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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI R.C. SHARMA & SHRI PAWAN SINGH
This appeal filed by the assessee against the order of Director of Income-tax (Exemptions) (in short ‘DIT(E)’) dt. 26.6.2014, in the matter of order passed u/s. 12AA(1)(b)(ii) r.w.s. 12A of the Income Tax Act, 1961.
By the impugned order, the DIT(E) declined registration u/s. 12A, therefore, the assessee is in appeal before us.
We have considered the rival contentions and found that the assessee organization was incorporated as a Company under section 25
2 New Acropolis Cultural Organization ITA No. 5380/Mum/2014 of the Companies Act, 1956 (‘Companies Act’). Copy of incorporation certificate and license under section 25 of the Companies Act was submitted alongwith the application u/s. 12A. The organization was established with a view and object, inter alia, to promote and develop philosophical, cultural and social activities, to unite men and women of all creeds, races and social conditions around an ideal of universal fraternity, awakening a global vision in men and women through the comparative study of science, religions, art and philosophy by the means of various educational and ecological social assistance programmes, to enable men and women to live as part of nature and to express their new personalities by developing the capacities of each individual, promote humanism by educational campaign, promote activities to eradicate the poverty etc. The DIT(E) declined registration after observing as under :
“4. I have carefully perused the submissions made by the applicant company but the same are not acceptable as two of its directors viz. Yaron Barzilay and Sivan Barzilay are Non Residents/Foreign Nationals/Non Indian Citizens. It is pertinent to mention that the essence of any charitable company or for that matter a director of a Section 25 company lies in its characteristic of permanency of the residential status/availability at all times. As such the possibility of such a company cannot be conceived wherein the tenure/residency of the director does not exist/is not predictable. Furthermore, the director of a charitable company is a holder of a property. Therefore, his capacity to be a director may well depend upon the law as to whether an alien/director can hold property in India. In India there are restrictions for non-citizens to hold property. As such, the company does not qualify for grant of registration u/s. 12A of the I.T. Act.”
3 New Acropolis Cultural Organization ITA No. 5380/Mum/2014 Against the above order of DIT(E), assessee is in further appeal before us.
We have considered the rival contentions and carefully gone through the order of the authorities below and found that the object for which assessee was incorporated was fully charitable as evidenced from its object clause. The assessee was incorporated as a company u/s. 25 of the Companies Act. There is no provision under the Income Tax Act, 1961 which mandates an organization to have Indian nationals as directors of the company, to be eligible for registration under section 12A of the Income Tax Act, 1961. Further, under other related laws also, there is no bar on foreign nationals to be the directors of a company. Further, the fact that the company has been incorporated as a section 25 company, under the Companies Act, itself establishes that there is no bar under the provisions of the Companies Act to restrict foreign nationals from being directors of the organization. Section 12AA of the Income Tax Act, 1961 determines the procedure for registration, wherein it has been laid down that Commissioner shall grant registration to an institution if he is satisfied about the objects of the organization and genuineness of its activities. Further, Sec. 13 of the Income Tax Act, 1961 determines the cases where the provisions of Sec. 11 and 12 shall not apply. However, there is no case or condition which contemplates denial of applicability of the provisions of Sec. 11 or 12 of the Income Tax Act, 1961 if one or all the directors of the organization are foreign nationals. The DIT(E) has declined registration on the plea that two directors of the company are non- residents/foreign nationals. The issue under consideration is squarely
4 New Acropolis Cultural Organization ITA No. 5380/Mum/2014 covered by the decision of the coordinate Bench in the case of GIA India v. DIT (Exemption) (ITA No. 3921 of 2010) wherein it has been held that registration cannot be rejected on the ground that the directors of the company are foreign nationals. Nowhere DIT(E) has doubted the genuineness of its activities or charitable nature of its object. Accordingly, we find no merit in the action of DIT(E) for declining the registration. Respectfully following the decision of the coordinate Bench in the case of GIA India (supra) we direct the DIT(E) to issue registration within 30 days of receipt of this order. We direct accordingly.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 17th March, 2016.