INCOME TAX ACT, 1961

Section 35

Business deduction under section 35 - R & D Expenses - Allegation that donation given to a Research Foundation was not a genuine research foundation - Allowability

A notice was issued under section 143(2) by AO calling upon assessee to explain as to why the deduction claimed under section 35(1)(ii) being donation for scientific research should not be disallowed. According to AO, donation given to a Research Foundation was not a genuine research foundation. During the course of the survey, it was found that the donor/beneficiaries in connivance with the said research foundation with the active help of brokers, entry operators/bogus billers were engaged in bogus donation syndicate and donations were returned back to the donors in lieu of commission. Therefore, amount claimed under section 35(1)(ii) was disallowed by AO. Held: Tribunal had given the finding of the fact that amount of donation was transferred to research foundation through Bank channel and there is no evidence that the same is returned back in cash. It was also found that Foundation had confirmed that amount was utilized for scientific research. Accordingly, onus placed upon the assessee was discharged. Therefore, appeal failed and was dismissed.

REFERRED : ACIT v. Thakkar Govindbhai Ganpatlal [ITA No.2318/Ahd/2017, dt. 17-7-2019] S.G. Vat Care Pvt. Ltd. v. ITO [ITA No.1943/Ahd/2017, dt. 15-1-2019]

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT