M. SQUARE ASSOCIATES,MUMBAI vs. ACIT 15(2), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A)- 26, Mumbai dated 23/01/2014 for the A.Y.2009-10, wherein the assessee is aggrieved for denying deduction claim u/s.35(1)(iii) of the IT Act. As an alternate, it was prayed for deduction of donation so made u/s.80G of the IT act.

Rival contentions have been heard and record perused.

Facts in brief are that the assessee has claimed deduction in respect of payment of donation of Rs.90,00,000/- to Research Foundation For Jainology and claimed deduction @125% thereof u/s.35(1)(iii). However, the society ‘Research Foundation for Jainology’ was not approved for the M.Square Associates purpose of Section 35(1)(iii) for the relevant previous year i.e., F.Y.2008- 09 and the application for such approval by the society was rejected by CBDT on 28/05/2008. Accordingly, AO declined assessee’s claim of deduction u/s.35(1)(iii). By the impugned order, CIT(A) confirmed the action of the AO.

It was submitted by learned AR that in terms of the decision of Chennai High Court dated 25/04/2011, CBDT is still in the process of passing orders regarding renewal of approval of the society and therefore, matter should be restored to AO. Learned AR has submitted alternatively that in case deduction u/s.35(1)(iii) is not allowed, the Society is also approved for deduction u/s.80G and accordingly, the A.O. should be directed to allow deduction u/s.80G. Learned AR has also filed a letter dated 03/09/2007 from Director of Income Tax (Exemption), Chennai to the fact that the society ‘Research Foundation For Jainology’ is approved for deduction u/s.80G for the period 01/04/2007 to 31/03/2010.

We have considered rival contentions and do not find any merit for assessee’s claim of deduction u/s. 35(1)(iii) as the CBDT has already rejected the approval of Research Foundation on 28/05/2008. So far as assessee’s claim for deduction u/s.80G is concerned, we restore the matter back to the file of the AO to verify the factual position and find out if research foundation of Jainology is approved for deduction u/s.80G during the relevant period in which donation has been given and for deciding the issue afresh as per law. We direct accordingly.