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2017 (10) TMI 909

Registration under Section 12 of the Foreign Contribution (Regulation) Act, 2010 (“FCRA”) rejected - Grant of certificate of registration under FCRA - the respondent is not satisfied that the foreign contribution is not likely to be used for personal gains - petitioner is a society registered under the Societies Registration Act, 1860 and has been registered under Section 12A of the Income Tax Act - Held that:- The question whether a society established for charitable/religious purpose is one of the principal considerations for grant of exemption under Section 11 and 12 of the Income Tax Act, 1961. One of the pre-condition for availing exemption from charge of Income Tax is that the charitable society/trust would utilise all funds for the purposes of its object and no part of it can be distributed as dividends or profits. Any society/trust which is run for the commercial benefits of its founders or trustees would plainly be ineligible for being accorded the certificate under Section 12A of the Income Tax Act. This is also the principal consideration, which is set out in Section 12(4)(vi) of the Act.

Notwithstanding the registration granted to the petitioner under the Income Tax Act, the permission sought by the petitioner could have been refused if there was any evidence to show that the foreign contribution is likely to be used for personal gains or diverted for undesirable purposes. But, as stated earlier, there is no material to indicate that these conditions were satisfied. There is no material which would justify the conclusion that the petitioners were likely to divert the foreign contribution for personal gains or utilise it for any undesirable purposes. In this view, the impugned orders cannot be sustained and are consequently, set aside.

The respondents are directed to process the petitioner's application for registration under Section 12 of the FCRA, as the only ground on which the same was denied is unsustainable.


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