The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that examination of Memorandum of Association would clarify the services in lieu of consideration and so the amount was in the nature of fee and not donations. Thus restored the matter to the files of Commissioner of Income Tax (Exemption) [CIT (E)] for examination.
The assessee Global Research Forum on Diaspora and Transnationalism has claimed to the Consortium of researchers and policymakers drawn from national and international universities, institutes and organizations. It is registered in India with members and partners spread across various countries.
The assessee applied for registration under Section 12A(1)(ac)(iii) of the Income Tax Act,1961 and CIT(E) has sought certain information and based upon the replies, has rejected the application primarily for the reason that the receipt of Rs. 9,500/- GBP (equivalent Rs. 12,57,005/-) from Queen Mary University of London against the project of “Migration, Pandemic and Responses from the Third Sector: Lessons from Brazil and India” was considered to be a donation and as assessee admittedly did not have registration under Foreign Contribution Regulation Act, 2010 (FCRA ), there were breach of provisions of said act.
Aggrieved by the order the assessee filed an appeal before the Tribunal. The Authorised Representative (AR) of the assessee Sudhir Kumar Dash submitted that the CIT (E) had directed assessee to file original and certified copy of Memorandum of Association as the one filed was not found to be updated and every page not sealed, accordingly, assessee had applied for reissue of the certified copy of the Memorandum of Association.
The AR further submitted that it is submitted that as some amendments were pending for approval from the office of Registrar of Societies, the certified copy of amended Memorandum of Association could not be filed.
It was contented that CIT (E) has fallen in error in treating the receipt from Queen Mary University of London to be in violation of FCRA and otherwise the business receipt, which is rather amount received against the project for ‘Migration, Pandemic and Responses from the Third Sector: lessons from Brazil and India’ and is not a donation or contribution for the purpose of Section 2(1)(h) of FCRA .
The counsel submitted that the accounting classification of service income as general donation/ contribution has created confusion and the receipt was in the nature of service income and not in form of donation.
The Departmental Representative (DR) Vivek Kumar Upadhyay, supported the findings of CIT (A).
The Bench comprising of N.K.Billaiya, Accountant Member and Anubhav Sharma, Judicial Member observed that CIT (E) gave the conclusive findings by observing that assessee has failed to file details / information required by the notices to verify the genuineness of the activities and the compliances of any other law being FCRA 2010 the conditions for grant of registration in the case is not satisfied.
The Tribunal stated that the question as to if the amount received from Queen Mary University of London was in the forum of donation or receipt against services is also connected with the examination of Memorandum of Association.It further added that mere mention of the amount in books as donation cannot be basis to prejudice the rights of assessee.
Thus the Bench ordered re-adjudication of the matter and therefore restored the matter to the files of CIT (E) for examination of the issues and to give an opportunity to the assessee to place on record amended Memorandum of Association or any other information as the authority thinks fit.
The appeal of the assessee is allowed for statistical purposes.
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