CENTRE FOR SCIENCE AND ENVIRONMENT,DELHI vs. DCIT, CIRCLE EXMPT 1(1), DELHI

Further he submitted that, against the said intimation, the assessee filed a rectification application dated 22.02.2023, which was rejected, and the adjustment was confirmed. In appeal, the learned CIT(A), by order dated 10.10.2025, confirmed the order of rectification passed under section 154 of the Act by the CPC.

He submitted that the demand/adjustment has arisen on account of an incorrect understanding by the Department regarding the reporting of

Further he submitted that the CPC has perhaps picked up an amount of Rs.42,69,30,670/- appearing in Part A(D)(iv)(a) of the return, referred to at page 4 of the PB, wherein the assessee was required to report foreign contribution received during the year as per FCRA. According to the assessee, this information is to be given as per the return filed by it under FCRA before the Ministry of Home Affairs. He took us to page 138 of the paper book, which contains the same amount of foreign contribution, namely Rs. 42,69,30,670/- as reported in the FCRA return.

Ld. AR further submitted that under Explanation 2 to Section 2(1)(h) of the Foreign Contribution (Regulation) Act, 2010, the foreign contribution includes any interest from eligible investments or any other income derived from such foreign contribution. Hence, foreign contribution as per FCRA includes both the voluntary foreign contribution received and the interest earned thereon during the year under consideration.

He submitted that this is only ancillary information required by the Department, and the real income is computed at page 40 of the PB of the return of income under the head “Statement of Income”, wherein total voluntary contribution without interest is to be shown separately, and the

The learned counsel took us through page 40 of the paper book, which contains the computation of income in the income-tax return, where the total contribution received during the year is shown as Rs. 41,83,78,644/-. He further took us to page 11 of the PB, which gives the break-up of the total contribution of Rs. 41.83 crores, comprising of Rs. 40,81,75,913/- as foreign voluntary contribution and Rs. 1,02,02,73/- as local voluntary contribution.

Hence, He submitted that the foreign contribution, excluding interest, reported in the computation section of the return of income is Rs. 40.81 crores. The difference between the amount picked up by the CPC, namely Rs. 42.69 crores, and Rs. 40.81 crores represent the interest received on account of investment of foreign contribution in eligible investments.

He further submitted that as also shown in the return of income itself at page 40 of the PB, the total income other than voluntary contribution has been shown at Rs. 7,23,26,452/-. The break-up of this amount is at page 12 of the PB, where interest income is shown at Rs. 4,96,83,410/- and other income from the core activities of the trust is shown at Rs. 22,26,15,783/-.Hence, the interest of Rs. 4.96 crores shown in the return

Further ld. AR also took us to page 50 of the PB, which shows the computation of income annexed with the return of income, where the same facts as mentioned above have been reflected. Hence, according to the assessee, the difference has arisen because of the mistake committed by the CPC in taking Rs. 42,69,30,670/- as voluntary contribution, without realising that the said amount includes interest on the voluntary foreign contribution invested in eligible investments during the year under consideration.

Ld. AR submitted that as also shown in the return of income, this difference, i.e. Rs. 1.87 crores has been separately offered to tax as interest at page 12 of the return of income and is included in the total interest of Rs. 4.96 crores offered by it. Hence, the assessee has already been taxed in respect of interest on foreign contribution as per the computation of income and is being doubly taxed by the CPC by treating

Also, he took us through the return for Assessment Year 2020-21, where similar treatment has been given. At page 192 of the PB, the total foreign contribution including interest as per FCRA is shown at Rs.45,23,50,997/-, whereas at page 196 of the PB; the foreign contribution excluding interest is shown at Rs.43,39,88,587/-. Further, at page 197, the interest income forming part of total income is separately shown at Rs. 5,22,97,570/-.

Ld. AR submitted that here also the interest includes the interest on foreign contribution invested in eligible investments as well as interest on other domestic contribution, and the total is Rs. 5.22 crores, which includes the difference between the foreign contribution reported at page 192, which includes interest, and the foreign contribution reported at page 196, which excludes interest.

He submitted that similar treatment/representation was also made for Assessment Year 2019-2020. Hence, on the principle of consistency, the assessee contended that the same treatment has been given year after year and no such adjustment has been made in the past.

He further submitted that the ld. CIT(A) has stated that the difference between Rs.42.69 crores and Rs.40.81 crores reflected in the return has not been adequately explained. The ld. CIT(A) also stated that there is yet another amount of Rs.43.54 crores under the head “Total Foreign Grant” in the income and expenditure account, which further throws up more confusion in the representation made by the assessee.

He submitted that the ld. CIT(A) has not properly looked at the composition of Rs. 43.54 crores at page 54 of the PB which is the audited income and expenditure account, where foreign grant has been shown at Rs. 40.81 crores and other income have been shown at Rs. 2.72 crores. The break-up of Rs. 2.72 crores are at page 60 of the PB i.e. audited income and expenditure account, which shows income from investment, being interest on foreign grants invested, and other income, which has been reported in the total amount of Rs. 7.23 crores in the return of income at page 12 of the PB.

Hence, all the incomes have been duly reported under separate heads, and the only mistake that has arisen is because the CPC mistakenly took the figure reported under FCRA, which included interest on the FCRA contribution invested in the bank in India, whereas the assessee has

Ld. AR further contended that if the Department wanted to obtain the break-up of total interest of Rs. 4.96 crores reflected in the return of income at page 12 of the PB, in order to find out the component of interest on foreign contribution invested ineligible investments and other domestic contribution, it ought to have issued a notice under section 143(2) and scrutinised the return, and not simply disbelieved the assessee, who had correctly reported the foreign voluntary contribution and the interest derived on such foreign contribution.

He submitted that there is no requirement in the return of income to give a break-up of total interest, namely interest from foreign contribution and interest from other domestic contribution, either in the return or in the computation of income. Therefore, if the Assessing Officer wanted such a break-up, he could have scrutinised the return. This certainly does not fall within the scope of adjustment permissible under section 143(1) of the Act.

He submitted that Section 143(1) of the Act permits only arithmetical adjustments and certain specified prima facie adjustments. It does not permit any adjustment which can be made only after seeking details from

Further, the ld. AR submitted that assessee has consistently followed the

He further submitted that the perusal of the above demonstrates that the

Accordingly, he submitted that the action of the Revenue in disregarding the consistently accepted methodology of reporting followed by the assessee, without pointing out any change in facts or law, is arbitrary, unsustainable in law, and liable to be set aside. 27. Hence, ld. AR pleaded that the adjustment made under section 143(1) is beyond jurisdiction and, therefore, could not have been made.

On the other hand, Ld DR brought to our notice page 7 of first appellate order and also pages 54 and 60 of the paper books. He submitted that the assessee failed to explain the income and foreign contributions received by it during the year. He heavily relied on the detailed findings of Ld CIT(A). 29. Considered the rival submissions and material placed on record. We observed that in the proceedings u/s 143(1) of the Act, the CPC observed that the assessee had declared total contributions receipt of Rs. 41.84 crores, which includes 40.81 crores from foreign contributions. The assessee had filed as a part of its submissions along with the return of income, included the report and declaration as per the declaration rules contained in FCRA. As per which the assessee had to declare the total foreign contribution along with the relevant income earned during the year out of the above-mentioned foreign contributions. Since CPC have observed that there is mismatch in the declaration of income and