High Court Of Calcutta
CIT vs. Ethelbari Tea Co. (1932) Ltd.
Section 35CCA
Tarun Chatterjee & S.N. Bhattacharjee, JJ.
IT Appeal No. 130 of 2000
21st June, 2000
Counsel Appeared : Agarwal, for the Revenue : Dutta, for the Assessee
JUDGMENT
BY THE COURT :
This rule has been obtained by the Revenue Department by raising the following question :
“Whether, on the facts and circumstances of the case, the learned Tribunal was justified in law in holding that the assessee’s claim under s. 35CCA of the IT Act, 1961 is allowable even though the approval of the society had been withdrawn with retrospective effect?”
2. We have heard Mr. Agarwal, learned counsel appearing on behalf of the Department and Mr. Dutta, learned counsel appearing for the assessee. In this case, only question that is raised is whether the assessee would be entitled under s. 35CCA of the IT Act, 1961, deduction of incometax—even though the approval of the society had been withdrawn with retrospective effect. In support of this contention, Mr. Agarwal relies on a Division Bench decision of this Court in the case of CIT vs. Bankam Investment Ltd. (1994) 121 CTR (Cal) 122 : (1994) 208 ITR 208 (Cal) : TC 15R.603. It is true that in that case, it was held that when the State Level Committee had wiithdrawn the approval of the society with retrospective effect from 30th Dec., 1982, the petitioner was not entitled to any deduction under s. 35CCA of the IT Act, 1961. In view of a decision of the Supreme Court in the case of State of Maharashtra vs. Suresh Trading Co. 109 STC 439 (SC) we are unable to apply the principles laid down by the aforesaid Division Bench of this Court. In the aforesaid decision of the Supreme Court, it was held that a purchasing dealer was entitled by law to rely upon certificate of registration of the selling dealer and to act upon it. The Supreme Court further held that whatever might be the effect of a retrospective cancellation upon the selling dealer, it could have no effect upon any person who had acted upon the strength of a registration certificate when the registration was current. The Supreme Court in that decision also observed that it was not the duty of persons dealing with registered dealers to find out whether a state of facts existed which would justify the cancellation of their registration. In this case, we are of the view that the aforesaid principle laid down by the Supreme Court in the aforesaid decision would be squarely applicable. Admittedly, on the date the payment was made, the society was very much in existence. It is also an admitted fact, subsequent to that the registration was withdrawn. In view of the aforesaid decision of the Supreme Court, we have no hesitation to hold that the writ petitioner was, entitled to deduction as given by the Tribunal. Therefore, there is no merit in this rule. Rule is accordingly discharged. There will be no order as to costs.
[Citation : 256 ITR 470]
