- (1.) The petitioner is a society registered under the West Bengal Societies Registration Act, 1961 with an object to promote advancement of Chemical Engineering Science, to carry out and support Scientific Research and to disseminate education and knowledge in the field of Chemical Engineering. Section 35 (1) (ii) of the Income Tax Act, 1961 allows the deduction in respect of expenditure on Scientific Research to a Research Association or to a University, College or other Institution provided they are approved in accordance with the guidelines as may be prescribed and notified in the Official Gazette by the Central Government. It is not in dispute that since its incorporation, the petitioner was recognized under the aforesaid provisions till 31st March, 2005 in the category of University, College or other Institution partly engaged in Scientific Activity. The petitioner applied for renewal of the said exemption on 27th January, 2005.
(2.) Undisputedly, the department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India accorded renewal of the recognition to the petitioner under the scheme on recognition of Scientific and Industrial Research Organization, 1988 from 1st May, 2005 to 31st March, 2008. The said authority further granted registration for the purpose of availing custom duty s exemption in terms of various notifications and circulars and validity of such registration was indicated up to 31st March, 2014. A show cause notice dated 1st April, 2008 was issued on the petitioner by the Department of Revenue, Ministry of Finance, Government of India through under Secretary ( ITA. II) as to why an application should not be rejected. The petitioner submitted the reply to the said issuing authority. Since no response was made, the petitioner requested for early disposal of the said application. Subsequently by letter dated 20th August, 2009, the petitioner was informed that the prescribed authority did not find any ground to grant approval for exemption under Section 35 (1) (ii) of the Income Tax Act, 1961 and had rejected the said application. The said order is challenged by the petitioner before this Court in W.P. No. 7193 (w) of 2012 on various points including a point that the Central Board of Direct Taxes is not the competent authority under the aforesaid section. The said section postulates that the Central Government is only competent to grant permission. The Court allowed the said writ petition holding that the CBDT is not the Central Government for the purpose of said section and directed the application to be heard afresh. The said order was carried in Intra Court Appeal ( MAT 795 of 2013). The said appeal stood partly allowed on 28 November, 2013 deleting the observation wherein it was held that the CBDT is not the Central Government and permitted the petitioner to agitate the said point before the authority which may propose to hear the writ petition on the subject.
(3.) In the meantime, an assessment came to be made under Section 143 (3) of the said Act for the assessment year 2009-2010 raising a demand of Rs. 32, 23,096/-. Since the amount was not paid, a garnishee proceeding was initiated under Section 226 of the said Act by attaching the bank account of the petitioner and collecting the same therefrom. Since the exemption used to be granted for three years, the petitioner made two applications seeking renewal of the exemption under Section 35 (1) (ii) of the said Act for the Year 2008-2011 and 2011-2014. On an application made for the Year 2011-2014, a letter was issued on 26th February, 2013 by the Deputy Secretary to Government of India, Department of Revenue, Ministry of Finance, Central Board of Direct Taxes for submission of various documents and to avail an opportunity of hearing on the date so fixed. The petitioner once again raised objection as to the competence of the Member IT, CBDT and CAT (ITA) as they cannot be said to be Central Government. By letter dated 21st March, 2013 issued by the Deputy Secretary to the Government of India, Department of Revenue (CBDT), Ministry of Finance, the application for renewal filed by the petitioner was communicated to have been dismissed by the competent authority.;