TaxTMI 
TaxTMI 
2020 (9) TMI 486
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....he Income Tax Act, 1961 ["the Act"], even though the appellant has an order from the Central Board of Direct Taxes ["CBDT"] as required by the proviso to Section 11(1)(c) of the Act". 3. Let us set out, in plain words, the controversy requiring our adjudication. The assessee trust had spent monies for creation of endowment funds, through contribution at the Cornell University USA, for scholarship of Indian students, as well as for foreign collaboration project between Indian and Cornell scientists, and grant of financial assistance to Harvard Business School for construction of a new executive building named Tata Hall. The amounts spent on this account, for the assessment year 2011-12, was Rs. 197,79,27,500, and, for the assessment year 2012-13, was Rs. 25,37,00,000. The question really is whether the amounts so spent by the assessee trust will be treated as permissible application of the trust income, and, accordingly, will be the assessee be eligible for tax exemption, under section 11, in respect of that income. Facts of the case and developments leading to this litigation before us: 4. The assessee before us is a public charitable trust registered under Bombay Public T....
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....December 2015, and for the assessment year 2012-13, on 9th August 2016. The additions in question, i.e. on account of application of funds abroad without specific approval of the CBDT- Rs. 197.79 crores for the assessment year 2011-12 and Rs. 25.37 crores for the assessment year 2012-13, were thus deleted by the Assessing Officer himself. However, learned CIT(A) disregarded these rectification orders by observing that the rectification order under section 154 "does not merit consideration in this appeal as the present appeal has been filed against the order of the AO passed under section 143(3) of the Act". He proceeded to hold that the CBDT's approval dated 10th November 2015 "is not retrospective in nature", that "the said order of the CBDT has been passed in response to assessee's application dated 31st March 2015, and, therefore, it cannot apply to the assessment year 2011-12 (and 2012-13)", and that the related verifications, as is the condition precedent for allowing the benefit, was not carried out in the original assessment proceedings. The impugned additions were thus, in effect, restored by the learned CIT(A), even though, based on the CBDT approval, the Assessing....
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....ral Board of Direct Taxes. Learned counsel then invites our attention to the letter dated 26th May 2010 written by the assessee trust to Member, Central Board of Direct Taxes (a copy of which is placed before us at paper-book pages 1-4) which, inter alia, states as follows: We present this Application for favour of an issue of Requisite Order as contemplated under the proviso to Section 11(1)(c) of the Income-Tax Act, 1961, for the Assessment Years 2009-10 to 2011-12. 1) Tata Education and Development Trust was founded in the Year 2008, by Mr. Ratan Naval Tata. [Trust Deed enclosed - Exhibit 'A1 The Trust has been registered as a Public Charitable Trust with the office of the Charity Commissioner, Maharashtra State, under E-25973 (BOM) [Certificate enclosed -Exhibit 'B'). The Trust is also registered with the Commissioner of Income-Tax, Mumbai u/s. 12-A(a1) under TR/42070 of September 15, 2008. [Certificate enclosed - Exhibit 'C'] 2) Clause 5(1) the Trust Deed dated July 25, 2008 lays down that: Across several countries globally, there have been significant scientific and technological developments, many of which have a crucia....
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....n India. Their main aim is to improve the livelihoods and nutritional status of rural poor in India. This core group is further supported by a Scientific Advisory Committee, who holds planning sessions at regular intervals. (b) Considering the growing economic conditions in India, Tata Education and Development Trust recognizes the need to have dynamic Indian business leaders for developing and implementing sustainable strategies for doing business in India and around the world. The Trust is planning to launch an executive education program in an association with Harvard Business School, USA which would benefit many deserving Indian students. The Social Mission of the Executive Education's is to enhance the School's reach into communities that might not otherwise have ready access to intellectual capital, teaching expertise, and programme experience offered by Harvard Business School. Harvard Business School plans to continue their commitment towards educating and training Indian business leaders in the years to come. Tata Education And Development Trust will provide financial assistance to Harvard Business School to construct Tata Hall at Harvard....
