TIRUPATI MEAL PRODUCERS (P) LTD.,KOLKATA vs. I.T.O.,WARD-2(4), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA [Before Shri J. Sudhakar Reddy, Hon’ble Accountant Member & Shri Aby T. Varkey, Hon’ble Judicial Member] I.T.A. No. 904/Kol/2019 Assessment Year: 2014-15 Tirupati Meal Producers (P) Ltd……….................……....………………..……...……………...…Appellant C/o. Subash Agarwal & Associates, Advocates Siddha Gibson 1, Gibson Lane Suite 213 2nd Floor Kolkata – 700 069 [PAN: AAECT 0620 N] Vs. Income Tax Officer, Ward-2(4), Kolkata..………………………………..........….....……......Respondent Appearances by: Shri Siddharth Agarwal, Advocate, appeared on behalf of the assessee. Shri Supriyo Pal, JCIT, Sr. D/R, appearing on behalf of the Revenue Date of concluding the hearing : October 31st, 2019 Date of pronouncing the order : November 29th, 2019 O R D E R Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) – 10, Kolkata, (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 31/01/2019, for the Assessment Year 2014-15. 2. At the outset we find that there is a delay of 23 (twenty three) days in filing of this appeal. After perusing the petition for condonation, we are convinced that the assessee was prevented by sufficient cause from filing the appeal on time. Hence the delay is condoned and the appeal is admitted.

2 I.T.A. No. 904/Kol/2019 Assessment Year: 2014-15 Tirupati Meal Producers (P) Ltd b) Copy of the renewal of SIRO by Ministry of Scienc Copy of the renewal of SIRO by Ministry of Science and Techonlogy, e and Techonlogy, Govt. of India alongwith the typed copy Govt. of India alongwith the typed copy c) Notification No. (S.O. 798) 35/2008 dt. 14.03.2008 u/s 35 (1)(ii) of Notification No. (S.O. 798) 35/2008 dt. 14.03.2008 u/s 35 (1)(ii) of Notification No. (S.O. 798) 35/2008 dt. 14.03.2008 u/s 35 (1)(ii) of the I.T. Act. 3.1. The Assessing Officer made the addition on the ground that this is an The Assessing Officer made the addition on the ground that this is an The Assessing Officer made the addition on the ground that this is an accommodation entry. The ld. CIT(A) reli accommodation entry. The ld. CIT(A) relied on circumstantial evidence and ed on circumstantial evidence and confirmed the addition. 4. We find that the issue is covered by a number of decisions of the Kolkata We find that the issue is covered by a number of decisions of the Kolkata We find that the issue is covered by a number of decisions of the Kolkata Bench of the Tribunal. In the case of Bench of the Tribunal. In the case of DCIT vs. M/s. Maco Corporation (India) Pvt. DCIT vs. M/s. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017, order dt. Ltd. in ITA No. 16/Kol/2017, order dt. 14/03/2018, from para 8 onwards, it was from para 8 onwards, it was held as follows:- “8. We have heard the rival submissions and perused the materials available on 8. We have heard the rival submissions and perused the materials available on 8. We have heard the rival submissions and perused the materials available on record. We find that this issue is squarely covered in favour of the assessee by record. We find that this issue is squarely covered in favour of the assessee by record. We find that this issue is squarely covered in favour of the assessee by the order of this tribunal in the order of this tribunal in assessee's own case for the Asst Year 2013 assessee's own case for the Asst Year 2013-14 in ITA No. 16/Kol/2017 dated 14.3.2018 wherein it was held as under: ITA No. 16/Kol/2017 dated 14.3.2018 wherein it was held as under:- 8. We have heard the rival submissions and perused the materials available on 8. We have heard the rival submissions and perused the materials available on 8. We have heard the rival submissions and perused the materials available on record. The brief facts pertaining to HHBHRF are as under: record. The brief facts pertaining to HHBHRF are as under:- a) HHBHRF was registered u/s 12AA of the Act by the ld a) HHBHRF was registered u/s 12AA of the Act by the ld a) HHBHRF was registered u/s 12AA of the Act by the ld DIT(Exemptions), Kolkata with effect from 26.12.2003. DIT(Exemptions), Kolkata with effect from 26.12.2003. b) HHBHRF was also recognized in the year 2006 b) HHBHRF was also recognized in the year 2006-07 as a 07 as a scientific industrial research organization (SIRO) by Ministry scientific industrial research organization (SIRO) by Ministry scientific industrial research organization (SIRO) by Ministry of Science & Technology, Gov of Science & Technology, Government of India. The renewal of ernment of India. The renewal of recognition as SIRO by the Department of Scientific and recognition as SIRO by the Department of Scientific and recognition as SIRO by the Department of Scientific and Industrial Research under the Scheme on Recognition of Industrial Research under the Scheme on Recognition of Industrial Research under the Scheme on Recognition of Scientific and Industrial Research Organisation , 1988 was Scientific and Industrial Research Organisation , 1988 was Scientific and Industrial Research