THE TRAINED NURSES ASSOCIATION OF INDIA,NEW DELHI vs. DCIT CIRCLE EXEMPTION-2(1), NEW DELHI

4. On the facts and circumstances of the case, the order passed by Ld. CIT under Section 263 of the Income Tax Act is unsustainable as power to revise can be invoked in case of lack of enquiry, not in the case of inadequate inquiry. 5. (i) On the facts and circumstances of the case, the learned CIT has erred both on the facts and in law in passing order under Section 263 holding that foreign contribution be taken as Income in the Income & Expenditure Account without appreciating that it is an undisputed provision of law of treating foreign grants as a liability at the time of receipt, however, the expenditure of foreign grant is also reflected in Balance Sheet under ‘Schedule of Grants’. (ii) The Ld. CIT has erred in law in treating grant money received as voluntary contributions completely ignoring the stated position of law that grant money being involuntary funds to be utilized as per specific conditions and stipulations as laid down by the donor cannot be treated as Income in the hands of the done. Thus, this issue cannot be considered for the purpose of Section 263 and the order passed under Section 263 should be cancelled.

3. The brief case of the assessee is that assessee a trust registered under Section 12A of the Act, has filed its return of income declaring income nil claiming exemption under Section 11 of the Act. The return of income filed by assessee was scrutinized u/s.143(3) of the Act and accepted. The case was selected for limited scrutiny. A notice u/s.142(1) with questionnaires was issued. The AO after examining the record accepted the return of income. A proposal of the revision received from the AO the LD CIT (Exemption) issued the show cause notice u/s 263 of the Act to the assessee. Ld CIT(A) on careful examination of records, it was noticed that the said order was erroneous and prejudicial to the interests of revenue as the AO failed to make requisite verification and enquiries which were expected in the facts and circumstances of the case.

4 The issue raised in the show cause notice are briefly mentioned here under : a) Assessing Officer failed to examine whether the rent recovered from the specified fair market rent prevailing in that locality. b) Assessing Officer failed to notice that the foreign contribution of Rs.21,83,643/- received by the assessee trust during A.Y. 2017-18 was not disclosed as income in the Income & Expenditure A/c.

5. The Ld AR of the assessee has submitted that the case of the assessee was selected only for limited scrutiny and the assessee has submitted all the details of the rent recovered from the various persons and also given the reasons for recovery of the rent. He has further submitted that Ld CIT (exemption) has not given the finding as how the prejudice has been caused to the revenue. He has also submitted that Ld CIT (exemption) in his notice has raised the issue of the foreign contribution but this reason was not selected for limited scrutiny and the AO had no power to discuss the issue in the assessment proceedings. Ld CIT(Exemption) has no jurisdiction u/s 263 of the Act. In the support of the contention the assessee has filed the paper book containing page (1-104).

6. The Ld AR has stated that the Ld CIT (exemption) could not direct the AO for further enquiry and give his findings. Reliance has placed on the following decisions; ITO vs Housing Projects Ltd (2012)343 ITR 329 (Del) CIT vs Sandeep Kumar Aggarwal ITA 750/2018 (Del-HC) CIT vs Kohinoor Foods Ltd ITA 757/2005 (Del-HC)

would fetch from the open market and there are various methods to calculate it. The AO has not made any attempt to find out the fair market rent of the said property to check whether these specified persons were benefitted or not. On this issue, by not verifying or inquiring into the reasonableness of the rent recovered from these specified persons which should have been done, the impugned order is erroneous and prejudicial to the interest of the revenue.

It was submitted by the assessee that grant of USD 25,600 was received from Johnson & Johnson Consumer Inc. as an educational grant and the amount was to be spent on Panel Review of Association of Women’s Health, Obstetric and Neonatal Nurses guideline from the Indian perspective. Grant of Rs.4,84,000/- was received from “Centre for Catalyzing Change” for the purpose of maternal health and quality of care advocacy in India (referred to as Grant for respectful Maternity Care RMC). It was further submitted by the assessee that these grants are project grants and are not voluntary contributions to be treated as income in the hands of the assessee. The term voluntary contribution implies a contribution to be utilized by the receiving done as per its own free will without any specific direction as per it own free will without any specific direction as to its usage. It further observed that once the amount is received with stipulations and conditions as regards its utilizations the same loses the character of voluntary contributions in the hands of the recipient as it can neither spend it for any purpose it desires or in the period on its own will.

estimated at 6 months from the date of final approvals. The formal agreement was entered into on 09.04.2016 and Johnson & Johnson Consumer Inc made the payment on 04.05.2016. Since the period of study was only 6 months, it has to be completed before March, 2017. Nowhere in the agreement it is mentioned as a tied up grant or as a corpus donation.

to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely. (ii) is prejudicial to the interests of the Revenue. If one of them is absence- if the order of the Income-tax Officer is erroneous but it is prejudicial to the Revenue- recourse cannot be had to S. 263 (1) of the act.

Order pronounced in the open court on 05.09.2024.