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....nd human nutrition, which require immediate attention, such as: increasing production under stress conditions; resource conversation technologies; post-harvest handling and agro-processing; fortification and dietary diversity for enhanced nutrition in India Payment Schedule: Financial Year Amount 2008 - 2009 US $ 12.50 million 2009 - 2010 US $ 18.75 million 2010 - 2011 US $ 18.75 million Total US $ 50.00 million (b) Tata Hall at Harvard Business School - To develop a locally relevant body of knowledge, including case studies and course materials for use in MBA and Executive programs in India and around the world. The focus will be on disseminating the knowledge created in India directly to businesses and school in the country. - To deepen faculty understanding of and exposure to Indian management issues, trends, and practices. HBS will be global in scope, the faculty will be knowledgeable about the most important, relevant and interesting management issues and practices everywhere in the world, with a special interest in India. - To strengthen ties with important constituencies in the region (including co....
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....t was in this backdrop that the Assessing Officer, during the course of assessment proceedings under section 143(3) for the assessment years 2011-12 and 2012-13, which were finalized on 28th March 2014 and 3rd March 2015 respectively, declined to grant exemption of income relatable to the application of funds, outside India, amounting to Rs. 197,79,27,500, and Rs. 25,37,00,000 respectively. Aggrieved by the stand so taken by the Assessing Officer, the assessee had carried the matter in appeal but the assessee also, in the meantime, moved a fresh and more comprehensive application, justifying that it was a fit case for CBDT's approval under proviso to Section 11(1)(c), and its approval as such. Learned counsel then took us through the fresh application dated 31st March 2015, a copy of which is placed before us at pages 7 onwards on the paper-book filed by the assessee. This application, inter alia, submitted as follows: 1.1 TEDT is a public charitable trust founded by Mr. Ratan Naval Tata in the year 2008. The Trust has been registered as a Public Charitable Trust with the office of the Charity Commissioner, Maharashtra State, under E-25973 (Bom). TEDT is also registere....
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....te international welfare 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 which such income is applied such purposes outside India: Provided that the Board, by general or special has directed in either case that it shall not be included in the total income of the person in receipt of such income," 2.3 As can be seen from the above, income of a charitable find religious trust (created on or after 1 April 1952), if applied for a charitable purpose outside India which tends to promote international welfare in which India is interested, shall not be included in the total income of the trust subject to a general or special order of CBDT issued under Section 11(1)(c) of the Act. 2.4 As submitted above, since TEDT has been created post 1 April 1952, funds applied/proposed to be applied by TEDT to a charitable purposes outside India that tend to promote international welfare in which India is interested can be excluded from its total income subject to an approval granted by the Hon'ble Board. ....
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.... USD (in Million) Date of remittance 2008-09 12.50 23 December 2008 2009-10 18.75 24 December 2009 2010-11 18.75 23 December 2010 Total 50.00 Details of grant for Tata Scholarship and our submissions: 3.3 As mentioned above, TEDT has given grant to Cornell to support students being citizens of India through scholarship for their higher studies at Cornell. The agreement with Cornell specifically provides that an Indian student, to be eligible for Tata Scholarship, must have attended secondary school in India and should demonstrate financial need for high quality education at the University of Cornell. 3.4 The quality of undergraduate education in India (except IITs and some other prestigious colleges) is unsatisfactory and much below international standards. Invariably, educational institutions are stifled by excessive regulations, unclear procedures and lack, of incentives/facilities for inducing independent thinking ability in students. At times, securing admissions at IITs and other colleges of repute becomes extremely difficult due to limited seats (as compared to the number of eligible candidates). Lack of....
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....A study shows that out of 700 international students who are eligible and allowed admission at Cornell, 500 students cannot enroll duo to non-availability of requisite financial resources. 3.8 All these and more has led to TEDT taking an initiative to introduce Tata Scholarships Cornell to facilitate Indian stud... As per agreed norms, the Tata Scholarships would be granted to Indian snide fulfilling the following criteria: * is a citizen of India; * Have completed secondary schooling in India; * Possesses the required intelligence and academic brilliance to qualify for admission in Cornell; and * Demonstrates financial need. 3.9 In this regard, while selecting students for granting Tata scholarships, it hits been agreed that preference shall be given to qualified students from colleges of Architecture, Art, and Planning, colleges of Engineering, Applied Economics and Management, majors from colleges of Agriculture and Life Sciences; and majors across colleges in the biological sciences, physical sciences and any other hard sciences as well as social sciences. 3.10 It is also pertinent to note that the 'Tata Scholar....