Organisation , 1988 was made for the period from 1.4.2012 to 31.3.2015 vide made for the period from 1.4.2012 to 31.3.2015 vide made for the period from 1.4.2012 to 31.3.2015 vide communication in F.No. 14/444/2006 ommunication in F.No. 14/444/2006-TU-V dated 13.8.2012. V dated 13.8.2012. c) HHBHRF was recognized vide Gazette Notification No. c) HHBHRF was recognized vide Gazette Notification No. c) HHBHRF was recognized vide Gazette Notification No. 35/2008 dated 14.3.2008 issued by the Central Board of 35/2008 dated 14.3.2008 issued by the Central Board of 35/2008 dated 14.3.2008 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance, Direct Taxes (CBDT in short), Ministry of Finance, Direct Taxes (CBDT in short), Ministry of Finance, Government of India, u/s 35(1)(ii) of the Act. Government of India, u/s 35(1)(ii) of the Act. 8.1. The brief fact pertaining to SGHPH are as 8.1. The brief fact pertaining to SGHPH are as under:- a) SGHPH was recognized vide Gazette Notification dated a) SGHPH was recognized vide Gazette Notification dated a) SGHPH was recognized vide Gazette Notification dated 28.1.2009 issued by the Central Board of Direct Taxes (CBDT in 28.1.2009 issued by the Central Board of Direct Taxes (CBDT in 28.1.2009 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance (Department of Revenue), short), Ministry of Finance (Department of Revenue), short), Ministry of Finance (Department of Revenue), Government of India, u/s 35(1)(ii) of the Act. Government of India, u/s 35(1)(ii) of the Act. b) SGHPH was also recognize b) SGHPH was also recognized as a scientific industrial d as a scientific industrial research organization (SIRO) by Ministry of Science & research organization (SIRO) by Ministry of Science & research organization (SIRO) by Ministry of Science & Technology, Government of India. The renewal of recognition Technology, Government of India. The renewal of recognition Technology, Government of India. The renewal of recognition as SIRO by the Department of Scientific and Industrial as SIRO by the Department of Scientific and Industrial as SIRO by the Department of Scientific and Industrial Research under the Scheme on Recognition of Scientific and Research under the Scheme on Recognition of Scientific and Research under the Scheme on Recognition of Scientific and

3 I.T.A. No. 904/Kol/2019 Assessment Year: 2014-15 Tirupati Meal Producers (P) Ltd Industrial Research Organisation , 1988 was made for the Industrial Research Organisation , 1988 was made for the Industrial Research Organisation , 1988 was made for the period from 1.4.2010 to 31.3.2013 vide communication in F.No. period from 1.4.2010 to 31.3.2013 vide communication in F.No. period from 1.4.2010 to 31.3.2013 vide communication in F.No. 14/473/2007 14/473/2007-TU-V dated 17.6.2010. 8.2. At the outset, we find that the 8.2. At the outset, we find that the Taxation Laws (Amendment) Act s (Amendment) Act, 2006 with retrospective effect from 1.4.2006 had introduced an 2006 with retrospective effect from 1.4.2006 had introduced an 2006 with retrospective effect from 1.4.2006 had introduced an Explanation in Section 35 Section 35 of the Act which reads as under:- Section 35( Section 35(1)(ii) - Explanation The deduction, to which the assessee is Explanation The deduction, to which the assessee is entitled in respect of any sum paid to a research association, entitled in respect of any sum paid to a research association, entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause university, college or other institution to which clause (ii) or clause university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that (iii) applies, shall not be denied merely on the ground that (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval subsequent to the payment of such sum by the assessee, the approval subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution granted to the association, university, college or other institution granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn. referred to in clause (ii) or clause (iii) has been withdrawn. Hence the aforesaid provisions of the Act are very cl Hence the aforesaid provisions of the Act are very cl Hence the aforesaid provisions of the Act are very clear that the payer (the assessee herein) would not get affected if the the payer (the assessee herein) would not get affected if the the payer (the assessee herein) would not get affected if the recognition granted to the payee had been withdrawn recognition granted to the payee had been withdrawn recognition granted to the payee had been withdrawn subsequent to the date of contribution by the assessee. Hence subsequent to the date of contribution by the assessee. Hence 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 no disallowance u/s 35(1)(ii) of the Act could be made in the no disallowance u/s 35(1)(ii) of the Act could be made in the instant c instant case. 8.3. We find that there is no provision in 8.3. We find that there is no provision in section 35(1)(ii) of the Act to of the Act to