M/S.alarsin v. The Commissioner Of Income Tax Bombaycity Xi, Bombay

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE NO.12 OF 1994 M/s.Alarsin ..Applicant. Versus The Commissioner of Income Tax BombayCity XI, Bombay ..Respondent. Mr.Jitendra Jain i/by M/s.Shah, Desai, Doijode & Phatarpherkar for the applicant. Mr.P.S. Sahadevan for the respondent. CORAM : V.C. DAGA &J.P. DEVADHAR, JJ. DATE : 26[th] JUNE, 2009 P.C. : 1.This is a reference made under Section 256 (1) of the Income Tax Act, 1961 by the Tribunal vide its order dated 3-10-1991, wherein following questions are referred for the opinion of this Court. QUESTIONS FOR OPINION i)Whether on the facts and in the circumstances of the case information received the Assessing Officer from the Income-tax Officer, A – Ward, Sangli through the Chief Commissioner of Income-tax, Bombay City-II, Bombay, can be considered as information within the meaning of the term used in Section 147(b) of the Income-tax Act, 1961 ?information received the Assessing Officer from the Income-tax Officer, A – Ward, Sangli through the Chief Commissioner of Income-tax, Bombay City-II, Bombay, can be considered as information within the meaning of the term used in Section 147(b) of the Income-tax Act, 1961 ? ii)Whether on the facts and in the circumstances of the case the Assessing Officer validly initiated and completed re-assessment under Section 147(b) of the said Act ? iii)Whether on the facts and in the circumstances of the case reference to scientific Research Association or University or College or other institution u/s.35(2A) is an institution or association as is referred to in sub-clause (ii) of section 35(1) and not in the proviso to clause (ii) of section 35 of the said Act ?reference to scientific Research Association or University or College or other institution u/s.35(2A) is an institution or association as is referred to in sub-clause (ii) of section 35(1) and not in the proviso to clause (ii) of section 35 of the said Act ? iv)Whether on the facts and in the circumstances of the case for getting deduction u/s.35(2A) of the Act is it necessary that approval to the institution referred to in section 35(2A) should be subsisting u/s.35(1)(ii) of the Act at the time when the amount is paid to such an institution ?getting deduction u/s.35(2A) of the Act is it necessary that approval to the institution referred to in section 35(2A) should be subsisting u/s.35(1)(ii) of the Act at the time when the amount is paid to such an institution ? v)Whether on the facts and in the circumstances of the case expiry of approval to the Institution u/s.35(1)(ii) of the Income-tax Act automatically invalidates the approval to the said Institution u/s.35(2A) of the said Act even though the period for which approval was given to the said Institution u/s.35(2A) has not expired ?expiry of approval to the Institution u/s.35(1)(ii) of the Income-tax Act automatically invalidates the approval to the said Institution u/s.35(2A) of the said Act even though the period for which approval was given to the said Institution u/s.35(2A) has not expired ? 2.So far as question Nos.(i) and (ii) are concerned, learned counsel appearing for the applicant submits that he does not want to press them. In this view of the matter, question Nos.(i) and (ii) are returned unanswered. 3.So far as remaining three questions are concerned, heard both the parties at length. We find that these questions are squarely answered by the Division Bench judgment of this Court in the case of CIT V/s. KhoslaMetal Power Private Limited reported in (1994) 208 ITR 115, wherein the Division Bench of this Court has interpreted Section 35 (2A) of the Income Tax Act, 1961 in the following words : 2.So far as question Nos.(i) and (ii) are concerned, learned counsel appearing for the applicant submits that he does not want to press them. In this view of the matter, question Nos.(i) and (ii) are returned unanswered. 3.So far as remaining three questions are concerned, heard both the parties at length. We find that these questions are squarely answered by the Division Bench judgment of this Court in the case of CIT V/s. KhoslaMetal Power Private Limited reported in (1994) 208 ITR 115, wherein the Division Bench of this Court has interpreted Section 35 (2A) of the Income Tax Act, 1961 in the following words : “Section 35 deals with “Expenditure on scientific research”. Under section 35(1)(ii), any sum paid to a scientific research to a university, college, etc., which has as its object the undertaking of scientific research, is to be deducted as business expenditure, provided the said body is for the time being approved for that purpose by the prescribed authority. The deduction allowed under section 35(1)(ii) is equal to the amount of donation. Section 35(2A) pertains to additional benefit. It provides that if a donation is made to the approved body for a programme or scientific research which is also approved by the prescribed authority having regard to the social, economic and industrial needs of India, then the deduction would be of a sum equal to 1-1/3 (one and one-third) times the sum paid, subject to a condition that the donor would not be entitled to the deduction under section 35(1)(ii) simultaneously. Thus, the additional one and one-third benefit is granted by section 35(2A). For entitlement to this additional benefit, two conditions have to be fulfilled. - (i)The assessee must pay a sum to a scientific research association or the university etc., referred to in section 35(1)(ii) ; and (ii)The sum must be paid with the object that it is to be used for scientific research undertaken under a programme approved in that behalf by the prescribed authority having regard to the social, economic and industrial needs of India. The undisputed position is that the University of Poona is approved for the purposes of section 35(1)(ii) since December 4, 1972. The programmes of scientific research undertaken by the University of Poona have been approved by the “prescribed authority”, vide memorandum dated December 9, 1975. The resolution passed by the executive council of the University dated March 13, 1976, clearly indicates that the donations given would be utilised only in the 20 approved schemes.” 5.In the light of above decision, the question Nos.(iii) to (v) are answered in the affirmative and in favour of the revenue. It is true that the questions raised herein were not specifically raised before this Court in the case of Khosla Metal Power Private Limited (supra). However, we are clearly of the opinion, that the interpretation of Section 35 given by this Court in the above case is the correct interpretation of Section 35(1)(ii) of the I.T. Act. 6.The reference is disposed of accordingly with no order as to costs.