F. No. 203/31/2018-ITA (II)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Room No. 245A North Block
New Delhi, the 28th February, 2019
All Principal Chief Commissioners of Income Tax
All Director Generals of Income Tax(Investigation)
Subject: Withdrawal of approval under section 35(1)(ii) of Income-tax Act, 1961 in the case of M/s Bioved Research Society,Allahabad(PAN: AAAA135572D) and request to take appropriate remedial action In the case of donors -reg.-
Kindly refer to the subject mentioned above.
2. In this regard, I am directed to state that the Central Government has withdrawn the Notification.no.15/2008 dated 01.02.2008 vide which M/s Bioved Research Society, Allahabad (PAN: AAAABS572D) was approved u/s.35(1)(ii) of the Act under the category of “Other Institution”, in view of blatant misuse of the benevolent provisions of the Act by the said Society. Earlier notification has been rescinded w.e.1 01.04.2011 vide a fresh Notification no. 3/2019 dated 25.01.2019.(copies of relevant notifications enclosed as Annexure -1 & 2 respectively for ready reference)
3. It is brought to the notice of the Board that M/s Bioved Research Society has grossly misused the provisions of section 35(1)(ii) of the Act by allegedly providing accommodation entries to the donors in the name of research activities which has enabled the donors to claim a false weighted deduction under the income tax. A brief note on the nature of the enquiries conducted and consequential withdrawal of approval u/s.35(1)(ii) of the Act is enclosed as Annexure 3. As the donors had defrauded the revenue in connivance with M/s Bioved Research Society, appropriate remedial action is required to be taken in the cases of donors also.
4. In view of above, I am directed to forward the list of donors of M/s Bioved Research Society for the period F.Y 2011-12 to F.Y 2015-16 as per Annexure -4 with a request to initiate appropriate remedial action in respect of donors to safeguard the interest of the revenue. It is also stated that the pending scrutiny assessment cases of donors who have claimed irregular weighted deduction u/s 35(1)(ii) in respect of donations made to M/s Bioved Research Society should be handled in light of above facts.
5. In this context, I am also directed to seek your kind attention towards explanation to sub-section(1) of section 35 of the Act which reads as under :
Explanation.—The deduction, to which the assessee is entitled in 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 ground that, subsequent to the payment of such sum by the ossessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) hos been withdrawn;
However, the donors in the instant case can not take the benefit of the above mentioned provision as the approval has not been withdrawn on technical grounds and it has been withdrawn as M/s Bioved Research Society had provided accommodation entries in connivance with donors for evading taxes as elaborated in detail in Annexure -3.
6. I am further directed to state that while handling investigations/enquiries in these cases, the concerned Assessing Officer should examine the specific transactions related to the sum donated and cash trail should be clearly identified. Also, various provisions pertaining to enquiry and investigation under the Act should be effectively used and assessment orders should be passed under the monitoring of supervisory authorities.
7. This issues with approval of Member (IT&C), CBDT.
Enclosure: As above
Under Secretary, (ITA.II)
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