TaxTMI 
TaxTMI 
2025 (10) TMI 1433
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....s for prosecuting studies in India or abroad in any specialized subject on such terms as may be thought fit", the assessee intends to apply funds outside of India and a show cause was issued to the assessee seeking necessary clarification. 3. In its submissions, the assessee-trust submitted that the trust vide the said clause meant to provide betterment and incentive/assistance to students for further studies either in India or abroad. It was submitted that such assistance is given in India or by assisting in Indian rupees within India whether the study is in India or abroad and nowhere it is mentioned in the Trust Deed that assistance will be paid in foreign currency. The assessee trust also submitted an affidavit and copy of the resolution passed in the meeting of the trustees and the contents thereof reads as under: "Resolved that Ramesh Sheth is authorized to inform Income Tax Department that trust has not remitted any donation in Foreign Currency since its inception and trustees have no intention to remit any donation in Foreign Currency in Future also. For removal of doubt, it is unanimously agreed by trustees that necessary change in Clause 3(k) may be c....
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....f registration u/s. 80G(5) of the Act without highlighting or point out what specific non-compliances have been observed by him. 7. Further, in the context of the findings of the Ld. CIT(E) that there is a violation of section 11 of the Act, our reference was drawn to the provisions of section 11 which read as under: "11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property; (b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such purposes in India; and, where any such income is finally set apart f....
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....IT(E), the assessee-trust intends to provide financial assistance to students for prosecuting studies in India or abroad and such assistance will be given in India by assisting in Indian rupees to Indian students and, therefore, as far as application of income is concerned, the same will happens for educational purposes in India. It was submitted that in any case, the assessee-trust has not remitted any donation in foreign currency since its inception and has no intention to remit any donation in foreign currency in future also and for removal of any doubts, the same was submitted before the Ld. CIT(E) by way of an affidavit and even resolution was passed by the trustees that the word "abroad" in one of the objects may be deleted from the object clause and for which the necessary application shall be moved before the Charity Commissioner and a certified copy thereof was submitted before the ld CIT(E) which he has failed to appreciate in correct perspective. It was accordingly submitted that there is no violation of section 11 of the Act and if at all there is a likelihood of potential violation as so apprehended by the Ld. CIT(E), it would be for the purposes of determining the inc....
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....atisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AA of the said Act. So far as income which is applied outside India is concerned, is not a relevant criteria for rejecting the application. In absence of order under section 11(1)(a)(c), one cannot seek benefit for application of income for charitable or religious purposes, outside India. Therefore, the order dated 24-2-2004 made by the Director of Income-tax (Exemptions), Annexed at page 32 which is based on irrelevant criteria is quashed and set aside with a direction to consider the application strictly in accordance with law. It is made that even application under section 80G is required to be considered afresh. It is directed that the application shall be disposed of within a period of four weeks by the Commissioner." 11. It was submitted that the said decision was subsequently followed by the Co-ordinate Bench of the Tribunal in the case of Foundation for Indo German Studies vs. DIT(Exemptions) [2016] 74 taxmann.com 66 (Hyderabad-Trib), wherein the similar proposition has been laid down. Furthe....
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.... India has been carried out. In such circumstances and facts of the case, the learned DIT(E) is not justified in denying registration u/s.12AA r.w.s. 12A of the Act. The reliance is placed upon the decision of Hon'ble Delhi High Court in the case of M.K. Numbyar Saarf Law Charitable Trust (supra)." 12. Further, our reference was drawn to the Co-ordinate Bench of the Tribunal in the case of Sarbat The Bhala Gurmat Mission Charitable Trust vs. CIT (Exemptions), in ITA No. 297/Chd/2020, dt. 30-03-2021, wherein similar proposition has been laid down and the relevant findings read as under: "13. The Ld. Pr. CIT's order in the present case, therefore denying registration to the applicant assessee merely for the reason that its objects included application of income outside India, we hold, is not in accordance with law. More particularly when, admittedly, this was not the sole and main object of the applicant assessee, but only its ancillary and incidental object. It is not the case therefore that there is to be no application of income within India at all as per the objects. In fact the main object of the applicant assessee involves carrying out charitable activities in I....
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....Form No. 10A for registration under section 12A and recognition under section 80G of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The application was rejected on the ground that the applicant itself has admitted that the scholarships can be paid to the members even outside India. It is in view of this admission that the activities will be extended outside India as per the objects laid down, it was held that the registration cannot be granted under section 12A of the Act and the approval of exemption under section 80G also cannot be granted. Section 11 of the Act refers to income from property held for charitable or religious purposes. The relevant provisions are reproduced hereunder: "11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income fa) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which ....
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....s concerned, it is not a relevant criteria for rejecting the application. In the absence of an order under section 11(1)(a) and (c), one cannot seek benefit for application of income for charitable or religious purposes, outside India. Therefore, the order dated February 24, 2004 made by the Director of Income-tax (Exemptions), annexed at page 32, which is based on irrelevant criteria is quashed and set aside with a direction to consider the application strictly in accordance with law. It is made clear that even the application under section 80G is required to be considered afresh. It is directed that the applications shall be disposed of within a period of four weeks by the Commissioner." 16. The aforesaid decision of the Hon'ble Delhi High Court has been followed by the Coordinate Benches of the Tribunal in the case of National Informatics Centre Services Inc. (supra). 17. In view of the above, the order passed by the Ld. CIT(E) denying registration u/s 12A of the Act is set aside and the Ld. CIT(E) is directed to grant registration as applied for by the assessee. " 13. Finally, our reference was drawn to the decision of the Co-ordinate Bench of the Tribu....
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....e 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 India. Similarly in the present case of such a wide object of propagation of art it would be difficult to confine it to the shores of the land. We are of the considered opinion that the expression "applied to such purposes 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 t....
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....E) in terms of the genuineness of the activities of the trust. 16. As far as non-fulfillment of the conditions so laid down in clauses (i) to (v) of Section 80G(5) the Act, Ld.CIT(E) held that the explanation submitted by the assessee against violation of section 11 of the Act is neither satisfactory nor conclusive and, therefore, in absence of necessary and sufficient compliance by the assessee, he is unable to arrive at a satisfactory conclusion on these parameters and in view of the same, the ld CIT(E) rejected the application of the assessee, seeking registration u/s. 80G of the Act. In effect, the ld CIT(E) has referred to the non-fulfillment of condition as so specified in 80G(5)(i) which provides that where the institution or fund derives any income, such income would not be liable for inclusion in its total income under the provisions of section 11 and 12 of the Act. 17. In this regard, the ld CIT(E) has referred to the one of the object clause in the trust deed and held that the assessee seeks to provide financial assistance to students for studies abroad and the same will result in application of income outside of India and thus, there would be a violation of provis....