INCOME TAX ACT, 1961

Section 35

Business deduction under section 35 - Disallowance of deduction claimed under section 35(i)(ii) - Bogus donation to a Research Foundation -

During the course of assessment proceedings, assessee was asked to furnish the detail about the claim of deduction under section 35(1)(ii) on account of donation. On verification of detail furnished by assessee, AO noticed that assessee had claimed deduction under section 35(1)(ii) on giving donation to a Research Foundation. AO had received information from investigation wing that the said institution was engaged in facilitating the donation in lieu of earning commission and assessee was one of the beneficiaries. AO disallowed the claim of deduction under section 35(1)(ii) on the basis of report of investigation wing that Research Foundation was engaged in accommodating bogus donation in lieu of commission. Held: AO had not brought on record a specific evidence wherein donee had deposed that donations received from assessee was paid back in cash after deducting commission. On the basis of a general information collected from donee, donation made by assessee could not be doubted. In absence of such circumstances, donation given by assessee to the donee, on which assessee had no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. Therefore, there could not be any disallowance on this issue.

REFERRED : ACIT v. Thakkar Govindbhai Ganpatlal [ITA No. 2318/Ahd/2017 dated 17-07-2019] S.G. Vat Care Pvt. Ltd. v. ITO [ITA No.1943/Ahd/2017, dt. 15-1-2019]

FAVOUR : In assessee's favour

A.Y. : 2014-15

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