The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) quashed the rejection order of the Commissioner of Income Tax (Exemption) [CIT(E)] citing that the order lacked specific details of violation of the Foreign Contribution Regulation Act (FCRA) 2010.
Alliance Francaise De Jaipur (assessee) is a society, that filed an application in Form 10AB seeking registration for a status of charitable organisation/ institution under section 12AB of the Income Tax Act, 1961.
The Commissioner of Income Tax (Exemption) [CIT(E)] rejected the application on several grounds. The CIT(E) rejected the application on the ground that the society violated the provisions of Foreign Contribution Regulation Act. The CIT(E) observed that the assessee received a donation from the French Embassy in Delhi.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee filed an appeal before the ITAT. The Counsel for the assessee submitted that the CIT(E)’s order did not highlight the specific violation of the Foreign Contribution Regulation Act. The counsel also contended that the furniture and other assets were used in the Jaipur Office by the assessee.
The counsel also submitted that the assets were used ever since from incorporation of the society. The counsel further submitted that the assets were not shown as donations neither in the book of accounts nor in the Income Tax Return (ITR).
The counsel for the revenue did not dispute the contention of the assessee’s counsel that the CIT(E) was not referring to specific provisions for alleged violations in the Foreign Contribution Regulation Act.
The two-member tribunal bench comprising Narinder Kumar (Judicial Member) and Gagan Goyal (Accountant Member) heard the arguments of the assessee and the revenue. The tribunal observed that the contention of the assessee’s counsel was not specified in the CIT(E)’s order.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The tribunal also observed that the assets were not shown as donations in the book of accounts and also in the Income Tax Return. The tribunal also observed that the CIT(E) was required to specify provision for violation in the order.
The tribunal observed that the absence of specification of relevant provision for violation cannot be said the CIT(E) rejected the application on valid grounds.
Therefore, the tribunal set aside the order of the CIT(E) and held that the ground for rejection cannot be taken for consideration. Thereby, the appeal of the assessee was allowed for statistical purposes.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
