Section 35(1)(ii)

Section 35(1)(ii) — the law in short

What the courts have decided on section 35(1)(ii), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT-4, Kolkata v M/s Maco Corporation India Pvt Ltd High CourtHelps taxpayer
  Is there any High Court authority that a donor keeps his s.35(1)(ii) weighted deduction when the donee's approval is cancelled with retrospective effect after the payment?
  Yes. The Calcutta High Court dismissed the Revenue's appeal and answered the questions on s.35(1)(ii) against it, holding that under the Explanation in s.35(1) a deduction shall not be denied merely because the approval granted to the research organisation has been withdrawn after the payment, and applying the Supreme Court's decision in CIT v Chotatingrai Tea. The Tribunal's finding that nothing on record showed the assessee had connived in the arrangement was held not to be perverse.
• Ashokkumar Gokulchand Sananda v ACIT, Akola Circle ITATHelps taxpayerNo later treatment found
  The CBDT cancelled my donee's s.35(1)(ii) approval with retrospective effect two years after I donated, and the reassessment has taken away my 175 per cent weighted deduction and added a notional commission. Does the deduction survive?
  Yes, on these facts. The Explanation in s.35(1) says in terms that the deduction shall not be denied merely because the approval granted to the institution has been withdrawn after the payment, so a retrospective cancellation is by itself no ground for disallowance. A general Investigation Wing report about the donee, never furnished to the donor and never linked to his particular transaction, will not carry the disallowance either, and the consequential s.69C commission addition falls with it.
• Rashmikant Bhaichandbhai Shah v ITO, Ward-5(3)(2), Ahmedabad ITATHelps taxpayerNo later treatment found
  The CPC disallowed my s.80GGA deduction in the s.143(1) intimation because I have business income. Can I still get relief for the same donation under s.35(1)(ii), and can I raise it in a s.154 application?
  The Ahmedabad Bench restored the matter to the Assessing Officer with a direction to examine the alternative claim under s.35(1)(ii) and to grant it if the assessee is found eligible. The Bench proceeded on the footing, recorded from the intimation, that s.80GGA is not available where the assessee has business income, and held that the authorities should assist an assessee in claiming eligible deductions rather than punish him for a bona fide mistake.
• Chromex v DCIT-17(1), Mumbai ITATHelps departmentNo later treatment found
  My client says the Explanation in s.35(1) protects him because the donee's approval was live on the day he paid. The department has the donee's own admission before the Settlement Commission that the money went back in cash. Is the statutory protection enough?
  No. The Mumbai Bench held that once the Revenue demonstrates through cogent material that the payment was an accommodation entry, the onus shifts to the donor to establish the genuineness of his own transaction, and failure to discharge it disentitles him to the weighted deduction. CIT v Chotatingrai Tea was distinguished on the footing that there was no finding of fraud there, whereas here the institution had admitted before the Settlement Commission that it did no significant research and refunded the donations.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.