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Facts
The Assessee, a trust, received a foreign contribution of Rs. 31,07,394/- which was disclosed but not included by the assessing authority in total gross receipts for determining 85% utilization under Section 11 of the Income Tax Act. The Assessee contended that even with this amount added, its total gross receipts would be Rs. 467.12 crores, and its expenditure of Rs. 401.35 crores would still exceed the 85% utilization threshold. The appeal was against an order passed by the ADDL./JCIT(A)–1 under section 250 of the Act for AY 2021-22.
Held
The Tribunal found that the Assessee had not violated its objects and had utilized more than 85% of its total gross receipts, including the foreign contribution. Consequently, the addition made by the lower authorities was deemed unsustainable. The Tribunal allowed the appeal, thereby deleting the addition.
Key Issues
Whether foreign contribution should be included in total gross receipts for calculating the 85% utilization threshold under Section 11 of the Income Tax Act, 1961.
Sections Cited
Section 250, Section 11 of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, NAGPUR”SMC” BENCH : NAGPUR
Before: SHRI NARENDER KUMARCHOUDHRY
This appeal has been preferred by the Assessee against the order dated 23/01/2024 impugned herein passed by the Ld. ADDL./JCIT(A)–1, Coimbatore [in short, “Ld. Commissioner”]u/sec. 250 of the Income Tax Act, 1961 (for short, “the Act”) for the Assessment Year (for short, “AY”) 2021-22.
2 ITA.No.172/NAG/2024 2. Though, the Assessee has raised various issues qua legality and merits of the case, however, alternatively argued that adding the amount of Rs. 31,07,394/–received on account of foreign contribution during the year as duly disclosed in the return of income, being not part of the total gross receipts of ₹ 466.81 crores , to the said gross receipt, the aggregate amount would be ₹ 467.12 only, whereas the Assessee has spent an amount of ₹ 401.35 crores, which is admittedly more than 85% of such aggregate receipt and therefore no income would be assessable, as per the provisions of sec.11 of the Act. The Assessee further claimed that the Assessee even otherwise has duly complied with the directions, as endorsed in the foreign contribution agreements and also refunded the unutilised amount and it is a general practice of the Assessee for receiving such foreign contribution for the specified purposes.
On the contrary the Ld. DR though supported the orders passed by the Authorities below but did not refute the said factual aspect, as demonstrated by the Assessee.
We have given thoughtful consideration to the orders under consideration and rival claims of the parties. Admittedly there is no violation by the Assessee in implementation of its objects, for which the Assessee trust has been established and registered and the Assessee even otherwise has utilised more than 85% of the total gross receipts including that foreign contribution and therefore the addition is un-sustainable. Resultantly the addition is deleted by allowing the appeal of the Assessee.
3 ITA.No.172/NAG/2024 5. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 16.06.2025.