A Trust whose objects include ‘international welfare’ cannot be denied S. 12A registration

In a decision by Income Tax Appellate Tribunal (ITAT), Mumbai it has been held that a Trust whose objects include ‘international welfare’ is a charitable entity and cannot be denied S.12A registration.

DIT (E) who rejected the application for S.12A registration of the Trust in its order had contended that Critical Art & Media Practice’s (to be referred as Trust) objects include charitable as well as non charitable activities, such as hosting of artists-in-residence programmes for international artists and raising funds for organizing trips, seminars and conferences within and outside the country. Considering S.11 applies only for income to be applied for charitable purposes within India, the Trust cannot be given the tax exemption status.

The trust filed an appeal before ITAT (Mumbai) against the Order. The Tribunal divided the issue into two parts, one for examination of charitable activity and second applicability of tax exemption (S.11) on the same. It after examining the case, held that while it is true that the objects of the Trust are such that it may apply some of its income outside India, however the test of an entity being charitable has to be based on definition of ‘charitable purpose’ under S. 2(15). It stated that this definition nowhere states that any activity undertaken by a Trust outside India is not a charitable activity. Thus even if an entity applies its income on welfare activities outside India, its charitable purpose needs to be seen in light of definition given under S.2(15).

It further stated that in case the Trust applies its income on objects which are outside India and if not authorized by CBDT that expenditure would not fall within the definition of application of income under S.11 and would need to be dealt accordingly.

– Citation : ITA No.736/M/2013 2 M/s. Critical Art and Media Practices vs DIT(E) dt 15 Mar 2015

___________________________________
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail: socio-research@sma.net.in

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Donation from NRI

Can any FCRA registered NGO receive donation from an individual/person who is working abroad having NRE account in India? If yes, what are the terms and conditions will apply to the NGO who will receive the donation and person who is donating?

Please advice.

Thanks,

Randhir

Posted in FCRA, TAX, LEGAL | 6 Comments

MHA cancels registration of 1142 NGOs

Ministry of Home Affairs has cancelled the FCRA registration of 1142 organizations from Andhra Pradesh undivided) vide a cancellation order dt. 3-3-2015. It has stated that these organisations have not filed their Annual Returns from 2009 to 2012.

Among the well known organisations whose registrations have been cancelled include Osmania University, the University of Hyderabad, Andhra University in Vishakhpatnam. The Home Ministry has also cancelled the FCRA license of Cancer Care Units Research and Educational Foundation of Apollo Cancer Hospital at Jubilee Hills in Hyderabad. For complete list click here

The Dept had sent individual notices to 1441 organisation in the State, out of which responses came only from 299 cases. These cases are being examined. However the rest of the cases, where either the notice was returned (510 notices were returned undelivered) or where no response has come, registrations have been cancelled.

Obviously AP is the first state where the Dept. has taken action and it is quite likely that similar action could follow in other cases too. Infact SRRF analysis as posted earlier (see http://blog.srr-foundation.org/?p=2299) indicated that out of 39,087 registered entities more than 50% had not filed annual returns for FY 2013-14.

All registered organisations should ensure that their annual returns are upto date to avoid any hassles.
___________________________________
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail: socio-research@sma.net.in

Posted in FCRA, TAX, LEGAL | 9 Comments

Is there any restriction on amount of donation by an individual against 35 A/C

Dear Sir,

I have a following query:
any idividual can donate any amt under 35 AC but whether
a businessman /partner/proprietor of a firm after taking 100% exemption upto
his limit on investments like ppf etc can over & above this also donate to
a NGO having 35 AC exemption any amt he wishes and avail of 100% tax exemption?

Pl reply immediately as it is a query of our donor.

Thanks & rgrds for your wonderful service.

Devendra S. Desai
Founder/Mg. Trustee

Play Together,Stay Together
Devendra S. Desai
Vandana Sonawane
Team CTF
Children Toy Foundation
C/O R.Desai & Co,Modern House,11,Dr. V.B.Gandhi Road,Fort,Mumbai-400001

Posted in FCRA, TAX, LEGAL | 8 Comments

Is 12 A compulsory for FCRA?

Dear Sir,

I would like to know some facts and logic about IT

One NGO having FCRA but they don’t have IT 12 AA registration.

