NND Ambernath LLP Vs ACIT (ITAT Mumbai)
Explanation to Sec.35 Protects Donor- Retrospective Cancellation No Bar – Tribunal Deletes Disallowance of 35(1)(iii) Deduction
The appeal was filed by NND Ambernath LLP against the order of CIT(A)-51, Mumbai dated 22.11.2024, confirming disallowance of donation of Rs.1.75 crore given to School of Human Genetics & Population Health, for which deduction was claimed u/s 35(1)(iii).
Assessee, engaged in business of builders & developers, filed return declaring total income of Rs.22.02 crore. During assessment, AO noticed claim of deduction u/s 35(1)(iii) for donation of Rs.1.75 crore. Based on information that the donee trust was engaged in providing accommodation entries & later notified as bogus, AO disallowed the deduction & added the sum back to income. CIT(A) upheld the disallowance on the same basis.
Before Tribunal, Assessee argued that the donation was made on 21.03.2014 when the institution had valid approval notified by CBDT. The subsequent withdrawal of approval was vide CBDT order dated 15.09.2016. As per Explanation to s.35(1)(ii)/(iii), deduction cannot be denied merely because approval is withdrawn at a later date. Reliance was placed on earlier ITAT Mumbai order in Motilal Dahyabhai Jhaveri & Sons Vs ITO & jurisdictional HC in National Leather Cloth Manufacturing Co., which held that retrospective cancellation of registration does not invalidate donor’s claim if donation was given during the validity period.