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....ing mid living abroad would normally be beyond the reach of most middle class families in India. The objective of the grant is to ensure that the most deserving students w. are in need of financial aid for higher education courses abroad secure an opportunity to realise their dreams of learning la Ivy League Universities. It would be important to note that the intention is not to provide scholarships only to the poorest of the poor students, but the level of minimum standard of education and the merits of the students are major parameters for selection. This would mean that even students from modest family backgrounds are selected for scholarship who can at least afford to bear the gap in the estimated cost of the course against the scholarship received. 3.14 It is important to note that 3 years prior to this scholarship, i.e., 2006, 2007 and 2008 in all only 20 Indian undergraduate students went admitted to Cornell. However, it is to be noted that post the Tata Scholarships there were 14 undergraduates in 2009 (4 a whom were Tata Scholars) and 18 undergraduates in 2010 (7 of whom were Tata Scholars) who were admitted to Cornell. Thus, the Tata Scholarship has def....
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....d provide a holistic approach to treatment, rather than treating diseases as separate and unrelated). This is one of the many examples of promotion of international welfare in which India is interested. 3.19 We have also provided at Annexure 6, the details pertaining to the current Tata Scholars on the campus, i.e., the Indian students who have been benefited by the Tata Scholarship Fund. The details provided duly mention the courses undertaken by the scholars as well as their academic background. Moreover, testimonials of these Tata Scholars addressed to Mr. Ratan Tata, expressing their gratitude for the endowment received for the respective courses at Cornell are attached as Annexure 7. As can be concluded from the letters, all scholars have unanimously expressed that but for the scholarship; they would not have been able to take up the courses at Cornell. 3.20 Front the above, your Honour would appreciate that provision of grant to Cornell by the Trust is in the nature of furthering education, which falls within the objects of the Trust and also within the Meaning of charitable purpose defined under Section 2(15) of the Act. Further, as narrated above,....
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....of India's rural poor. 3.26 The grant for 'TACO-AN' has been given to promote: * Collaboration among Indian and Cornell scientists that will spur strategic investments designed to accelerate agricultural productivity, and reduce malnutrition among the poor in India; * The activities shall include but not limited to, research costs, graduate and undergraduate assistantships, public-private sector collaborations, sabbaticals for Indian and Cornell faculty, student exchanges, conferences, publications and guest speaker programs; and * Sustained faculty and student engagement in joint India - Cornell agriculture and nutrition projects. 3.27 Cornell utilizes the funds extended by TEDT for undertaking cutting edge research and interventions that address the complex intersection of agriculture, human nutrition, and poverty (The link: https.//tci.cals.contell.edu/can be referred for details). The subjects of this research arc: * Agriculture - led growth strategies; * Food and micronutrient programmes; * Nutrition behavior change; * Water and Sanitation; and * Metrics on ag-nutrition. ....
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.... are funded to undertake project work should be of Indian origin or that their research work should be directed only towards India. The research and the findings of such work undertaken by TACO-AN are shared amongst the scientists, research fellows, professors, etc. of Cornell, who in turn share their work with people from various countries and thus, the benefits of TACO-AN are reaching the international community and are not only restricted to India. 3.33 In this regard, we have summarised below activities/projects undertaken by the Cornell University in terms of TACO-AN initiative: * Considering the severe agrarian distress and recurrent farmer suicides; the Vidharbha region, Maharashtra was selected as a primary field research and implementation project area for TACO-AN project. Cornell, through its students and faculty, had undertaken a number of studies in the Vidharbha region. The broad issues which the studies focus on are: (i) Value chain analysis of cotton, soya bean, tur and wheat; (ii) Malnutrition and under nutrition amongst women and children; (iii) Analysis of potential for livestock development; and (iv) Situation....
