Over Rs 22 cr foreign funds under freeze after MHA action, confident of legal relief: CPR

More than Rs 22 crore in foreign funds has been “under freeze” at the Centre for Policy Research, according to the Delhi-based think tank’s latest annual report. The freeze emanates from the suspension of CPR’s Foreign Contribution Regulation Act licence by the Union Ministry of Home Affairs in February this year.

CPR has been accused of using its foreign funds for litigation and environment activism in violation of its “objects of the trust”. But the multidisciplinary and non-partisan think tank, which has tied up with various government bodies for research, has rejected all the allegations. 

In July, Newslaundry had reported on how the FCRA suspension and a subsequent cancellation of tax exemption had resulted in layoffs and impacted projects and research programmes. 

Now, the latest annual report released on September 30 has detailed the beleaguered think tank’s legal battles and its financial record for the year 2022-2023..

Allowed Rs 1.79 cr, struggle for more to continue

With Rs 22.31 crore under freeze, the CPR had approached the government as well as the Delhi High Court for permission to partially use the locked funds, according to the report. “The Society has filed an application with the MHA under section 13(a)(2)(b) of the Foreign Contribution (Regulation) Act, 2010 read with Rule 14(a) of the Foreign Contribution (Regulation) Rules, 2011 seeking the permission to utilise the 25 percent of its FCRA funds for the declared aims and objectives for which the grants were received,” read the ‘significant accounting policies and notes on accounts” section in the annual report.

Under the high court’s scrutiny, the MHA on September 12 allowed CPR to utilise Rs 1.79 crore of the locked amount and asked the think tank for a monthly account of its expenditure. 

However, the struggle for funds is likely to continue to play out in the judiciary. The accounting section of CPR’s annual report pointed out that the court had directed the MHA to decide on the think tank’s petition demanding 25 percent utilisation by September 5, but the date was adjourned to November 27.

The ministry had cancelled CPR’s FCRA registration in February for 180 days – it was later extended. The think tank, which entered the 50th year of its existence, has denied any FCRA violation in its report and said it was “confident of favourable verdict from courts”. 

‘Stay’ on tax exemption cancellation

CPR first came under the income tax scanner when its Delhi premises were “surveyed” in September last year. Three months later, the tax department issued a showcause notice for cancellation of registration under section 12(A) of the IT Act, 1961, which mandates tax exemption for funds received by not for profit organisations. And on June 30 this year, CPR’s tax exemption status was eventually cancelled.

“The Society has filed a writ petition before the Hon’ble High Court of Delhi against the order of the Department for cancellation of 12A registration. The Hon’ble High Court has granted an interim stay vide its order dated August 25 for the period up to next hearing date i.e. November 30, during which Society would be required to furnish the details of contributions received and utilised, duly audited,” read the CPR report.

Separately, the tax department in a March notice alleged that an income of Rs 23.18 crore escaped tax assessment in 2016-17. According to the CPR report, the think tank challenged this in the Delhi High Court, which stayed the operation of the notice on May 24 until its next hearing on November 22.

‘Formidable challenges’

CPR president Yamini Aiyar said that despite challenges the think tank could not be deviated from its rigorous research. “Despite formidable challenges @CPR_India has stayed true to its mission of producing rigorous research & contributing to democratic debate. This year’s annual report is a tribute to all our friends whose support has empowered us to keep going ,” she posted on X.

According to the report, in 2022-23, CPR produced three books, 34 journal articles, 16 working papers, 42 policy briefs, and over 500 opinion pieces in the mainstream media in 2022-23. “We also organised and participated in 63 national and international events and held the CPR Dialogues 2022 featuring 18 panels,” Aiyar wrote in the “president’s report”.

CPR’s gross receipts jumped from Rs 19.25 crore in 2021-22 to Rs 30.47 crore in 2022-23. But the increase may not indicate the full scale of the crisis at the think tank since the financials in the latest annual report cover only a one-month period since the suspension of the FCRA licence. “The FCRA licence suspension had a very debilitating impact on the functioning of CPR,” a source in CPR said.

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