Section 256(2) of the Income Tax Act

The decision most relied on for Section 256(2) is Commissioner of Income Tax v. Chotatingrai Tea & Ors. (258 ITR 529), cited in 30 of the 149 judgments on BharatTax that turn on this section.

Leading authorities on Section 256(2)

Commissioner of Income Tax v. Chotatingrai Tea & Ors.
258 ITR 529 · 2002 · Supreme Court
30
citing judgments

A donor cannot be held responsible for the utilization of their donation by a donee institution once the statutory conditions for claiming a deduction are met. Subsequent withdrawal of approval for the donee institution cannot retrospectively deny the donor the deduction.

B.P.Agarwalls & Sons Ltd. v. CIT
208 ITR 863 · 1994 · High Court
27
citing judgments

A High Court cannot cancel the registration of a scientific research association retrospectively. Therefore, a deduction claimed under section 35(1)(ii) based on such a cancelled registration must be allowed.

M/s Seksaria Biswan Sugar Factory Ltd. and Another v. Inspecting Assistant Commissioner and Others
184 ITR 123 · 1990 · High Court
20
citing judgments

The withdrawal of approval for a deduction, such as under Section 35CCA, cannot be given retrospective effect, and any reassessment notice based on such a retrospective cancellation is invalid. An assessee should not suffer due to the department's mistakes, and withdrawal of approval can only be prospective.

CIT v. Bhartia Culter Hammer Co.
232 ITR 785 · 1998 · High Court
20
citing judgments

An assessee should not suffer due to the department's mistake. If a donation to an approved society is genuine, retrospective withdrawal of approval does not affect the assessee's right to deduction. Withdrawal of approval can only be prospective.

184 ITR 123, CIT v. Bhartia Cutler Hammer Co.
236 ITR 644 · 1999 · Reported
11
citing judgments

An assessee should not suffer due to a mistake by the department. Withdrawal of approval for a society, even if permissible, must have prospective effect and cannot disentitle an assessee to a deduction for genuine donations made prior to withdrawal.

Commissioner of Income Tax v. General Magnets Ltd.
256 ITR 471 · 2002 · High Court
11
citing judgments

When approval for a deduction is withdrawn with retrospective effect, the order of the assessing officer cannot be considered erroneous or prejudicial to the interests of the revenue, as the assessee should not suffer for a mistake made by the department. There is no provision for withdrawal of recognition under Section 35(1)(ii) of the Act.

256 ITR 470 (Cal), B.P. Agarwalla and Sons Ltd. v. CIT
229 ITR 23 · 1998 · Reported
6
citing judgments
CIT v. Ethelbari Tea Co.
256 ITR 470 · 2002 · High Court
6
citing judgments
DCIT v. Charipall
177 Taxmann.com 69 · Reported
4
citing judgments

Judgments on Section 256(2)

Devi Cine Projector Manufacturing Co., Etc. Etc vs. Commissioner of Income Tax

CIVIL APPEAL No. 1185/1990Supreme Court05 Feb 1990

Bench: 3 Judges

Section 256Section 256(2)Section 40

Commissioner of Income Tax vs. Mussadilal Ram Bharose

CIVIL APPEAL No. 2083/1972Supreme Court28 Jan 1987

Bench: 2 Judges

Section 27Section 271Section 274Section 274(2)

Commissioner of Income Tax, Kanpur vs. Saran Engineering Co. Ltd

CIVIL APPEAL No. 1599/1974Supreme Court31 Jul 1986

Bench: 2 Judges

Section 2Section 256(2)Section 84

Commissioner of Income-Tax, Calcutta vs. Biju Patnaik

CIVIL APPEAL No. 1793/1974Supreme Court09 May 1986

Bench: 2 Judges

Commissioner of Income-Tax, Orissa vs. Orissa Corporation (P) Ltd

CIVIL APPEAL No. 1379/1974Supreme Court19 Mar 1986

Bench: The Incmae-Tax Officer, Discharged Hundies & Confirmation Letters From These Creditors Who Were Income-Tax Assessees. The Assessee Made Attempts To Bring The Creditors Before The E Income-Tax Officer By Issue Of Notices Under S.131 Of The Income Tax Act, 1961 But Failed, As These Were Returned With The Endorsement 'Left'. The Assessee Thereafter Wante4 Further Opportunity To Find Out The Whereabouts Of The Lenders. The Income-Tax Officer Observed Certain Inconsistencies In The Confirmation Letters Which Did Not Inspire Confidence & F Being Of The View That The Alleged Creditors Were Not Genuine Bankers But Were Mere Name Lenders, Treated The Entire Uount As Unproved Cash Credit & Added The Same To The Income Of The Assessee. The Assistant Appellate Coaal.Ssioner Dismissed The Appeal Of The Assessee. In A Separate Proceeding Under S.27L(L)(C) Of The Act On The Basis Of The Assessment Order The Inspecting Assistant Coamissioner Imposed A Penalty Of Rs.50,000. The Tribunal Came To The Conclusion That The Revenue Was G Ii

Section 68

Indo- Aden Salt Mfg. & Trading Co. Pvt. Ltd vs. Commissioner of Income Tax, Bombay

CIVIL APPEAL No. 800/1974Supreme Court12 Mar 1986

Bench: 2 Judges

Section 147Section 25

Smt. Saroj Aggarwal vs. Commissioner of Income Tax, U.P

CIVIL APPEAL No. 542/1974Supreme Court30 Sept 1985

Bench: 2 Judges

Section 256(2)Section 35Section 70Section 78(2)

Mangalore Electric Supply Co. Ltd vs. The Commissioner of Income Tax, West Bengal

The appeals are dismissed and the

CIVIL APPEAL No. 2160/1972Supreme Court04 May 1978

Bench: 3 Judges

Section 12BSection 256(2)Section 4

Lachminarayan Mandal Lal vs. Commissioner of Income-Tax, West Bengal

In the result this appeal fails and the same is dismissed with

CIVIL APPEAL No. 20/1969Supreme Court13 Sept 1972

Bench: 3 Judges

Section 25Section 256(1)
Section 256(2) of the Income Tax Act — Case Laws | BharatTax