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....ted availability of crop varieties that can withstand drought and unsustainable use of ground water are common, These problems often are coupled with poor infrastructure, weak government institution and dysfunctional markets that often exclude small holders. While aspects of agriculture are very context specific because of variation in rainfall patterns, soil fertility and pests and diseases, exchanges among development practitioners, farmers and scientists who are contending with these problems in similar environments are likely to result in exchanges that benefit all In addresses to groups of farmers, frequently the most appropriate approach is to facilitate such knowledge exchanges. However, today's technologies provide many better options to this approach. One of TACO-AN's goals is to make contributions such knowledge exchanges" 3.34 In addition to the above, we have also attached following documents in relation to TACO-AN initiatives: * Details of additional activities undertaken under the TACO-AN project vide Annexure 12. * Annual Report on TACO-AN for the period 2013-14 summarizing the progress of the research activities undertaken as a par....
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....he future of education with a focus on advancing new approaches to teaching and learning, attracting and supporting the best students and faculty, creating a campus for the 21st century, and supporting multidisciplinary research. During a year, Harvard organizes more than 100 courses/events/conferences, which are attended by world leaders from business, government and society across the globe, where issues having global impact/significance are discussed and solutions are sought. For instance, considering the lethal consequences of global warming, Harvard had organized a campaign on research for Green initiatives which seeks to transform the building industry by connecting architectural research with real-world development processes and production. Through organizing several events and conferences on the subject, it has created a platform to bring together leaders in subject field and develop strategies on climate change. 4.6 As one of the world's leading universities, Harvard attracts more than 10,000 students each year. These students are either young leaders who join the undergraduate program or graduate program. These remarkable students have a significant impact on....
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....ke Harvard, there is a tremendous increase in the number of aspirants applying to various Executive Education programs. Harvard being rated as one of the topmost business school in the world, always has a situation where many deserving candidates are unable to join courses due to limitation on the number of seats available. Given the benefit of learning at Harvard as narrated above, the Tata Facility is aimed to create additional infrastructure which would increase the number of seats for the Executive Education program, thereby benefit more aspirants, both from India as well as from other countries in the world of studying at Harvard. 4.13 In the last decade, Harvard has educated 404 MBAs and 2,228 executives and senior government officials from India. With the additional infrastructure in the form of Tata Hall, there is a scope for many experienced leaders attending the Executive Education program in the years to come, which would definitely have a significant impact in their leadership roles in almost every field of economic activity. 4.14 Over past years, more than 550 senior executives and government officials (both from India as well as other countries of th....
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.... the manner of application of funds, for charitable purposes of the trust, outside India and the benefits such an application of funds was to yield, was accepted, and, accordingly, the CBDT passed an order 10th November 2015 granting the approval. Learned counsel then points out that in the said approval, the CBDT has been categorical in stating that the period covering the aforesaid approval will be from 2009-10 to 2016-17, and then he takes us through the said order, a copy of which was placed before us at page 20 of the paper-book, which reads as follows: F. No. 180/9/2010-ITA.I Government of India Ministry of finance Department of Revenue (CBDT) (ITA-I Division) .... Order u/s. 11(1)(c) of the Income-tax Act, 1961 Name of the applicant : Tata Education and Development Trust Address of the applicant : Bombay House, Homi Mody Street, Mumbai-400 001 Date of Application : 31.03.2015 Date of Order : 10.11.2015 With reference to your application dated 31.03.2015, the undersigned is directed to convey that under the proviso to clause (c) of sub-section (1) of Section 11 of the Income-tax Act, 1961 (4c of 1961), the Cent....
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....dditions impugned in appeal, were submitted before the CIT(A). The arguments were then advanced justifying as to how, on merits and in the light of the CBDT order (supra), the assessee deserves to succeed in appeal. As pointed out by the learned counsel, the CIT(A), however, proceeded to decide the matter on merits and observe as follows: 5.3. After considering the submissions of the appellant in the light of the above referred order of the CBDT. I am of the considered view that the action of the AO in rejecting claim of the assessee u/s. 11(1)(c) of the Act in respect of assessee's income applied outside India aggregating to Rs. 197,99,94,581/- on the ground that in respect of the said amount, there is no direction given by the CBDT by general or special order as contemplated in proviso to sec. 11(1)(a) of the Act and consequently, denying the benefit U/s. 11(1)(a) of the Act in respect of the said amount of Rs. 197,99,94,581/- is correct and tenable in law for the following three independent reasons: i) The above referred order of the CBDT dated: 10-11-2015 is not retrospective in operation as nowhere in the said order it has been specifically mentioned that....
