3 days before its chief Yamini Aiyar quit, CPR got tax notice for Rs 10.16-crore

On March 26, the CPR announced that its chief executive, Yamini Aiyar, would step down April 1 and senior fellow Srinivas Chokkakula would take over.

Details available with The Indian Express show that the latest 73-page demand notice reiterates the same alleged violations by CPR which were listed in notices the think tank got before it lost its tax exemption status and its registration under the Foreign Contribution Regulation Act (FCRA) in February this year.

When asked about the March 22 tax demand, Chokkakula told The Indian Express: “I have only heard about this tax demand. The CPR has a team of professionals handling these issues and we will decide how to go about it.”

CPR insiders said the think tank is likely to seek legal recourse.

At the time of losing its tax exemption status, Aiyar had described the action to The Indian Expressas a “debilitating blow to an independent, highly regarded research institution that strikes at the core of its ability to function.”

Yamini Aiyar. (Image source: cprindia.org)

The tax trouble for the CPR began with a survey carried out on its premises on September 7, 2022 following which a slew of show-cause notices were sent to the think tank and its key employees.

The IT Department had alleged that CPR had used its income for purposes “other than’’ its stated objectives; several of its activities were “not genuine” and some were not being carried out in accordance with its objectives. In their replies, CPR had consistently denied any wrongdoing.

The present order which taxes the CPR under Section 143 (3) of the IT Act also lists the evidence (and the replies of CPR) on the following (among others) alleged violations:

* That CPR is engaged in litigation activities after receiving funding from Namati Inc USA and expenses to the tune of Rs 2.69 crore claimed by CPR are against their objectives.

* The CPR was engaged and involved with the Hasdeo Andolan through the Jana Abhivyakti Samajik Vikas Sanstha (JASVS). While the JASVS has shown these as voluntary contributions, CPR has shown them as “professional fees” paid. These expenses, now added to CPR’s tax demand, total Rs 16.86 lakh.

* Payments to the tune of Rs 27.32 lakh given to the contractor who renovated the fourth floor of the CPR building have been listed as “bogus transactions” and “siphoning of funds.”

* The CPR has been faulted for not maintaining separate books of accounts for receipts of professional services it rendered to organisations and one foreign university as required via IT provisions. It has, according to the IT, clubbed business income with income on which it was claiming exemption.

Significantly, CPR has challenged the cancellation of IT exemptions in the Delhi High Court but the latest IT demand notice has called these proceedings “distinct and separate.”