving donation. We hold that if the subsequent notification cancelled the registration u/s 35(1)(ii) of the Act, the same does not affect the donation made by the assessee when the said 35(1)(ii) of the Act, the same does not affect the donation made by the assessee when the said 35(1)(ii) of the Act, the same does not affect the donation made by the assessee when the said notification was in force. The bonafide beli notification was in force. The bonafide belief of the assessee donor at the time of granting ef of the assessee donor at the time of granting donation to an institution on the basis of recognition then available, cannot be disturbed by donation to an institution on the basis of recognition then available, cannot be disturbed by donation to an institution on the basis of recognition then available, cannot be disturbed by subsequent event. This is more clearly spelt out in the provisions of the Act itself by way of an subsequent event. This is more clearly spelt out in the provisions of the Act itself by way of an subsequent event. This is more clearly spelt out in the provisions of the Act itself by way of an Assessment Year: 2014-15 UD Marketing Private Limited Explanation to Section 35(1) Section 35(1) of the Act. Hence even as per the provisions of the Act, the denial of the Act. Hence even as per the provisions of the Act, the denial of deduction u/s 35(1)(ii) of the Act is not in order. We also find that the Hon'ble Jurisdictional of deduction u/s 35(1)(ii) of the Act is not in order. We also find that the Hon'ble Jurisdictional of deduction u/s 35(1)(ii) of the Act is not in order. We also find that the Hon'ble Jurisdictional High Court in the cases of of B.P.Agarwalls & Sons Ltd vs CIT reported in 208 ITR 863 ( reported in 208 ITR 863 (Cal) and Jai Kumar Kankaria vs CIT reported in 251 ITR 707 (Cal) had held that there was no p reported in 251 ITR 707 (Cal) had held that there was no p reported in 251 ITR 707 (Cal) had held that there was no power to cancel the registration retrospectively. Hence even on this count, the deduction claimed u/s cancel the registration retrospectively. Hence even on this count, the deduction claimed u/s cancel the registration retrospectively. Hence even on this count, the deduction claimed u/s 35(1)(ii) of the Act by the assessee deserves to be allowed. 35(1)(ii) of the Act by the assessee deserves to be allowed.”

Consistent with the view taken therein, as the recognition in question was in Consistent with the view taken therein, as the recognition in question was in Consistent with the view taken therein, as the recognition in question was in force on the date of payment of donation, the claim of donation has to be allowed. The date of payment of donation, the claim of donation has to be allowed. The date of payment of donation, the claim of donation has to be allowed. The statement of the ld. D/R that it is not a withdrawal but a rescinding of recognition, is not statement of the ld. D/R that it is not a withdrawal but a rescinding of recognition, is not statement of the ld. D/R that it is not a withdrawal but a rescinding of recognition, is not supported by any documents/evidence. Thus, we allow this ground of appeal