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.... that the assessment of the assessee trust, for the assessment year 2009-10, was reopened on 10th March 2015, on the ground that the amounts paid to Cornell University and Harvard University were not eligible for consideration under section 11(1)(c), and, to that extent, exemption of income was not available. However, in the final assessment order under section 143(3) r.w.s. 147 framed on 30th March 2016, the exemption was duly allowed in the light of the CBDT approval dated 10th November 2015. Learned counsel then invites our attention to the assessment orders for the assessment years 2010-11, 2013-14, 2014-15, 2015-16 and 2016-17 copies of which were placed before us in the paper-book at pages 63-85. Except for the assessment year 2010-11, which was a summary assessment under section 143(1), all other assessments were detailed scrutiny assessments under section 143(3) taking into account all the relevant facts and taking a conscious call on the availability of benefit under section 11(1)(c) in respect of amounts spent by the assessee trust outside India. He submits that it is difficult to comprehend as to how a different treatment could be justified, so far as availability of ben....
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....ts that section 11(1)(c) does not set out the time frame within which the application for approval of the CBDT is to be sought, whereas, in sharp contrast to this position, there are statutory provisions wherein it is provided that similar approvals must be applied for within certain time frame. He then invites our attention to the requirements of 10(23C) wherein, in the first proviso to the said section, it is stated that the exemption "shall not be available" unless the application is made within the time framework set out in (i) to (iv) in the said proviso. Similarly, a time frame of "a period of one year from the date of the creation of the trust or the establishment of the institution" is also provided for in Section 12A(1)(a), and exception to the said time frame are set out in section 12A(1)(ac). A reference is then made to proviso to Section 80HHD(4) which provides that so far as any utilization of reserve which would result in creation of any asset owned by the assessee outside India, "such asset should be created only after obtaining prior approval of the prescribed authority". It is then again pointed out that no such time frame for CBDT approval are set out in Section 1....
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..... Their Lordships further added that "it would be conducive to judicial discipline and the maintaining of certainty and uniformity in administering the law that the taxing authorities should proceed on the basis that the recognition granted and available for the particular assessment year implies that the provident fund satisfies all the conditions under rule 4 of Part A of the Fourth Schedule to the Act and not sit in judgment over it". It was thus contended that by the same logic, once the Board has granted approval under section 11(1)(c), it cannot be open to the Assessing Officer to question the same. 14. Learned counsel then invites our attention to two judgments of Hon'ble jurisdictional High Court, broadly in support of the same proposition i.e. when an approval is granted by the prescribed authority, the Assessing Officer cannot question correctness of the same. Our attention is invited to Hon'ble Bombay High Court's judgment in the case of CIT Vs Parrys (Eastern) Pvt. Ltd MANU/MH/0175/1988 : [(1989) 176 ITR 449 (Bom)] wherein it was held that once the Central Government granted approval the approval, the Assessing Officer could not have questioned the same. ....
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....e with the proceedings even if order of the ITO by the appellate or revisional order is set aside because the revenue has not accepted the order and matter is sub-judice". The principle that the learned counsel thus seeks to rely upon is that the operative order is to be given effect, and submits that the operative order is the order of the Board dated 10th November 2015 which holds the field, and the Commissioner (Appeals) ought to have applied the same. 16. On the strength of these submissions, learned counsel urges us to vacate the order of the learned Commissioner (Appeals) on this point, and hold that the benefit of exemption under section 11(1)(c) was also available to the assessee in respect of amounts spent, on charitable objects outside India, by way of payments to Cornell University and Harvard University. 17. Learned Departmental Representative, on the other hand, vehemently supports the order of the learned Commissioner (Appeals) and justifies the same. He begins by pointing out that the learned counsel has gone to the merits without looking at the applicable legal position inasmuch as the CBDT approval is not an absolute or unconditional approval, and that this a....
