TaxTMI 
TaxTMI 
2017 (5) TMI 633
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.... the Income Tax Act, 1961 has been denied to the assessee company. In the order denying approval u/s 80G(5)(vi), the Ld. CIT (Exemption) has pointed out that the applicant primarily intends to carry out the activities outside India and the applicant has not submitted any approval u/s 11(1)(c). Further it is stated by the Ld. CIT (Exemption) that the applicant has simply collected funds and has not carried out any significant charitable activities. In view of this, the case does not seems to be fit for granting exemption u/s 80G. 2.1 It was submitted that the conclusion drawn by the ld. CIT(Exemption) is not correct and our reference was drawn to the provisions of Section 80G(5) of the Act which reads as under: "(5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of Sub-section (2), only if it is established in India for a charitable purpose and if it fulfills the following conditions, namely:- (i) Where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23AA) or clause (23C) of section 10: ....
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....ction and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been- (a) established for chartibale purposes for the previous year beginning on the 1st day of April, 2008 and ending 31st day of March, 2009; and (b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009." 2.2 It was submitted by the ld AR that a bare reading of the above provisions makes it clear that the fund or institution should be established in India for charitable purposes. Nowhere there is a the mention regarding the scope of activities to be carried out within India or outside India. It was accordingly submitted that the fact that the assessee intends to carry out some part of its activities outside India does not put a bar on it being approved u/s 80G(5)(vi). 2.3 It was further submitted that another objection by the Ld. CIT (Exemption) that the assessee has not carried out any significant charitable activities also does not seem to have any merit. The section 80G nowhere prescribe that carrying out of activities is a pre-condition for approval. The assesse....
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....dental surplus into growth and strengthening of its social and humanitarian projects, through itself or by transfer to any other nonprofit organization, institution, association, company, trust etc. situated in India or outside India. 10. No objects of the company will be carried out on commercial basis. 4. In light of above objects, the activities commenced by the applicant were examined. Therefore vide point No. 5 of letter No. 3777, dated 18.12.2015 applicant was asked to produce activity details carried out since its inception. In response to which AR of the applicant vide written reply dated 13.01.2016 stated that " the company has entered into a MOU with Digital Empowerment Foundation on dated 10.08.2015 with a focus to benefit the inaccessible people in the villages of India with wireless connectivity." It means that applicant only entered into MOU and activity to be started in future to fulfill its objects. 5. Further, the Clause No.-4 of Memorandum of Association reads as under:- "4.The objects of the company extend to the whole of India and all under developed as well as developing countries, as identified by the United Nationa....
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....tal income of the previous year of the persons in receipt of the income which includes the following: (a) .... (b) .... (c) Income from property held under trust - (i) Created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952 to the extent to which such income is applied to such purposes outside India. Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income." 4.2 A close reading of the above provisions, namely 11(1)(c)(i) which is applicable in the instant case, it is clear that income derived from property held under trust for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India shall not be included in total income of the person in receipt ....
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....er section 11(1)(c) of the Act. In the instant case, since such approval is not in place, the requirement of section 80G(5)(vi) cannot be said to be satisfied. Therefore, the issue is not that the scope of activities should be restricted to India and it cannot be carried out outside of India. The issue is limited to carrying out the activities outside India after seeking approval from competent authority u/s 11(1)(c) of the Act. The ld CIT(E) was therefore correct in denying the approval under section 80(G)(vi) in absence of approval of competent authority under section 11(1)(c) of the Act. 4.4 Now coming to the second contention of the ld AR where he has objected to findings of the Ld. CIT (Exemption) that the assessee has simply collected funds and has not carried out any significant charitable activities and in view of that, the matter doesn't seem fit for grant of approval under section 80G of the Act. It was submitted by the ld AR that section 80G nowhere prescribe that carrying out of activities is a pre-condition for grant of approval and so long as it has fulfilled the prescribed conditions, the approval under section 80G should not be denied. 4.5 On perusal of materi....