Case Law Details
Urnish Jewellers Vs ACIT (ITAT Mumbai)
If at the time of giving the donation to the research Institute it had a valid registration granted under the Act, subsequent withdrawal of such approval with retrospective effect would not be a reason to deny deduction claimed by the donor under under section 35(1)(ii) for Scientific research expenditure.
In case of CIT v/s Chotatingrai Tea, [2003] 126 Taxman 399 (SC), the Hon’ble Supreme Court while dealing with the deduction claimed under section 35CCA of the Act, held that retrospective withdrawal of approval granted by the prescribed authority would not invalidate assessee’s claim of deduction.
Similar view was expressed by the Hon’ble Supreme Court in State of Maharashtra v/s Suresh Trading Co., 1998 com 1747 while dealing with the issue of effect of retrospective cancellation of registration certificate. In fact, in case of National Leather Cloth Mfg. Co. v/s Indian Council of Agricultural Research, [2000] 100 Taxman 511 (Bom.), the Hon’ble Jurisdictional High Court while dealing with identical issue of denial of deduction claimed under section 35(1)(ii) of the Act due to subsequent withdrawal of approval with retrospective effect, held that retrospective cancellation of registration will have no effect upon the deduction claimed by the donor since such donation was given acting upon registration when it was valid and operative. In case of Motilal Dahya Bhai Jhaveri & Sons v/s ACIT, ITA no.3453/ Mum./2018, dated 24.04.2019, the Co–ordinate Bench while dealing with identical issue of denial of deduction claimed under section 35(1)(ii) of the Act, in respect of donation given to the very same Institution i.e., SHG&PH held that, since, at the time of giving donation the assessee had acted on the strength of a valid registration/approval, which was subsequently cancelled with retrospective effect, assessee’s claim of deduction cannot be disallowed. Thus, a reading of Explanation to section 35(1)(ii) of the Act as well as the ratio laid down in the aforesaid decisions would make it clear that if the assessee acting upon a valid registration/approval granted to an Institution has donated the amount for which deduction is claimed, such deduction cannot be disallowed if at a later point of time such registration is cancelled with retrospective effect. Thus, keeping in view the relevant statutory provisions and the ratio laid down in the decisions discussed above, we have no hesitation in holding that assessee is entitled to claim deduction under section 35(1)(ii) of the Act. Accordingly, we delete the disallowance of Rs. 17.50 lakh.
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