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....the course of assessment proceedings. However, the AO has not done any such verification during the assessment proceedings. The AO has given effect to the order of the CIT (Appeals), Mumbai determining tax and interest payable for the AY's 2011-12 and 2012-13. 2.3 The assessee-trust was created on 25.07.2008 and, hence, provisions of clause 11(1)(c)(i) of the Act would apply where the conditions to be fulfilled are as below: 1. for charitable purpose which tends to promote international welfare in which India is interested; and 2. general or special order of the Board 18. The Assessing Officer, in the written submissions before us, then reproduced the CBDT approval and proceeded to observe as follows: 2.4 The first condition "for charitable purpose which tends to promote international welfare in which India is interested", it is to be noted that the aforesaid order of the CBDT explicitly mentions that such 'purpose' is subject to verification during course of assessment proceedings. The verification mandated by the Board is to be undertaken during assessment proceedings and the aforesaid order of the CBDT did not grant an ....
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.... is interested" and that "subsequently, even when the application was approved by the Board, it was unambiguously stated that the approval was subject to verification by the AO". It is then submitted that on a "the combined reading of the above it is undisputed that the AO has not verified the details during the course of assessment proceedings as mandated by the CBDT" and that "it is humbly but emphatically submitted that the learned CIT (Appeals)'s order denying the exemption u/s. 11(1)(c) of the Act deserves to be upheld". The Assessing Officer has then made an alternative prayer by stating that "it is prayed that alternatively, that the entire matter may kindly be set aside to the file of the Assessing Officer so that due verification as envisaged in CBDT's approval letter dated 10.11.2015 can be undertaken. It is respectfully submitted that allowing the assessee's appeal at this juncture without any verification as mandated would run contrary to said order of the CBDT in this regard". When learned Departmental Representative was asked whether it was at all open to the learned CIT(A) to adjudication on a grievance, which did not at all survive at the stage of adjudi....
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....ed" It is submitted that the relief was wrongly given by the Assessing Officer under section 154, without necessary verifications, but then the scope of that section is limited and no such exercise could have been carried out. He further submitted that he can answer the question regarding deviation in these two years in more specific terms after discussion the matter with his senior officers. Learned Departmental Representative, however, added that the rule of consistency, as laid down in the case of Radhasoami Satsang(supra), is not absolute. It is then pointed out that in the said judgment itself comes with a rider that "the facts of this case being very special, nothing should be said in a manner which would have general application" and that "we are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application". Learned Departmental Representative, on the strength of these submissions, urged us to confirm the order of the learned CIT(A), or at best remit the matter to the file of the Assessing Officer for fresh veri....
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....venue before them, but relying on a subsequent judgment in the case of Bharat Sanchar Nigam Ltd. v. Union of India MANU/SC/1091/2006 : [2006] 282 ITR 273 (SC)] rejected the same. We were taken through relevant observations in these judicial precedents. It is thus submitted that the objection raised by the learned DR, therefore, cannot be accepted. Learned counsel submits that in any case promotion of international welfare in which India is interested cannot be said to be non-existent for the two years, when it is found to exist in the remaining six years. It is thus submitted that as is the principle laid down in Radhasomai Satsang's case (supra), when a factual aspect permeating through the different years has been found one way or the other, it cannot be ordinarily deviated from. We are thus urged to uphold the plea of the assessee that exemption under section 11(1)(c) is admissible in respect of the amounts paid by the assessee to Cornell University and Harvard University, as permissible application of trust income for the purposes of the trust outside India, and grant relief accordingly. Our analysis: 21. We have given our careful consideration to the rival contention....
