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TMI Blog2020 (5) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case the assessee is a trade association which was created for the cause of Indian Automobiles. The assessee was constituted with the charitable objects and as part of the objects, it was receiving membership fee; income from distribution of technical literature, publication for the benefits of its.........................; was also organizing seminar/conference wherein participation fee was charged. The assessee was also organizing the Auto Expo Exhibition alongwith ITPO upto AY 2008-09. The expenses claimed by the assessee were allowed u/s 11 & 12 of the Act. However, from AY 2009-10 when proviso 2 was added u/s 15 of the Act, the exemption claimed u/s 11 & 12 of the Act was disallowed to the assessee. The year under appeal before us in AY 2010-11 and in view of Proviso 2 of Section 15 of the Act, the assessee was receiving membership fee and also charging participation fee for organizing different seminars, conferences, the exemption claimed u/s 11 & 12 of the Act was denied. The case of the Revenue was that the assessee was not doing for the benefit of publication at large. It was further held that the principle of mutuality would not apply as the income of the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi High Court in India Trade promotion Organization vs DGIT 2015 (374) ITR 333 and Institution of Chartered Accounts vs DGIT(E) 2013 (358) ITR 91 (Del.). 8. The appeal filed by the Revenue before the Hon'ble Supreme Court has been dismissed in low tax effect. 9. The issue raised in the present appeal being squarely similar to the issue raised in Assessment Year 2009-10. Following the same parity of reasoning, we hold that the assessee is entitled to claim exemption u/s 11 & 12 of the Act and the same is directed to be allowed to the assessee. Thus, Ground Nos. 1 & 2 are allowed. 10. The Ld.AR for the assessee pointed out that the issue raised in Ground No.3 in this appeal was alternate plea made by the assessee, on without prejudice basis, it would become academic incase Ground Nos. 1 & 2 are allowed. Hence, Ground No.3 is dismissed. 11. Now, coming to the next issue vide Gorund No.4 wherein the assessee is aggrieved by the orders of the authorities below in holding that since the assessee was not entitled to claim deduction u/s 11 of the Act then the corpus donation was treated as income of the assessee. 12. The Ld.AR for the assessee drawn our attention to the audited balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance sheet if we look at the corpus fund, the amounts of Rs. 90 Lakhs transferred to corpus funds and the narration is "transfer from income and expenditure account i.e. for Rs. 90 Lakhs". Similarly, amounts have been transferred to the different funds as tabulated above. While drawing up the income for the year under consideration, the assessee has very clearly pointed out that that all these amounts which are transferred to funds are not to be considered as application of income and accordingly, the income has been computed in the hands of the assessee. In such a scenario, we find no merit in the exercise undertaken by the AO, which has been confirmed by the CIT(A), we reverse the findings of the CIT(A) in this regard and direct the AO to delete the aforesaid addition made in the hands of the assessee. Thus, Ground No.4 raised by the assessee is allowed. 16. Next issue raised by the assessee vide Ground No.5 against the addition of Rs. 64,72,647/- made on account of alleged foreign grants received during the year on account of pending approval under Foreign Contribution Regulation Act (in short "FCRA"). 17. Briefly the facts relating to the issue, the AO vide para 13.1 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 33,68,659/- and under stadium project Rs. 9,93,520/-. In this regard, a note was given under schedule 19 which read as under:- "The society has since applied to Ministry of Home Affairs, Government of India under Foreign Contribution Regulation Act, 1976 (FCRA) for permission to accept the foreign contributions received during the year in respect of two projects viz. SIMBA and STADIUM. Pending approval of the same, the amount received in advance has been kept in a Foreign Contribution designated bank account along with the interest earned thereon. The corresponding credits have been shown in the Balance Sheet under the "Foreign grant pending approval and utilization". The grants and interest earned have not been considered as income of the year for computation of income under section 11 of the Income tax Act." 23. In the note, it was clearly pointed out that the assessee had applied to the Ministry of Home Affairs for permission to accept foreign contribution received. Further, the amount was kept in foreign contribution designated bank account pending approval of Ministry of Home Affairs. Further, the bank interest was also earned on such deposits which was shown as Rs. 1,10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Delhi High Court in CIT vs Om Prakash Khaitan (supra) had laid down the proposition that the characterization of a receipt could taxable only at the time of appropriation and not at the time of receipt which at best was advanced received, which did not bear in particular characterization for the purpose of treating it as income. Applying the said proposition to the issue in hand, we find no merit including the foreign grant as pending approval as income of the assessee. Accordingly, Ground No.5 raised by the assessee is allowed.
27. The Ground Nos. 6 & 7 are consequential hence the same are dismissed.
28. The Ground No.1 raised by the Revenue is against the penalty levied u/s 271(1)(c) of the Act relating to Assessment Year 2009-10. Consequent to the order of the Tribunal (supra) when no quantum additions remain in the hands of the assessee, there is no merit in the levy of penalty u/s 271(1)(c) of the Act.
Accordingly, we dismissed the appeal filed by the Revenue in this regard.
29. In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed.
Order pronounced in the open court on 30th April, 2020. X X X X Extracts X X X X X X X X Extracts X X X X
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