Delay condonation and scholarship assistance in India: ITAT found no spending outside India and set aside registration rejection.

ITAT Mumbai condoned a 38-day delay in filing Form 10AB, accepting that the late receipt of the Charity Commissioner's order was a bona fide explanation and applying a liberal, justice-oriented approach to limitation. On merits, it held that scholarship assistance paid in India in Indian rupees to an Indian resident for higher studies abroad was not expenditure incurred outside India merely because the student later remitted funds abroad on his own arrangement. The alleged violation of section 11(1)(c) was therefore not sustained, and rejection of registration on that ground was set aside. The matter was restored for fresh consideration of the Form 10AB application on merits.

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Issues: (i) Whether the delay of 38 days in filing Form 10AB seeking registration under section 12AB should be condoned. (ii) Whether scholarship assistance paid in India to an Indian resident for higher studies abroad amounts to expenditure incurred outside India so as to attract section 11(1)(c), and whether the rejection of registration on that basis was justified.

Issue (i): Whether the delay of 38 days in filing Form 10AB seeking registration under section 12AB should be condoned.

Analysis: The delay was explained as arising from late receipt of the Charity Commissioner's order. The Tribunal applied a liberal and justice-oriented approach to delay condonation, noting that exemption should not be denied merely on limitation where the explanation is bona fide and supported by material circumstances.

Conclusion: The delay was condoned in favour of the assessee.

Issue (ii): Whether scholarship assistance paid in India to an Indian resident for higher studies abroad amounts to expenditure incurred outside India so as to attract section 11(1)(c), and whether the rejection of registration on that basis was justified.

Analysis: The payment was made in Indian rupees in India to an Indian student, and the subsequent remittance abroad was through the recipient's own arrangement. On the facts, such assistance could not be treated as expenditure incurred outside India. The objects were also sought to be amended to remove ambiguity. The Tribunal treated the issue as covered by the principle that financial assistance given in India for education abroad remains application of income in India and does not by itself constitute spending outside India.

Conclusion: The finding of violation of section 11(1)(c) was not sustained and the rejection of registration on that basis was set aside.

Final Conclusion: The impugned order was set aside and the matter was restored to the Commissioner for fresh consideration of the Form 10AB application on merits, with the assessee obtaining relief at the present stage.

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