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...., 1961. The Revised income computed as under:- Gross receipts as per computation Rs. 229,34,27,501.00 Less: Income actually applied towards Objects (i) In India Rs. 8,16,25,444.00 (ii) Outside India Rs, 197,79,37,500.00 Rs. 205,95,62,944.00 Rs. 23,38,64,557.00 Exemption u/s.11(1) of the Income Tax Act allowed to the extent of income available Rs. 229,34,27,501.00 Total Taxable Income Rs. N I L Give credit for taxes paid after verification. Issue revised notice of demand/refund order accordingly. 23. The rectification order so passed and the original assessment order were, for all practical and for all legal purposes, stood merged, and the disallowance thus ceased to exist as on 8th December 2015. To this extent, grievances raised in the appeals before the CIT(A), against the aforesaid disallowances, became wholly academic and infructuous. Yet, on 29th December 2017, when learned CIT (A) disposed of these appeals, he proceeded to adjudicate on these issues. That course of action, in our considered view, was not permissible. ....
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....ion 154 and thus deleting the disallowance of exemption, had any merits, the remedy was not with him. He was not seized of the matter regarding correctness of relief granted by the Assessing Officer under section 154, and, at the same time, legal effect of the order under section 154 was that the issue, which he was called upon to adjudicate on, was rendered academic. As held by Hon'ble Calcutta High Court in the case of PCIT Vs KPC Medical College and Hospital [MANU/WB/0791/2018 : (2018) 95 taxmann.322 (Cal)], in view of the scope of Explanation to Section 251, the CIT (A) can deal with "any matter arising out of the proceedings in which the order appealed against was passed" but then when different sub clauses of section 251(1) provide for different appeals for the orders, while dealing with appeal against one order, the CIT(A) cannot deal with the subject matter of the other order. This is evident from Their Lordships' observations to the effect that "As would be evident from Section 251(1) of the Act, an appeal against an order of assessment is covered by clause (a) thereof and an appeal against an order imposing a penalty is covered by clause (b) thereof. In other word....
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....ee must succeed in appeal on this point. 27. As learned counsel for the assessee rightly contends, once an authority, which has the jurisdiction to pass an order, passes an order, unless that order is set aside by the process of law, it cannot be ignored. The powers of granting approval for the purpose of application of income of the trust, for objects of the charitable institution, vests with the Central Board of Direct Taxes, and, in exercise of these powers, the Central Board of Direct Taxes had granted the approval dated 10th November 2015. On the question as to whether, in the course of assessment proceedings, such an approval can be called into question, we find guidance from Hon'ble Supreme Court's judgment in the case of Gestetner Duplicators(supra) wherein Their Lordships have, inter alia, observed as follows: ...........However, we would like to make some observations with regard to the true impact of the recognition granted by the Commissioner of Income-tax to a provident fund maintained by an assessee. The facts in the present case that need be stressed in this behalf are that it was as far back as 1937 that the Commissioner of Income-tax had granted....
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.... ............................ ............................ (c) income derived 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 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 30. In the present context, in plain words, section 11(1)(c)(i) provides that so far as any income from any property held under trust is concerned, in respect of the trusts created on or after 1st April 1952, as long as such income is applied 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. There is, however, a common proviso to Section 11(1)(c) (i) and 11(1)(c)(ii) which lays down the condition that the CBDT, by general or special order, has directed that "it shall....
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....restigious university like Cornell, would definitely provide international outlook and develop personalities of Indian students and will thereby contribute to international welfare in future from wherever they are situated/placed"., The point was clarified further, and it was explained that "To give example, one graduate student, Mr. Jishnu, who, had received admission for undergraduate studies in Cornell University, but was unable to accept it owing to financial reasons was selected for the scholarship. The scholarship has enabled him to pursue graduate studies from Cornell University and together with his Advisor, he is mapping genetic similarities in multiple diseases, which would improve the way diseases are treated world over, including India (as it would provide a holistic approach to treatment, rather than treating diseases as separate and unrelated). This is one of the many examples of promotion of international welfare in which India is interested". Similarly, justifying the contribution to Harvard University is concerned, it was explained that "as the above donation to Harvard by the TEDT is for furthering education, it falls within the objects of the Trust and also withi....
