Gujarat HC allows Expenses incurred on a Donation made through Banking Channel used for Scientific Research [Read Judgment]

The Gujarat High Court has allowed expenses incurred on donations made through Banking Channel for Scientific Research Purpose.

The assessee M/s Thakkar Govindbhai Ganpatlal HUF had filed its return of income on 9.9.2014 declaring total income at Rs.31,23,870/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer(AO) that the assessee has claimed deduction under section 35(1)(ii) at Rs.96,25,000/- on the ground that it has expenses incurred towards the donation.

The Assessing Officer(AO) observed that donations were given to Herbicure Health Care Bio-herbal Research Foundation. According to the Assessing Officer(AO), a survey under section 133A was conducted by the DDIT(Investigation) at the “Herbicure” foundation. During the course of the survey, it was found that donors/ beneficiaries in connivance with donee and with the active help of certain brokers, entry operators/bogus billers were engaged in arranging these entries of bogus donation. According to the Assessing Officer(AO) after an inquiry, “Herbicure” was prohibited from receiving donations. On the strength of this report of the survey team, the Assessing Officer(AO)has treated this donation as bogus and disallowed the claim of donation made by the assessee. On appeal, the Commissioner of Income Tax (Appeals) had deleted the disallowance.

The division bench comprising of Justice J.B. Pardiwala and Justice Bhargav D. Karia while upholding the judgment of the lower appellate authorities remarked that “the facts of the present case, the CIT(Appeals) has given the finding of the fact that the amount of donation was transferred to the Herbicure through Bank channel and there is no evidence that the same is returned back in cash. It is also found that the Herbicure Foundation has confirmed that the amount has been utilized for scientific research vide confirmation dated 29.09.2016. Accordingly, the onus placed upon the assessee was discharged.”