ACIT (E), CIRCLE- 1(1), New Delhi V. Indo French Centre for the Promotion of Advanced Research, New Delhi

ITA 7324/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0172 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 07-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI K.N. CHARY, JUDICIAL MEMBE R ITA NO. 7324/DEL/2017 [A.Y 2014-15] THE A.C.I.T[E]. VS. INDO FRENCH CENTRE FOR PROM OTION CIRCLE 1(1) OF ADVANCED RESEARCH NEW DELHI 5-B, GROUND FLOOR, INDIAN HABITAT CENTRE, LODHI ROAD, NEW DELHI PAN: AAATI 0155 Q [APPELLANT] [RESP ONDENT] ASSESSEE BY : SHRI PRAVIN GUPTA, CA REVENUE BY : MS. ANIMA, SR. DR DATE OF HEARING : 20.07.2021 DATE OF PRONOUNCEMENT : 20.07.2021 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-40, DELHI DATED 22.09.2017 PERTAINING TO A. Y 2014-15 . 2 2. THE GRIEVANCES OF THE REVENUE READ AS UNDER: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT IN T HIS CASE, TRANSACTION OF FOREIGN CONTRIBUTION WAS NOT TRANS ACTED AS PER THE DIRECTIVE OF THE M/O HOME AFFAIRS DATED 02.01.2 014 ISSUED TO THE ASSESSEE UNDER FCRA RULES. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT T HAT FOREIGN CONTRIBUTION WAS NOT BETWEEN THE GOVT, OF INDIA AND THE GOVT, OF FRANCE, BUT IT WAS BETWEEN THE GOVT, OF FRANCE A ND THE ASSESSEE. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT T HAT IN THE CASE OF THE ASSESSEE A COMPULSORY AUDIT BY THE C & AG WAS NOT REQUIRED. 4) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTI ON U/S 11 & 12 OF THE INCOME TAX ACT, TO THE ASSESSEE. 5) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS 'THE ACT'] VIDE REGISTRATION NO. DIT(E)/2004- 05/I-993/03/168 DATED 12.05.2004.THE BASIC AIMS AND OBJECTS OF THE ASSESSEE, INTER ALIA, ARE: (I) TO PROMOTE COOPERATION BETWEEN INDIA AND FRANCE IN ADVANCED AREAS OF FUNDAMENTAL AND APPLIED SCIENTIFI C RESEARCH. THESE FIELDS WILL BE IDENTIFIED PERIODICALLY TAKING INTO ACCOUNT ADVANCEMENTS IN DISCIPLINES OF SCIENCE. (II) TO DEVELOP COOPERATION BY IDENTIFYING SCIENTIS TS AND SCIENTIFIC INSTITUTIONS OF THE TWO COUNTRIES LIKELY TO COOPERATE IN A PROFITABLE WAY IN THE FIELDS CHOSEN BY MUTUAL AGR EEMENT. (III) TO PROVIDE ASSISTANCE IN THE FORM OF GRANTS A ND EQUIPMENT AS WELL AS OTHER APPROPRIATE MEANS OF RTE PURSUIT O F ADVANCED SCIENTIFIC RESEARCH. 4 4. THE ASSESSEE TRUST HAD BEEN NOTIFIED U/S 11(1)(C ) OF THE ACT BY CBDT VIDE NOTIFICATION DATED 08.02.2016, FOR THE F. YS 2009-10 TO 2012- 13. IN THE F.Y. 2013- 14, PERTAINING TO A.Y. 2014-1 5, THE ASSESSEE HAS NOT BEEN NOTIFIED BY THE CBDT U/S 11(1)(C) OF THE A CT. 5. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTICED FROM THE INCOME AND EXPEN DITURE ACCOUNT THAT THE ASSESSEE HAS CLAIMED EXPENSES OF 17,71,551 EUROS I.E. RS. 12,32,00,388/- INCURRED IN FOREIGN CURRENCY OUTSIDE INDIA AND THE ASSESSING OFFICER FOUND FROM THE DOCUMENTS SUBMITTE D DURING THE SCRUTINY ASSESSMENT THAT THE ASSESSEE WAS NOT NOTIF IED BY THE CBDT U/S 11(1)(C) OF THE ACT FOR THE A.Y UNDER CONSIDERATION . THE ASSESSING OFFICER, ACCORDINGLY, MADE DISALLOWANCE OF RS. 12.3 2 CRORES. 