National Payments Corporation of India Vs CIT (Exemptions) (ITAT Mumbai)
Summary: The appeal was filed by M/s. National Payments Corporation of India against the order of the Commissioner of Income Tax (Exemptions), Mumbai, cancelling its registration under section 12AB(4) of the Income-tax Act, 1961. The assessment year involved was AY 2022-23.
The assessee was incorporated as a non-profit company under section 25 of the Companies Act, 1956 in December 2008, with commencement of business in April 2009. It claimed that its activities were for advancement of general public utility, without profit motive and unrelated to trade, business or commerce. Its shares were majorly held by ten promoter banks. Registration under section 12A(1)(ac)(i) was granted on 23.09.2021 in Form 10AC for five years from AY 2022-23 to AY 2026-27. For AY 2022-23, the assessee filed its return declaring nil total income after claiming refund of prepaid taxes of Rs.3.43 crores, including advance tax refund of Rs.2.51 crores.
During complete scrutiny, the Faceless Assessing Officer made a reference seeking cancellation of registration on the allegation of “specified violations”. The CIT(E) considered that the assessee earned substantial receipts from payment gateway services and National Financial Switch and other payment platforms, and held that its activities were commercial and did not constitute charitable activity under section 2(15). The CIT(E) also alleged benefit to the ten promoter banks, invoking section 13(1)(c) read with section 13(3), and alleged application of funds outside India without Board approval under section 11(1)(c). On that basis, the registration was cancelled with effect from 23.09.2021.