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....dian and Cornell scientists, and grant for financial assistance to Harvard Business School for construction of a New Executive Building named 'Tata Hall'." It cannot, therefore, be said that the condition regarding promotion of international welfare in which India is interested was not considered by the CBDT. Once this aspect of the matter has been examined by the Central Board of Direct Taxes- the highest authority under the Income Tax Act 1961 and the prescribed authority under proviso to Section 11(1)(c), as has clearly been examined in our considered view, it cannot be open to any other authority to conduct the same exercise again. That would not only be contrary to the law laid down by Hon'ble Supreme Court in Gestetner Duplicator's case (supra), but also a wholly superfluous and parallel exercise by an authority which does not statutory powers to conduct that exercise. 32. A plain reading of the CBDT approval would show that only condition attached to in the CBDT approval, as learned counsel for the assessee so correctly point out, is the condition that "the claim as above of the applicant (regarding contributions made to Cornell University USA and Harvard ....
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...., cannot be conducted by the Assessing Officer, nor does the scheme of the Act, or facts of the case- particularly in the light of material on the basis of which the CBDT has granted the approval, permit so. 34. It is also important to bear in mind the fact that the Assessing Officer has in the other assessment years covered by the same CBDT approval, including four subsequent years and including an earlier year of which the assessment was reopened, allowed the benefit of Section 11(1)(c) in the course of scrutiny assessment proceedings under section 143(3). By implication, therefore, it is accepted that either the verification about promotion of international welfare in which India is interested was not required as the same was done by the CBDT, or, in the opinion of the Assessing Officer, the application of income outside India as such tends to promote the international welfare in which India is interested. Whichever way one looks at it, that is a fundamental fact which permeates from year to year, and, the principle of consistency requires that once a fundamental fact permeating through different assessment years has been found, as a fact, one way or the other and parties hav....
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....debar courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the presidential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi-judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision of where the earlier decision is per incuriam. However, these are fetters only on a co-ordinate Bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction." (emphasis supplied) ....
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....on, and rightly so, about the manner in which the contributions made by the assessee trust tend to promote the international welfare in which India is interested. The only place in the material before us where this aspect of the matter is discussed and justified is the application dated 31st March 2015 filed by the assessee trust before the Central Board of Direct Taxes, and, by granting approval to the said application, by unambiguous implication, the Central Board of Direct Taxes has approved the said justification. The distinction in facts canvassed by the Assessing Officer is thus a distinction without material difference. 38. In the light of the above discussions, even though there is no res judicata in the income tax proceedings, the principles of consistency apply to the income tax proceedings nevertheless, and, in the light of these principles of consistency, it was not open to the Assessing Officer to decline the benefit of section 11(1)(c), in respect of application of income of the trust outside India by making contributions to Cornell University USA and Harvard University USA, only for these two years, when, on the same set of facts, the benefit of section 11(1)(c) h....
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....J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 (KB) at page 71, that: '......in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.'" Viewed thus, a time limit for making application for approval under section 11(1)(c) cannot be inferred, and, in the absence of such a time limit, it could not be said, as was impliedly held by the CIT(A), that an application for approval under section 11(1)(c) cannot be made after the end of the relevant assessment year. The reasoning employed by the learned CIT(A), on this count as well, does not meet our approval. The last reason for rejecting the impugned claim of exemption by the CIT(A) was that the exemption under section 11(1)(c) was subject to necessary verification during the assessment proceedings and that verification has not been done. There is no merit in this plea either. The only verification required, as we have held earlier in this order, was with respect to "the extent to which such inco....
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....a taxpayer friendly environment. We hope that the admirable work being done by the Government of India, in pursuing such forward looking policies at the macro level, is not allowed to be overshadowed by the isolated situations like this, at the field level, which must be minimized by sensitising the authorities concerned. An effort should be made to create a taxpayer friendly atmosphere by adopting just and fair approach at every level of the tax administration. Ground wise disposal of appeals before us: Assessment year 2011-12 43. We first take up the appeal filed by the assessee for the assessment year 2011-12, i.e. ITA No. 1423/Mum/2018, directed against the order dated 29th December 2017 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12. 44. Learned counsel for the assessee fairly submits that the only issue that requires our adjudication in this appeal is first ground of appeal, i.e. "on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ["CIT(A)"] has erred in denying deduction for the income applied outside India under section 11(1)(c....