Shall they eligible to receive foreign funds.
If so did they pay tax for the receipts from foreign donors

Please give a clarifications

Mohankumar
CADRE- India
(Center for Action Development Research and Education in India)
Kurumathoor, Kuzhithurai, PO,
Kanyakumari, Dist. Tamil Nadu.
India. PIN. 629163

Posted in FCRA, TAX, LEGAL | 4 Comments

Improvement on Building should it be caplitalised?

Dear Friends,

An NGO is operating from an rented premises and some expenditure is incurred on the improvement of the building by the NGO. The NGO treats this expenditure as an asset and reflects the same in the depreciation schedule. A note regarding the same is mentioned at the end of the document. The schedule is signed by the auditor.

Please let me know if such expenditure can be treated as an asset for the NGO.

Thanks and regards,


B V Soma Sastry

Posted in FCRA, TAX, LEGAL | 10 Comments

Applicability of ESI on NGOs

Dear Dialogue Members,

I share bellow a case of one NGO being pulled up by ESI.

Miracle Foundation India partners with one NGO in a small town in Tamil Nadu, the NGO runs a children’s home which cares for approximately 130 children and has a staff of 16-18 persons. We have been associated with this NGO for the past three year and consider them to be one the most transparent and honest organization. Their work with the children is outstanding

About a year & half back, an inspector of ESI office visited this children’s home and demanded documents which was dutifully shared. He told them that they have defaulted by not registering with ESI. The management tried its best to convince that they do not qualify for ESI, but he was unwilling to consider it.

Later the organization received notice form ESI to comply with requirement and pay the amount stipulated in their letter. The organiation made a representation to the local ESI head and requested him to look into the case; nothing happened.

Now after a long gap, the organization received a letter from ESI that they have withdrawn Rs.89,000/- (approx) form the bank. This NGO has now filed a case in the Madurai court and is awaiting their hearing, which they are not sure when it would take place.

My questions are:
Are NGOs, who are running children’s homes and take care of orphans (and are not manufacturing units) covered under ESI?
Why should ESI withdraw such amount without any notice?
What can be done in this case?
I look forward to a dialogue on this


Thank you & regards,

Nivedita DasGupta
India Country Head
Miracle Foundation India
A-149, Second Floor
New Delhi, 110017

Posted in FCRA, TAX, LEGAL | 1 Comment

Major changes in Finance Bill 2015 impacting NGO Sector

Following major changes have taken place which will impact the NGO Sector:

  1. Yoga has been added as one of the activity under S. 2(15). Earlier Yoga was covered under ‘General Public Utility Clause’ thus providing major income tax benefits to all organisations which are undertaking Yoga as a major activity. Thus now any income generating activity undertaken by such organisations is likely to be tax exempt.
  2. A lot of confusion and disputes use to arise in interpreting income being generated by organisations registered under the ‘General Public Utility Clause’. It was impacting income generation of a number of charitable organisations. Much sought after clarity has been provided. It has been clarified that any activity in the nature of trade, commerce or business or any activity of rendering any service for fees, cess, etc. Would be allowed only if:
    • Such activity is undertaken in the course of actual carrying out of such advancement of object of general public utility; and
    • The aggregate receipts from all such activities during the previous year do not exceed 20% of the total receipts of the Trust or institution. [earlier limit was Rs 25 lakhs]
  3. Under S. 80G, following two will get 100% deduction, as long as they are not part of CSR funds.
    • Clean Ganga Fund and
    • Swachh Bharat Kosh

___________________________________
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail: socio-research@sma.net.in

Posted in FCRA, TAX, LEGAL | 2 Comments

Restriction on receiving contributions from NRI donors

Dear Sir,

During 2014-15, I was told by our bank that RBI has placed a restriction on receiving contributions from NRI donors in the form of cheques and that only wire transfer of funds are allowed. What could be the reason for such a restriction?

Regards,

Ramamohan Rao Kakani
Secretary
BREAD Society,
Posted in FCRA, TAX, LEGAL | 4 Comments

Clarification on issue of 12A and 80G

Dear Sir

ARS Education Trust was established on 13-12-2013. We applied for 12A & 80G to the Income Tax Commissioner (Exemption) of Hyderabad. She rejected our application asking us to limit the objects in our Trust Deed. She also directed us to include the IT Provisions in the Deed as an amendment. However the local Sub Registrar did not agree to make amendments to the Deed. Will you please clarify what is to be done to get the approval for 12A & 80 G in this situation?

Purna Rao
ARS Education Trust

Posted in FCRA, TAX, LEGAL | 9 Comments