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The National Leather Cloth Manufacturing Co. Vs. Indian Council of Agricultural Research and Others - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 3320 of 1987
Judge
Reported in1999(4)ALLMR541; 2000(2)BomCR232; (2000)1BOMLR962; [2000]241ITR482(Bom)
ActsIncome Tax Act, 1961 - Sections 35(1) and 148
AppellantThe National Leather Cloth Manufacturing Co.
RespondentIndian Council of Agricultural Research and Others
Appellant Advocate Harsh Desai i/b. ;V.L. Panjuani, Adv.
Respondent AdvocateS.R. Rajguru, Adv.
Excerpt:
.....made to an approved institution under the said section - notice issued on withdrawal of the said approval with retrospective effect - assessee is entitled to rely on the certificate granted by the authority under section 35(1)(ii) for claiming any deduction under that section if it was valid and subsisting at the time donation was made - the retrospective withdrawal and or cancellation of the certificate will have no effect on the assessee who has acted upon it when it was valid and operative - thus there is no escapement of income from tax notice under section 148 quashed and set aside - writ petition allowed. - section 3: [s.b. mhase, d.s. bhosale & a.s. oka, jj] offences of atrocities - complaint under held, merely because the caste of the accused is not mentioned in the fir..........research, government of india for a period of one year. the approval was extended from time to time. there is no dispute that the approval was subsisting in the previous year relevant to the assessment year under consideration and for subsequent assessment years till it was withdrawn by notification dated 2nd january, 1986 with retrospective effect from 17th january, 1980. the petitioners claimed deduction under section 35(1)(ii) of the act in respect of the above donation on the basis of the notification of the prescribed authority approving the said institution for the purposes of clause (ii) of sub-section (1) of section 35 of the act which was subsisting and valid at the material time. this claim of the assessee for deduction under section 35(1)(ii) of the act was allowed.....
Judgment:
ORDER

Dr. B.P. Saraf, J.

1. By this writ petition, the petitioners seek to challenge the notice dated 12th August, 1987 issued by the Inspecting Assistant Commissioner of Income-tax under section 148 of the Income-tax Act, 1961 ('Act') for the assessment year 1983-84. The case of the petitioners is that the conditions precedent for issuance of notice under section 148 of the Act are absent in this case and hence the notice is wholly without jurisdiction.

2. We have heard the learned Counsel for the petitioners as well as for the respondents. We have perused the affidavit filed on behalf of the respondents. The material facts of the case are as under:

In the previous year relevant to the assessment year 1983-84, the petitioner company donated a sum of Rs. 2,00,000/- to one K.M. Scientific Research Centre. The said institution was approved for the purposes of section 35(1)(ii) by the Indian Council of Agricultural Research, Government of India for a period of one year. The approval was extended from time to time. There is no dispute that the approval was subsisting in the previous year relevant to the assessment year under consideration and for subsequent assessment years till it was withdrawn by notification dated 2nd January, 1986 with retrospective effect from 17th January, 1980. The petitioners claimed deduction under section 35(1)(ii) of the Act in respect of the above donation on the basis of the notification of the prescribed authority approving the said institution for the purposes of Clause (ii) of sub-section (1) of section 35 of the Act which was subsisting and valid at the material time. This claim of the assessee for deduction under section 35(1)(ii) of the Act was allowed by the Inspecting Assistant Commissioner in the original assessment. The impugned notice under section 148 has been issued on the basis of the withdrawal of the said approval by notification dated 2nd January, 1986 with retrospective effect from 17th January, 1980 because, according to the Inspecting Assistant Commissioner, in view of the retrospective withdrawal of the approval granted to the K.M. Scientific Research Centre to which the petitioners had donated Rs. 2,00,000/- in the previous year relevant to the assessment year under consideration, the income of the assessee to the extent of Rs. 2,00,000/- had escaped assessment. In other words, according to the Inspecting Assistant Commissioner, the relief given to the assessee under section 35(1)(ii) was wrongly granted and this notice has been issued to withdraw the same.

3. The only question that arises for consideration is whether the assessee who donated a sum of Rs. 2,00,000/- to the scientific research association on the basis of the approval granted by the prescribed authority to it for the purposes of Clause (ii) of sub-section (1) of section 35 of the Act by notification in the Official Gazette at the material time can be adversely affected by the withdrawal of the approval subsequently with retrospective effect by the prescribed authority. We have already decided identical controversy in the context of deduction under section 35-CCA of the Act in Writ Petition No. 957 of 1990. Law is now well-settled that the assessee is entitled to rely upon the certificate granted by the prescribed authority under section 35(1)(ii) of the Act to the institution or association to which it had donated any sum of money for claiming deduction under that section if it was subsisting and valid at the time the donation was made. The retrospective withdrawal and/or cancellation of the certificate will have no effect upon the assessee who has acted upon it when it was valid and operative.

4. In view of the above, it is clear that there is no escapement of income from tax in this case. The impugned notice under section 148 of the Act is, therefore, quashed and set aside. Writ petition is allowed in the above terms.

5. Writ petition allowed.


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