withdraw the recognition granted to the assessee therein. When there withdraw the recognition granted to the assessee therein. When there withdraw the recognition granted to the assessee therein. When there is no provision for withdrawal of recognition in the Ac is no provision for withdrawal of recognition in the Act, the action of t, the action of the revenue in withdrawing the recognition with retrospective effect the revenue in withdrawing the recognition with retrospective effect the revenue in withdrawing the recognition with retrospective effect from 1.4.2007 is unwarranted. In this regard, the recent decision of the from 1.4.2007 is unwarranted. In this regard, the recent decision of the from 1.4.2007 is unwarranted. In this regard, the recent decision of the Hon'ble Supreme Court in the case of Hon'ble Supreme Court in the case of Industrial Infrastructure Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd vs CIT Gwalior Development Corporation (Gwalior) M.P. Ltd vs CIT Gwalior reported reported in (2018) 90 taxmann.com 281 (SC) wherein it was held that : in (2018) 90 taxmann.com 281 (SC) wherein it was held that :- 21. In our considered opinion, the CIT had no express power of 21. In our considered opinion, the CIT had no express power of 21. In our considered opinion, the CIT had no express power of cancellation of the registration cert cancellation of the registration certificate once granted by him to the ificate once granted by him to the assessee under assessee under Section 12A till 01.10.2004. It is for the reasons that, till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with first, there was no express provision in the Act vesting the CIT with first, there was no express provision in the Act vesting the CIT with the power to cancel the reg the power to cancel the registration certificate granted under istration certificate granted under Section 12A of the Act. Second, the order passed under of the Act. Second, the order passed under Section 12A by the CIT by the CIT is a quasi judicial order and being qu is a quasi judicial order and being quasi judicial in nature, it could be asi judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power withdrawn/recalled by the CIT only when there was express power 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 vested in him under the Act to do so. In this case there was no such vested in him under the Act to do so. In this case there was no such express power. express power. 22. Indeed, the functions exercisable by the CIT under 22. Indeed, the functions exercisable by the CIT under Section 12A Section 12A are neither legislative and nor executive but as mentioned above they are neither legislative and nor executive but as mentioned above they are neither legislative and nor executive but as mentioned above they are essentially quasi judicial in nature. essentially quasi judicial in nature. 23. Third, an order of the CIT passed under 23. Third, an order of the CIT passed under Section 12A does not fall does not fall in the category of "orders" mentioned in in the category of "orders" mentioned in Section 21 of the General of the General Clauses Act. The expression "order" employed in Clauses Act. The expression "order" employed in Section 21 Section 21 would show that such "order" must be in the nature of a "notification", show that such "order" must be in the nature of a "notification", show that such "order" must be in the nature of a "notification", "rules" and "bye laws" etc. (see "rules" and "bye laws" etc. (see - Indian National Congress(I) v. Indian National Congress(I) v. Institute of Social Welfare Institute of Social Welfare [2002] 5 SCC 685. 24. In other words, 24. In other words, the order, which can be modified or rescinded by the order, which can be modified or rescinded by applying applying Section 21, has to be either executive or legislative in nature , has to be either executive or legislative in nature whereas the order, which the CIT is required to pass under whereas the order, which the CIT is required to pass under whereas the order, which the CIT is required to pass under Section

4 I.T.A. No. 904/Kol/2019 Assessment Year: 2014-15 Tirupati Meal Producers (P) Ltd 12A of the Act, is neither legislative nor an executive order but it is a of the Act, is neither legislative nor an executive order but it is a of the Act, is neither legislative nor an executive order but it is a "quasi judicial order". It is for this reason, "quasi judicial order". It is for this reason, Section 21 Section 21 has no application in this case. application in this case. 25. The general power, under 25. The general power, under Section 21 of the General Clauses Act, to of the General Clauses Act, to rescind a notification or order has to be understood in the light of the rescind a notification or order has to be understood in the light of the rescind a notification or order has to be understood in the light of the subject matter, context and the effect of the relevant provis subject matter, context and the effect of the