Donations Must be Made to Research Institutes Registered u/s 35(1)(ii): ITAT Disallows 1.05 Cr Deduction [Read Order]
The assessee was held to be not eligible to claim deduction under Section 35 (1)(ii)
![Donations Must be Made to Research Institutes Registered u/s 35(1)(ii): ITAT Disallows 1.05 Cr Deduction [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/05/donation-ITAT-TAXSCAN.jpg "Donations Must be Made to Research Institutes Registered u/s 35(1)(ii): ITAT Disallows 1.05 Cr Deduction [Read Order]")
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) recently disallowed a weighted deduction amounting to ₹1.05 cr to an assessee since the donations were made to research institutes which were not registered under Section 35(1)(ii) of the Income Tax Act, 1961. The brief facts are that the assessee, Kapadia Marketing Inc, claimed a deduction of ₹1.05 cr under Section...
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) recently disallowed a weighted deduction amounting to ₹1.05 cr to an assessee since the donations were made to research institutes which were not registered under Section 35(1)(ii) of the Income Tax Act, 1961.
The brief facts are that the assessee, Kapadia Marketing Inc, claimed a deduction of ₹1.05 cr under Section 35 (1)(ii) of the Income Tax Act, 1961 being 150% of deduction made to specified scientific research institution. On perusal of the records, the Assessing Officer observed that the assessee had claimed to have donated a sum of ₹70,00,000/- to Shri Arvindo Institute of Applied Science and Research Institute Trust.
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It was observed by the Assessing Officer that the said trust was found to have indulged in large scale scam of issuing bogus donation received for the purpose of claiming weighted deduction under Section 35(1)(ii) of the Act and many assessees had benefited by claiming such bogus donation through this scam.
The Central Board of Direct Taxes (CBDT) had issued an advisory regarding this scam and directed the concerned officers to make necessary enquiries in such cases. On the basis of these facts, the Assessing Officer denied the weighted deduction of ₹1,05,00,000/- claimed by the assessee.
On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] observed that Shri Arvindo Institute of Applied Science and Research Institute did not have requisite registration under Section 35(1)(ii) of the Income Tax Act, 1961 and hence, the claim of weighted deduction under Section 35(1)(ii) was prima facie inadmissible.
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He also observed that from an advisory issued by the CBDT it is an undeniable fact that the said trust Shri Arvindo Institute of Applied Science and Research Institute did not carry any valid registration or approval required under law to receive donation from the public and therefore, the donation claimed to have been made by the assessee is not eligible for claiming weighted deduction.
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The CIT(A) also observed that the research institute was involved in a large scam running into hundreds of crores and the trustees of the aforesaid trust were certain individuals operating out of Ahmedabad. A complaint had been filed with the Economic Offences Wing (EOW) of the Police Department and some of the key persons of this trust had also been arrested. Accordingly, the action of the assessing officer was upheld by the CIT(A).
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The bench comprising BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) at the outset placed reliance on the judgment in Devyani Dilip Patel (2016) wherein deduction under Section 35(1)(ii) of the Act, 1961 was disallowed to the assessee in view of the bogus donation scam of the trust. Further reliance was also placed on the judgment in C K Zipper Private Limited (2023) wherein ITAT Ahmedabad also disallowed the claim of weighted deduction under Section 35(1)(ii) of the Act,1961 to Arvindo Institute of Applied Science and Research Institute on the ground that at the time of grant of registration, it did not have a valid registration.
Thus, the bench, in view of the above decisions, upheld the order of the CIT(A) that the assessee was not eligible for claiming deduction under Section 35(1)(ii) of the Act. Hence, the appeal was dismissed.
To Read the full text of the Order CLICK HERE
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