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TMI Blog2023 (11) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Disallowance of amount paid to FCRA - penalty was paid for violation of provision of Foreign Contribution (Regulation) Act, 2010 - addition made as expenses were incurred by way of penalty for breach of law which cannot be considered as incurred wholly and exclusively for the purpose of business - HELD THAT:- Assessee vehemently submitted that such expenses were incurred wholly and exclusively for the purpose of regularization of foreign remittance. To support his submission, assessee relied upon the decision of Master Capital Services Ltd. [ 2007 (2) TMI 241 - ITAT CHANDIGARH-A ] wherein it was held that wherein some violation of conditions prescribed by National Stock Exchange but such violation occurred in the regular course of business which cannot be considered as infringement of any statutory law, so the expenses incurred by the assessee in regular course of business were allowable.We do not find that the assessee has incurred expenses for regularization of foreign remittance, thus the same is allowed for the purpose of business. In the result, ground No. 2 of the appeal is allowed. Addition on account of foreign contribution - AO made addition by taking a vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 25/05/2022 for the Assessment Year (AY) 2014-15. The assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case as well in law, the learned CIT(Appeals) has erred in confirming the AO s action in not allowing the statutory deduction u/s 24(a) of the Act claimed for the amount of Rs. 1,09,069/- for the rent income earned from the properties of the trust and hence, not justified. 2. On the facts and in the circumstances of the case as well in law, the learned CIT(Appeals) has erred in confirming the AO s action in making disallowance of Rs. 2,86,530/- being the penalty compensatory in nature under the FCRA and hence, not justified. 3. On the facts and in the circumstances of the case as well in law, the learned CIT(Appeals) has erred in confirming the AO s action in making the addition of Rs. 18,96,725/- on account of the voluntary contributions of the donors mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Section is gross receipt and its application, thus not entitled for standard deduction under Section 24(a) of the Act. On appeal before the ld. CIT(A), the action of Assessing Officer was confirmed. The ld. CIT(A) while confirming the action of Assessing Officer, following the decision of Mumbai Tribunal in the case of Nandlal Tolani Charitable Vs ITO(E) ITA No. 106/Mum/2016. Further aggrieved, the assessee is in appeal before the Tribunal. 3. I have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Commissioner of Income Tax- Departmental Representative (ld. CIT-DR) for the revenue. The ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee by the decision of Mumbai Benches of Tribunal in case of ADIT(E)(2) Vs Sri Sathya Sai Trust in ITA No. 7350/Mum/2011 order dated 25/03/2013. 4. On the other hand, the ld. CIT-DR for the revenue submits that the ld. CIT(A) relied upon the latest decision of Mumbai Tribunal in Nandlal Tolani Charitable Vs ITO(E) (supra) wherein the general provisions vis a vis, the special provision for trust prescribed under Sections 11, 12 and 13 were examined an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued show cause notice as to why penalty expenses should not be disallowed which was levied for the acceptance of foreign donations. The assessee filed its reply dated 26/12/2016 and explained that such penalty was levied on acceptance of foreign donation. Such donation was received in earlier years for building fund. Such expenses were claimed as educational expenses i.e. capital in nature. Reply of assessee was not accepted by the Assessing Officer by taking a view that such penalty was levied by the Ministry of Foreign Affairs, FCRA Division, New Delhi for infringement of law and same cannot be said to have been incurred for object of trust and thus not allowable. The penalty was paid for violation of Foreign Contribution (Regulation) Act and cannot be claimed as income for object of trust. Before the ld. CIT(A), the assessee made similar submission that the expenses incurred for payment of penalty is allowable expenses which are not penal in nature. The ld CIT(A) upheld the order of assessing officer by taking view that penalty was levied by Ministry of Home Affairs (MHA) for infringement of law, thus, the same is not allowable. Further aggrieved the assessee has filed prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and expenditure account or in the computation of total income. The assessee has not furnished FCRA bank account for the relevant period, thus, the assessee was issued show cause notice. The assessee filed its reply and submitted that donation was received in earlier years and was treated as capital in nature for construction of building. The reply of assessee was not accepted by the Assessing Officer by taking a view that assessee is not showing the donation received for specific expenditure nor shown in the computation of income and treated the foreign contribution as income of assessee. The ld. CIT(A) confirmed the action of Assessing Officer by holding that there is discrepancy in the statement of the assessee. The assessee is claiming to have received the donation for earlier years but as per letters were given to FCRA for registration of foreign contribution, the assessee admitted that they have received amount in FY 2013-14. The ld CIT(A) further noted that as per the submissions of the assessee the impugned amount was received in earlier years in FY 1997-98 and 198-99 but as the letter sent by the assessee to FCRA indicate that such amount was received in FY 2013- 14. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee made deposit in Central Bank of India. The details furnished by the assessee shows that bank account is in the name of Amalsad Mandal Prathmik Vibhag having PAN of assessee. Then perusal of Income expenditure accounts shows that the assessee has shown rent income, SB interest income FD Income and donation and in response to show cause notice no proper explanation was given by the assessee. The assessee furnished information through couriers only in Tapal, so such deposits remained unexplained. Before ld CIT(A) the assessee explained that source of deposits was from tuition fee which was received in cash and were deposited on various dates. The copy of bank account was filed. The ld CIT(A) confirmed the additions by taking view that bank account in Central Bank of India is not reflected in schedule H of P L, which is extracted in the order. 16. The ld AR for the assessee submits that the assessing officer made addition without appreciating the facts and only on the basis of AIR information. The assessing officer treated branch of assessee namely Amalsad Mandal Prathmik Vibhag as separate and independent entity without appreciation the real fact and only on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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