relevant provisions of the ions of the statute under which the notification or order is issued and the power statute under which the notification or order is issued and the power statute under which the notification or order is issued and the power is not available after an enforceable right has accrued under the is not available after an enforceable right has accrued under the is not available after an enforceable right has accrued under the notification or order. Moreover, notification or order. Moreover, Section 21 has no application to vary ation to vary or amend or review a quasi judicial order. A quasi judicial order can or amend or review a quasi judicial order. A quasi judicial order can 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 be generally varied or reviewed when obtained by fraud or when such be generally varied or reviewed when obtained by fraud or when such power is conferred by the Act or Rules under which it is made. (See power is conferred by the Act or Rules under which it is made. (See power is conferred by the Act or Rules under which it is made. (See Interpretation of Statutes, Ninth Ed Interpretation of Statutes, Ninth Edition by G.P. Singh page 893). ition by G.P. Singh page 893). 26. ............ 26. ............ 27. It is not in dispute that an express power was conferred on the CIT 27. It is not in dispute that an express power was conferred on the CIT 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 to cancel the registration for the first time by enacting sub to cancel the registration for the first time by enacting sub-Section (3) in Sectio Section 12AA only with effect from 01.10.2004 by the only with effect from 01.10.2004 by the Finance (No.2) Act (No.2) Act 2004 (23 of 2004) and hence such power could be 2004 (23 of 2004) and hence such power could be exercised by the CIT only on and after 01.10.2004, i.e., (assessment exercised by the CIT only on and after 01.10.2004, i.e., (assessment exercised by the CIT only on and after 01.10.2004, i.e., (assessment year 2004 year 2004-2005) because the amendment in question was not e the amendment in question was not retrospective but was prospective in nature. retrospective but was prospective in nature. 28. The issue involved in this appeal had also come up for 28. The issue involved in this appeal had also come up for 28. The issue involved in this appeal had also come up for consideration before three High Courts, namely, Delhi High Court in consideration before three High Courts, namely, Delhi High Court in consideration before three High Courts, namely, Delhi High Court in the case of the case of DIT (Exemptions) v. Mool Chand Khairati Ram Trust DIT (Exemptions) v. Mool Chand Khairati Ram Trust [2011] 11 taxmann.com 42/199 Taxman 1/339 ITR 622, Uttaranchal [2011] 11 taxmann.com 42/199 Taxman 1/339 ITR 622, Uttaranchal [2011] 11 taxmann.com 42/199 Taxman 1/339 ITR 622, Uttaranchal High Court in the case of High Court in the case of Welham Boys' School Society v. CBDT School Society v. CBDT [2006] 285 ITR 74/[2007] 158 Taxman 199 and Allahabad High Court in the 285 ITR 74/[2007] 158 Taxman 199 and Allahabad High Court in the 285 ITR 74/[2007] 158 Taxman 199 and Allahabad High Court in the case of Oxford Academy for Career Development v. Chief CIT [2009] case of Oxford Academy for Career Development v. Chief CIT [2009] case of Oxford Academy for Career Development v. Chief CIT [2009] 315 ITR 382. 315 ITR 382. 29. All the three High Courts after examining the issue, in the light of 29. All the three High Courts after examining the issue, in the light of 29. All the three High Courts after examining the issue, in the light of the object of ct of Section 12A of the Act and Section 21 of the General of the General Clauses Act held that the order of the CIT passed under Clauses Act held that the order of the CIT passed under Section 12A Section 12A is quasi judicial in nature. Second, there was no express provision in the quasi judicial in nature. Second, there was no express provision in the quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till Act vesting the CIT with power of cancellation of registration till Act vesting the CIT with power of cancellation of registration till 01.10.2004; and lastly, 01.10.2004; and lastly, Section 21of the General Clauses Act has no he General Clauses Act has no application to the order passed by the CIT under application to the order passed by the CIT under Section 12A Section 12A because the order is quasi judicial in nature and it is for all these reasons the the order is quasi judicial in nature and it is for all these reasons the the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cance CIT had no jurisdiction to cancel the registration certificate once l the registration certificate once granted by him under granted by him under Section 12A till the power was expressly till the power was expressly conferred on the CIT by conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004. . 