2021 (10) TMI 513 - AT - Income Tax

ITAT Delhi upholds denial of exemption under Section 11 for payments to University of Texas

Hariday Versus ADIT (Exemption) Trust Circle-II Civic Centre, New Delhi

Hariday Versus ADIT (Exemption) Trust Circle-II Civic Centre, New Delhi - TMI Issues Involved:Appeals filed against order by CIT (A) for assessment years 2011-12 to 2014-15; Denial of exemption u/s 11(1)(C) for payment to University of Texas, USA; Challenge of denial of exemption u/s 11 for violation of Section 13(1)(C) read with Section 13(3); Disallowance of amount remitted to University of Texas, USA as not an application of income u/s 11(1)(C); Levy of interest u/s 234B and Section 234D.Analysis of Issues:1. Denial of Exemption u/s 11(1)(C) for Payment to University of Texas, USA:The appellant, a registered society, challenged the additions made by the Assessing Officer on account of payment/remittance to the University of Texas, USA, as not an application of income u/s 11(1)(C) of the Income Tax Act, 1961. The appellant argued that the funds were spent based on a sub-grant to the University of Texas, USA, from funds received earlier from the National Institute of Health (NIH), already included in the income and expenditure account. The Assessing Officer disallowed the amount remitted, citing it as not an application of income u/s 11(1)(C). The CIT(A) found that the assessee's application of income outside India was denied, leading to the denial of exemption u/s 11 due to a violation of Section 11(1)(C). The CIT(A) directed the Assessing Officer accordingly, and the appellant's challenge was dismissed.2. Challenge of Denial of Exemption u/s 11 for Violation of Section 13(1)(C) read with Section 13(3):The appellant contested the denial of exemption u/s 11 for violating Section 13(1)(C) read with Section 13(3). The CIT(A) held that the Assessing Officer was unjustified in denying the exemption u/s 11 and deleted the disallowance made in one of the assessment years. The CIT(A) referred to legal precedents and dismissed the grounds raised by the appellant, upholding the decision to deny exemption u/s 11. The CIT(A)'s decision on this issue was detailed and in accordance with the law.3. Disallowance of Amount Remitted to University of Texas, USA:The Assessing Officer disallowed the amount remitted to the University of Texas, USA, considering it not an application of income u/s 11(1)(C). The appellant's submissions were not accepted by the Assessing Officer, leading to the denial of benefits under Sections 11 and 12. The CIT(A) partly allowed the appeal but ultimately dismissed all the appeals, including the challenge against the disallowance of the remitted amount.4. Levy of Interest u/s 234B and Section 234D:Regarding the levy of interest u/s 234B and Section 234D, the CIT(A) relied on legal decisions to support the imposition of interest, dismissing the grounds raised by the appellant. The CIT(A) cited relevant court cases and upheld the Assessing Officer's decision on the levy of interest, concluding that there was no need to interfere with the findings.5. Overall Decision:Despite the appellant's challenge and submissions, the ITAT Delhi dismissed all five appeals of the assessee. The decision was based on the findings of the CIT(A) and the legal provisions cited in the judgment. The appeals were dismissed, and the order was pronounced in open court on October 11, 2021.This detailed analysis covers the various issues raised in the appeals, the arguments presented by the appellant, the decisions of the CIT(A), and the final judgment delivered by the ITAT Delhi.