6. PROCEEDING FURTHER, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS RECEIVED FOREIGN CONTRIBUTION FROM THE GOVERNMENT OF FRANCE AMOUNTING TO. 18,23,738.51 EUROS I.E RS. 12, 68,29,706/-. THE ASSESSEE CLAIMED THAT THE TRANSACTION IS COVERED UN DER CLAUSE 51 OF FCRA, 2010. THIS CLAIM OF THE ASSESSEE WAS DISMISS ED BY THE ASSESSING OFFICER WHO WAS OF THE OPINION THAT THE SAID CLAUSE 51 OF FCRA, 2010 SPEAKS OF TRANSACTIONS BETWEEN TWO GOVERNMENTS ONLY . 5 7. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE GOVERNMENT OF INDIA, VIDE ORDER DATED 01.07.2011, THROUGH S.O. 14 92 STATED THAT ONLY THOSE CENTRAL GOVERNMENT OR STATE GOVERNMENT ORGANI ZATIONS CONSTITUTED UNDER THE COMPTROLLER AND AUDITOR GENER AL OF INDIA ARE OUTSIDE THE PURVIEW OF FCRA AND THE ASSESSEE IS NEI THER A TRUST/INSTITUTION CONSTITUTED UNDER A CENTRAL ACT O R STATE ACT, NOR ITS ACCOUNTS ARE AUDITED BY THE C&AG. SINCE THE ASSESS EE DID NOT REGISTER ITSELF WITH FCRA NOR FILED RETURN, THE ASSESSING OF FICER WAS OF THE OPINION THAT THE ASSESSEE HAS VIOLATED THE PROVISIO NS OF FCRA IN RESPECT OF FOREIGN CONTRIBUTION OF RS. 12.68 CRORES AND ACC ORDINGLY, MADE ADDITION OF THE SAME. 8. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED ITS CLAIM. 9. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE LD. CIT(A) HELD AS UNDER: 4.1.1 I HAVE CONSIDERED THE ASSESSMENT ORDER AND SU BMISSIONS MADE BY THE APPELLANT. THIS ADDITION HAD BEEN MADE DURIN G THE ASSESSMENT SINCE THE ORDER OF THE BOARD AS PER THE PROVISO TO SECTION LL(L)(C) HAD NOT BEEN RECEIVED. SUBSEQUENTL Y, THE SAID ORDER HAS BEEN ISSUED VIDE F. NO. 180/08/2016-ITA-I DATED 13.01.2017, 6 RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 'IN EXERCISE OF THE POWERS CONFERRED BY PROVISO TO CLAUSE (C) OF SUB-SECTION (I) OF SECTION 11 OF THE INCOME-TAX ACT , 1961 (43 OF 1961), THE CENTRAL BOARD OF DIRECT TAXES HEREBY DIR ECTS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER THE TRUST K NOWN AS 'INDO-FRENCH CENTRE FOR PROMOTION OF ADVANCED RESEA RCH', NEW DELHI SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSON IN RECEIPT OF SUCH INCOME AS IS APPLIED OUTSIDE INDIA FOR CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFAR E IN WHICH INDIA IS INTERESTED TO THE EXTENT AS PROVIDED BELOW : THIS ORDER SHALL HAVE EFFECT FOR THE PERIOD COVERED BY ASSESSMENT YEARS 2014-15 TO 2015-16.' 4.1.2 SINCE THE ORDER OF THE BOARD AS REQUIRED BY T HE PROVISO TO SECTION LL(L)(C) HAS BEEN ISSUED FOR THE AMOUNT OF RS. 12,32,00,428/- FOR ASSESSMENT YEAR 2014-15, THIS AM OUNT IS ALLOWED AS APPLICATION OF INCOME OUTSIDE INDIA. TH IS GROUND OF APPEAL IS ALLOWED. S.N O ASSESSMENT YEARS EXPENDITURE INCURRED OUTSIDE INDIA FOR THE PURPOSE OF INTERNATIONAL WELFARE (IN RS.) 1) 2014 - 15 12,32,00,428 2) 2015 - 16 12,80,46,948 TOTAL 25,12,47,376 7 10. A BARE PERUSAL OF THE AFORESAID FINDINGS OF THE LD. CIT(A) SHOW THAT ABSENCE OF ORDER OF THE BOARD QUESTIONED BY TH E ASSESSING OFFICER HAS BEEN FOUND SUBSEQUENTLY AT THE APPELLATE STAGE WHICH PROMPTED THE LD. CIT(A) TO DELETE THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER. SINCE THE ORDER IS NOW AVAILABLE, WE DO N OT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THI S GROUND IS, ACCORDINGLY, DISMISSED. 