Aragen Foundation vs Commissioner of Income Tax (Exemption)

PER ANUBHAV SHARMA, JM:

These appeals are preferred by the Assessee against the different order dated 19.03.2025 & 20.03.2025 of the Commissioner of Income-tax, (Exemption) Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Notice Nos: ITBA/EXM/F/EXM45/2024-25/(1074676330(1)/1074743375(1) against the cancellation of Registration under Section 12AB of the Act for AY: 2025-26.

On hearing both the appeals together we find that the competent authority i.e. Commissioner of Income Tax (Exemption), Delhi dismissed the claim of regular Registration under Section 12AA(1)(ac)(ii) of the Act and rejected application in Form 10B of the assessee and consequently application for Registration under Section 80G of the Ac was rejected leading to these appeals.

We find that the order of rejection application in Form 10AB has in its background the conclusion of competent authority that firstly, there was an error in selecting incorrect code application in seeking registration under Section 12AB of the Act. Secondly, competent authority concluded that assessee had received donation from foreign country without their being registration under Foreign Contribution Regulation Act (FCRA) and lastly that assessee had issued Form 10BE to Aragen Life Sciences Limited for contributions made towards Corporate Social Responsibility (CSR).

The Ld. AR representing the assessee has vehemently argued that enquiries were conducted beyond the scope of u/s 12AB of the Act and it was further contended that in fact there is factual error in considering receipts from foreign country while receipts were from within India. It was also contended that CSR contributions are allowable for u/s 80G deduction.

Ld. DR has contended that there is no error in impugned orders and without the source of funds explained the genuineness of activity becomes suspicious. It was also contended by Ld. DR that CSR contribution cannot be considered as 80G donations as the CSR contribution lack voluntary nature.

We have given a thoughtful consideration to the material on record and we find that as a matter of fact what competent authority has alleged to be received from foreign country without FCRA registration the assessee has submitted before the competent authority that one Suresh Sabapathy was member of Boehringer Ingelheim (BI) and Aragen Life Sciences Collaboration and BI team had high appreciation for excellent services provided by Mr. Suresh who had died and as a token of gratitude on behalf of BI its India managing director came forward and contributed a sum of Rs.4,00,000/- towards education of children of deceased Suresh and assessee coordinated this process by online transfer of the sum.

Then, as with regard to CSR expenses funds being eligible for 80G deductions is no more res-integra and Coordinate Bench in ITA No.1171/Del/2022, Agilent Technologies Vs. ACIT, (International) P. Ltd., Circle-1(1), vide order dated 26.03.25 has held that though CSR expenditure are not allowable expenditure under Section 37 of the Act, 80G exemption cannot be declined.

Then, technical mistakes in the applications for which there is no provision under law for revising or editing the application it is unjust to dismiss without attributing any malice and applicant should be given an opportunity to rectify procedural laps. Similar was the view of Coordinate Benches in the cases below:

On appreciating the impugned order of rejection of form 10AB we find that the competent authority has examined the issue of genuineness of funds which in fact are not relevant at this stage except when the intention is to discredit the genuineness of the charitable activities applicant. However, the same is not the case here, ld. competent authority has not at all applied its mind to the genuineness of the activities of the assessee to examine the same for the purpose of Section 12AA(1)(ac)(ii) of the Act. It is settled proposition of law that at the stage of considering application for grant of registration there is limited scope to go beyond the examination of the genuineness of activities of the registration when otherwise the powers are vested for the cancellation of the registration, provisional or final, on establishment of specified violations. The scope of specified violations cannot be widened to be considered at the stage of grant of registration itself. Thus, order of Ld. CIT(E), Delhi cannot be sustained.

The appeals are allowed. Both the applications are restored to the files of Ld. CIT(E) to decide afresh in the light of the aforesaid observation of this bench.