TaxTMI 
TaxTMI 
2024 (9) TMI 144
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....llow the basis of the order of the Hon'ble ITAT in the own case of the assessee Jamestji Tata Trust case without appreciating the fact that the Department has not accepted the said decision on merits and has filed an appeal u/s 260A to the Hon'ble High Court vide ITXA 1847/2014, which is pending adjudication before the Hon'ble High Court... 2. The brief facts of the case are that, the assessee trust is registered u/sec 12A of the Income Tax Act, 1961 and with the Charity Commissioner under the Bombay Public Trust Act, 1950. The main objects are that the assessee trust grants loan scholarship to Indian students in India for their higher education overseas. The assessee has filed the return of income for the A.Y 2011-12 on 29.09.2011 disclosing a total income of Rs. Nil after claiming exemption u/sec 11 of the Act. Subsequently the case was selected for scrutiny and notice u/sec 143(2) and u/sec 142(1) of the Act are issued. In compliance to the notice, the Ld. AR of the assessee appeared from time to time and furnished the details and information in support of the claims made in the return of income filed and also application of income for achieving the objects of the t....
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....n territories. vii. Payment to an Indian person for his education does not necessarily mean that payment of amount to an Indian person for his education abroad/outside India is income applied on education in India. viii. That the act/event of paying amount happening within Indian territories is not sufficient since both conditions mentioned in land 2 are to be satisfied. In view of above detailed discussion I hold that amount of Rs. 4,04,35,275 spent by assessee trust for charitable purpose outside India is not exempted u/s 11 and same will be treated as its income for the year under consideration and is being taxed accordingly. Penalty proceeding u/s 271(1)(c) of the IT Act are initiated separately for filing of inaccurate particulars. 5. Subject to the above remarks, the total income of the assessee is computed as under: Total Income - Nil Add: loan Scholarship Awarded disallowed 4,04,35,275/- Total income 4,04,35,275/-" 3. Aggrieved by the order, the assessee has filed the appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, statement of facts, submissions of the assessee and findings of the AO and decision of the Hon'ble ITAT in the a....
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....outside India. The AO further observed that the appellant did not have any CBDT's order in this regard u/s 11(1)(c) of the Income Tax Act. The AO held that the application of income i.e. execution of charitable purpose as well as charitable purpose both should be in India. It is not the case that the charitable purpose should be confined to India and execution of charitable purpose maybe inside or outside India, The AO relied on the order of the Hon'ble Delhi High Court in the case of Director of Income Tax (Exemption) vs. National Association of Software and Service Companies (345 ITR 362). In view of the same the AO issued a show cause noticed dated 6.3.2014 to the appellant and the appellant submitted its reply on 13.3.2014. 6.2.1 The appellant in its reply to the AO submitted that purpose id required to be made in India but it is not necessary that related to following such purpose be carried out in India. It has further stated that candidate is issued the cheques before he goes abroad for education. It is immaterial for purpose of section 11 whether the charitable or religious purposes are confined to the taxable territories or not. It is sufficient if the income is ....
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....s also submitted that the Hon'ble ITAT while delivering this judgment has clearly held that the facts in the case of National Association of Software and Services Companies which was relied upon by the AO were distinguishable. The relevant part of the judgment of the Hon'ble ITAT is as under: 10.5 We have considered the rival submissions and perused the relevant material. The assessee has given grant to 97 scholars studying in various institutions and universities outside Indian and the total amount of grant is Rs. 1,53,50,000/-. The assessee paid the grant in India and for the purpose of education of Indian students/persons, thus the charitable purpose of the grant is education of Indian persons. The application of income of the assessee completes at the point when the assessee released the grant which took place in India. The decision relied upon by the revenue is not applicable in the facts of the present case as the application of income took place in India and for the purpose of education of Indian students/persons. Therefore, for taking education by beneficiary from abroad would not amount to application of income of the assessee outside India. In the case of Bharat....
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....oses in India" refers only to the situs of the expenditure and not" to the place 'where the "purposes" are carried out. The fact that the troupe gave the performance abroad is therefore no disqualification for treating he amount actually spent in India as application of the amount for charitable purposes. The Commissioner also referred to collections made for performances given as an activity for profit. We find that such performances do not constitute activities for profit as the collections are in the nature of donations received for the purposes of the trust. Hence this objection also cannot be sustained, it follows that the exemption granted by the Income-tax Officer was not erroneous and did not require to be reviewed by the Commissioner. Hence his order u/s 263 is cancelled. The appeal is allowed." 10.6 Similarly in the case of CEO Clubs India (supra), coordinate bench of this Tribunal has held in para 11 as under:- "The other objection of the DIT was that the activities of the Assessee were not confined to India and therefore registration cannot be granted. The basis for these observations is that conferences were to be held outside India. We are of the view that hol....
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....assessee trust claimed loans granted to Indian students as scholarship for their overseas education as application of for the purpose of exemption u/s 11 of the Act. But according to the Assessing Officer income should have been applied for charitable purpose on education within Indian territories and not outside India. According to him, mere fact that persons to whom payments have been made for charitable purpose is Indian and payment has been made in Indian territory is not sufficient but the activity related to charitable purpose for which payment is made, should also happen within Indian territory. Before the Ld. CIT(A), the assessee relied on the decision of the Co- ordinate Bench of the Tribunal in the case of Jamsetji Tata Trust (supra). The Ld. CIT(A) after considering that facts of instant case being identical to facts of Jamsetji Tata Trust (supra), he deleted the disallowance observing as under: "6.2.1 The appellant in its reply has reiterated the stand taken before the AO and has also relied on the judgment of the Hon'ble ITAT in the case of the Jamsetji Tata Trust vs. Joint Director of Income-tax (Exemption) Range- II, (2014) 44 taxmann.com 447 (Mum.-Trib.) where....
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....states that the income derived from property held under trust wholly for haritable purposes shall not be included in the total income to the extent to which such income is applied to such purposes in India. The question is whether this section requires the application of money in India or the carrying out of the purposes in India or both. The contention of the revenue is that apart from the money being spent in India even the purpose must be carried out in India. The section itself contradicts this contention. Section 11(1)(c)(ii) provides that income applied to such purposes outside India is exempt in the case of trust created before 1-4-1952 subject to the approval of the Board. This underlines the principle that Governments do not forego their revenue in favour of charges paid outside their countries and hence the relevant consideration is whether the situs of the application of the money and not the place in which the objects of the trust may become effective. It may be pertinent to refer to section 1 of 16 which exempts scholarships granted to meet the cost of education where also the CBDT itself does not consider scholarship granted for education abroad as money spent outside....