11. NEXT GRIEVANCE RELATES TO DENIAL OF APPLICA TION OF INCOME AMOUNTING TO RS. 12.68 CRORES. 13. THE LD. CIT(A) HELD AS UNDER: I HAVE CONSIDERED THE ASSESSMENT ORDER AND SUBMISS IONS MADE BY THE APPELLANT. I HAVE ALSO REFERRED TO THE ORDER OF MY ID. PREDECESSOR CIT(A)-XXI IN THE APPELLANT'S CASE FOR ASSESSMENT YEAR 2010-11 IN APPEAL NO. 97/2013-14 AN D THE ORDER OF THE HON'BLE ITAT DELHI, BENCH 'C' IN ITA NO.2802/DEL/2014 FOR ASSESSMENT YEAR 2010-11 WHEREI N APPEAL OF THE REVENUE ON THE SAID ISSUE HAS BEEN DISMISSED . MY ID. PREDECESSOR, ON THE SAID ISSUE, HELD AS UNDER: 8 '4.3 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN TH E SUBMISSIONS OF THE ASSESSEE THAT THE PROVISIONS OF FCRA IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE VIDE CLAUSE-51 AND THE SAM E HAS BEEN CLARIFIED BY THE GOVERNMENT OF INDIA, MINISTRY OF H OME AFFAIRS IN THE LETTER DATED 2/1/2014 AND AS SUCH THE AO IS NOT JUSTIFIED TO MAKE THE ADDITION AND ACCORDINGLY THE SAME IS DELET ED.' 4.2.2 THE HON'BLE IT AT IN APPELLANT'S OWN CASE FOR ASSES SMENT YEAR 2010-11 (SUPRA) WHILE DECIDING '.HE APPEAL OF REVENUE THE SAID ISSUE HELD AS UNDER: 9 A0 MADE DISALLOWANCE OF RS.9,45,28,000/- ON THE GROUND THAT SINCE THE ASSESSEE SOCIETY HAS RECEIVED FOREIGN CON TRIBUTION FROM GOVERNMENT OF FRANCE WITHIN THE MEANING OF SECTION 2(1)(J) OF FCRA WITHOUT FILING RETURN QUA THESE CONTRIBUTIONS IN FC-3 TO MINISTRY OF HOME AFFAIRS AS PER FCRA. 10. UNDISPUTEDLY, THE ASSESSEE SOCIETY IS REGISTERE D UNDER SOCIETIES REGISTRATION ACT, 1860 AS A JOINT VENTURE OF GOVERNMENT OF INDIA AND GOVERNMENT OF FRANCE WITH AN OBJECT TO PROMOTE SCIENTIFIC RESEARCH IN BOTH THE COUNTRIES. THE ID. DR FOR THE REVENUE VEHEMENTLY CONTENDED THAT SINCE THE A SESSEE SOCIETY IS NOT A GOVERNMENT SOCIETY, THE ID. CIT (A) HAS GROSS LY ERRED IN DELETING THIS ADDITION IN TREATING THE ASSESSEE SOCIETY AS A GOVERNMENT SOCIETY. HOWEVER, WE ARE OF THE CONSIDER ED VIEW THAT WHEN THE ASSESSEE SOCIETY IS A REGISTERED SOCIETY U NDER THE 9 SOCIETIES REGISTRATION ACT ESTABLISHED AS A JOINT VENTURE WITH AN OBJECT TO PROMOTE SCIENTIFIC RESEARCH OF BOTH THE C OUNTRIES AND THE ENTIRE FUNDS ARE CONTRIBUTED BY GOVERNMENT OF INDIA AND GOVERNMENT OF FRANCE, THE SAME IS AN INSTRUMENTALITY OF THE GOVERNMENT OF INDIA. 10. THE ID. AR FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS A LETTER, AVAILABLE AT PAGE 44 OF THE PAPER BOOK, ADDRESSED TO THE ASSESSEE'S SOCIETY BY THE MINISTRY OF HOME AFFAIRS EXPLAINING THE TRANSACTIONS NOT ATTRACTING PROVISIONS OF FCRA. FOR FACILITY OF REFERENCE, LETTER (SUPRA) IS REPRODUCED AS UNDER :- 'NO ........................................... GOVERNMENT OF INDIA/BHARAT SARKAR MINISTRY OF HOME AFFAIRS/GRILL MANTRALAYA 1ST FLOOR, NDCC-1I BUILDING, JAI SINGH