9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 501 - AT - Income TaxRectification u/s 254(2) - excessive salary to the Secretary of the society - Argument in MA that FCRA guidelines do not apply to our Society and no specification of Rules to utilized only 50% of the foreign contribution to meet administrative expenses and decision of the Hon ble Supreme Court is not applicable, - HELD THAT - As per the Charter for Associations who have been granted registration or prior permission under FCRA, 2010, it has been clearly stated that Not more than 50% of the foreign contribution shall be defrayed to meet administrative expenses of the Association . In this case, the point is 10% of the amount earmarked for charitable purposes was given to Shri M. Krishna Kumar as salary, who is the Secretary in excess of what may be reasonably paid for such services as defined in section 13(2)(c). Considering the qualification, experience, etc. the CIT(A) allowed 50% of the disallowance of salary paid to the Secretary, which was confirmed by the Tribunal. Thus, we find no mistake apparent on the face of the order passed by the Tribunal. Therefore, the petition filed by the assessee stands dismissed. The administrative expenses work out to 95.4% which is a clear violation of Foreign Contribution Regulation Rules 2011, wherein it is defined that not more than 50% of the foreign contribution shall be defrayed to meet administrative expenses of the Association , which was repeated in Tribunal order at page 6 para 6, which is a rectifiable mistake. Accordingly, we replace the sentence with same terminologies that The above claim of the assessee is a clear violation as per the Charter for Associations, who have been granted Registration or prior permission under FCRA,2010 that not more than 50% of the foreign contribution shall be defrayed to meet administrative expenses of the Association . Not more than 50% of the foreign contribution shall be defrayed to meet administrative expenses of the association. What constitutes administrative expenses has been defined in Rule 5 of the Foreign Contribution (Regulation) Rules, 2011 (FCRR, 2011). Once these facts are not in dispute, we are of the considered opinion that the Tribunal has rightly followed the decision of the Hon ble Supreme Court in the case of Maddi Venkatraman and Co. Pvt. Ltd. 1997 (12) TMI 3 - SUPREME COURT to reverse the findings of the ld. CIT(A) and restore that of the Assessing Officer. Thus, the petition filed by the assessee is partly allowed.
Issues:
1. Rectification of consolidated order passed by the Tribunal dated 08.10.2018 in I.T.A. No.09/Chny/2017 and I.T.A. No. 36/Chny/2017. 2. Excess salary payment to the Secretary of the society in terms of section 13(2)(c) of the Act. 3. Interpretation and application of Foreign Contribution (Regulation) Rules 2011 regarding administrative expenses of the association. Issue 1: Rectification of Consolidated Order: The assessee sought rectification of the consolidated order passed by the Tribunal, which was dismissed as there was no mistake apparent on record warranting rectification under section 254(2) of the Act. The Tribunal adjudicated the cases raised in both the appeals filed by the assessee and Revenue, emphasizing that rectification would amount to a review of the order, not permissible under the Act. Issue 2: Excess Salary Payment to Secretary: Regarding the excess salary paid to the Secretary of the society, the Tribunal upheld the decision of the ld. CIT(A) to allow 50% of the disallowance of salary paid to the Secretary. The Tribunal found no reason to interfere with this decision as it was not disputed by the Department. The Assessing Officer's concern about the charity aspect and compliance with FCRA Rules 2011 were addressed, leading to the dismissal of the assessee's petition. Issue 3: Interpretation of FCRA Rules 2011 on Administrative Expenses: In the matter of the appeal filed by the Revenue, it was argued that the FCRA Rules 2011 do not apply to the Society, and there was a mistake apparent in the Tribunal's order. The Tribunal acknowledged an oversight in mentioning administrative expenses as 95.4%, which was corrected to not more than 50% as per FCRA Rules 2011. The Tribunal followed the decision of the Hon'ble Supreme Court to reverse the findings of the ld. CIT(A) and restore that of the Assessing Officer, partly allowing the petition filed by the assessee. In conclusion, the Tribunal dismissed M.P. No. 221/Chny/2018 and partly allowed M.P. No. 222/Chny/2018, emphasizing the adherence to statutory provisions and legal precedents in determining the issues raised in the appeals.
|