01.10.2004. We hold that the ratio decidendi of the aforesaid judgement of We hold that the ratio decidendi of the aforesaid judgement of We hold that the ratio decidendi of the aforesaid judgement of the Hon'ble Apex Court would squarely be applicable to the the Hon'ble Apex Court would squarely be applicable to the the Hon'ble Apex Court would squarely be applicable to the facts of the instant case. Infact the assessee's case herein falls facts of the instant case. Infact the assessee's case herein falls facts of the instant case. Infact the assessee's case herein falls on a much better footing than the facts before the H on a much better footing than the facts before the Hon'ble Apex on'ble Apex Court. In the case before Hon'ble Apex Court, the power of Court. In the case before Hon'ble Apex Court, the power of Court. In the case before Hon'ble Apex Court, the power of cancellation of registration us 12 cancellation of registration us 12A of the Act was conferred by was conferred by the Act on the ld CIT w.e.f. 1.10.2004 and the Hon'ble Apex the Act on the ld CIT w.e.f. 1.10.2004 and the Hon'ble Apex the Act on the ld CIT w.e.f. 1.10.2004 and the Hon'ble Apex Court hel Court held that prior to that date , no cancellation of d that prior to that date , no cancellation of registration could happen. But in the instant case, there is registration could happen. But in the instant case, there is registration could happen. But in the instant case, there is absolutely no provision for withdrawal of recognition u/s absolutely no provision for withdrawal of recognition u/s absolutely no provision for withdrawal of recognition u/s 35(1)(ii) of the Act . Hence we hold that the withdrawal of 35(1)(ii) of the Act . Hence we hold that the withdrawal of 35(1)(ii) of the Act . Hence we hold that the withdrawal of recognition u/s 35(1)(ii) of t recognition u/s 35(1)(ii) of the Act in the hands of the payee he Act in the hands of the payee

5 I.T.A. No. 904/Kol/2019 Assessment Year: 2014-15 Tirupati Meal Producers (P) Ltd organizations would not affect the rights and interests of the organizations would not affect the rights and interests of the organizations would not affect the rights and interests of the assessee herein for claim of weighted deduction u/s 35(1)(ii) of assessee herein for claim of weighted deduction u/s 35(1)(ii) of assessee herein for claim of weighted deduction u/s 35(1)(ii) of the Act. the Act. 8.4. We also find that the co 8.4. We also find that the co-ordinate bench of this tribunal in exactly ordinate bench of this tribunal in exactly similar facts had decided the issue in favour of the assessee in the s had decided the issue in favour of the assessee in the s had decided the issue in favour of the assessee in the following cases: following cases:- a) Rajda Polymers vs DCIT Rajda Polymers vs DCIT in ITA No. 333/Kol/2017 for Asst in ITA No. 333/Kol/2017 for Asst Year 2013 Year 2013-14 dated 8.11.2017. b) Saimed Innovation vs ITO Saimed Innovation vs ITO in ITA No. 2231/Kol/2016 for Asst in ITA No. 2231/Kol/2016 for Asst Year 2013 Year 2013-14 dated 13.9.2017. The findings of those decisions are not reiterated herein for the The findings of those decisions are not reiterated herein for the The findings of those decisions are not reiterated herein for the sake of brevity. sake of brevity. 8.5. In view of the aforesaid findings in the facts and circu 8.5. In view of the aforesaid findings in the facts and circumstances of mstances of the case and respectfully following the various judicial precedents the case and respectfully following the various judicial precedents the case and respectfully following the various judicial precedents relied upon hereinabove, we hold that the ld CITA had rightly deleted relied upon hereinabove, we hold that the ld CITA had rightly deleted 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/ the disallowance u/s 35(1)(ii) of the Act in the sum of Rs 3,06,25,000/ 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, t made by the ld AO. Accordingly, the Grounds raised by the revenue are he Grounds raised by the revenue are dismissed.” 5. This Bench of the Tribunal in the case of This Bench of the Tribunal in the case of Raj Karan Dasani vs. ITO. in ITA No. Raj Karan Dasani vs. ITO. in ITA No. 2346/Kol/2018, order dt. 13/03/2019, 2346/Kol/2018, order dt. 13/03/2019, had considered a similar transa had considered a similar transaction and after detailed discussion allowed allowed the claim of the assessee.

Kolkata, the Kolkata, the 29th day of November, 2019 9. Sd/- Sd/- [Aby T. Varkey] [J. Sudhakar Reddy] J. Sudhakar Reddy] Judicial Member Accountant Member Accountant Member Dated : 29.11.2019 {SC SPS}

6 I.T.A. No. 904/Kol/2019 Assessment Year: 2014-15 Tirupati Meal Producers (P) Ltd Copy of the order forwarded to: opy of the order forwarded to: 1. Tirupati Meal Producers (P) Ltd Meal Producers (P) Ltd C/o. Subash Agarwal & Associates, Advocates C/o. Subash Agarwal & Associates, Advocates Siddha Gibson 1, Gibson Lane Suite 213 2nd Floor Kolkata – 700 069 2. Income Tax Officer, Ward-2(4), Kolkata 2(4), Kolkata