ROAD, OFF. PARLIAMENT STREET, NEAR JANTAR MANDIR, NEW DELHI - 110 001, DATE : 2.01.2014 TO DR. DEBAPRIYA DUTTA, DIRECTOR, , 5B, GROUND FLOOR, INDIA HABITAT CENTRE, LODHI ROAD, NEW DELHI - 110003. SUBJECT: PERMISSION UNDER FOREIGN (REGULATION) ACT, 2010 SIR, I AM DIRECTED TO REFER TO YOUR LETTER DATED 18 SEPT 2013 ON THE SUBJECT MENTIONED ABOVE AND TO STATE THAT FOREI GN CONTRIBUTION (REGULATION) ACT, 2010 DOES NOT ATTRAC T IN RESPECT OF THE FOLLOWING TRANSACTIONS 10 A) TRANSACTION BETWEEN THE GOVT, OF INDIA AND THE G OVT, OF ANY FOREIGN COUNTRY OR TERRITORY - CLAUSE 51 OF FCRA 20 10. B) BODIES CONSTITUTED OR ESTABLISHED BY OR UNDER A CENTRAL ACT OR A STATE ACT REQUIRING COMPULSORY AUDITING BY C&A G NOTIFICATION NO.S.0.1492(E) DATED 1 JULY, 2011. IN VIEW OF ABOVE, IT IS REQUIRED TO EXAMINE THE SUB JECT PROPOSAL. IF THE FOREIGN CONTRIBUTION RECEIVING BODY COMES WITHI N THE PURVIEW OF ABOVE PROVISION. IF NOT, THEN APPLY ONLINE IN FC -4 THROUGH THIS MINISTRY'S WEBSITE I.E. WWW.MHA.NIC.IN . YOURS FAITHFULLY, SD/- (GOPAL JHA) UNDER SECRETARY TO THE GOVT, OF INDIA 12. BARE PERUSAL OF THE LETTER (SUPRA) GOES TO PROV E THAT WHEN A TRANSACTION IS BETWEEN GOVERNMENT OF INDIA AND GOVE RNMENT OF ANY FOREIGN COUNTRY OR TERRITORY, FCRA IS NOT ATTRACTED . WHEN UNDISPUTEDLY, THE TRANSACTION OF RS.9,45,28,000/- I S A GRANT GIVEN BY FRENCH GOVERNMENT TO THE ASSESSEE SOCIETY WHICH IS A JOINT VENTURE OF FRENCH GOVERNMENT AND GOVERNMENT OF INDI A, THE TRANSACTION OF TRANSFERRING THE GRANTS IS A TRANSAC TION BETWEEN BOTH THE COUNTRIES AS SPECIFIED IN THE LETTER (SUPR A). FURTHERMORE, VIDE LETTER DATED 08.06.1985, AVAILABLE AT PAGE 28 OF THE PAPER BOOK, ADDRESSED TO SECRETARY GENERAL, MINISTRY OF E XTERNAL RELATIONS, GOVERNMENT OF FRANCE BY SHRI RAMESH BHAN DARI, THE THEN FOREIGN SECRETARY, IT IS CATEGORICALLY MADE CL EAR THAT, 'THE ASSESSEE SOCIETY ESTABLISHED FOR PROMOTION OF SCIEN TIFIC RESEARCH ETC. WILL BE EXEMPT FROM PAYMENT OF INCOME-TAX. SO , M THESE 11 CIRCUMSTANCES, WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY ID. CIT (A). CONSEQUENTLY, GROUND NO.3 OF ORIGINAL GROUNDS AND GROUNDS NO.2 & 5 OF ADDITIONAL GROUNDS ARE DETERMINED AGAINST THE REVENUE.' 4.2.3 SINCE THE FACTS OF THE CASE FOR THE CURRENT YEAR A RE THE SAME AS THOSE FOR ASSESSMENT YEAR 2010-11, RESPECTF ULLY FOLLOWING THE ORDER OF THE HON'BLE ITAT IN THE APPEAL FOR ASS ESSMENT YEAR 2010-11, THE ADDITION IS DELETED. GROUND OF APPEAL NO. 3 IS ALLOWED. 14. SINCE THE FIRST APPELLATE AUTHORITY HAS FOLLOWE D THE ORDER OF THIS TRIBUNAL [SUPRA], WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THIS GROUND IS ALSO DISMISSED. 15. IN THE RESULT THE APPEAL OF THE REVENUE IN ITA NO. 7324/DEL/2017 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT IN THE PR ESENCE OF BOTH THE RIVAL REPRESENTATIVE ON 20.07.2021. SD/- SD/- [ K.N. CHARY ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20 TH JULY, 2021 12 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION ATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER