TaxTMI 
TaxTMI 
2026 (7) TMI 304
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....a Society since 1982 and mainly awards merit scholarships to Indian students for postgraduate studies at Oxford or Cambridge Universities. However, at the time of considering granting of registration, the Ld. CIT(E) has given several findings, which, in his opinion, were sufficient to deny registration u/s 12AB of the Act. The findings may be mentioned in brief as under: (i) The scholarships granted to students are eventually utilized outside India, in the UK specifically, ostensibly in violation of section 11(1)(c) of the Act; (ii) The scholarship beneficiaries are not strictly selected on the basis of financial hardship; (iii) The selection process is allegedly opaque and the assessee could not provide details of the selection process to the extent desirable; and (iv) The assessee could not indicate as to the kind of follow-up done by the Society once the recipients of the scholarships passed out from the courses in which they were enrolled. 1.2 The matter in ITA 5166 (u/s 80G of the Act) was adversely dealt with on the basis that the 12AB matter was held against the assessee. 1.3 The aggrieved assessee has approached the ITAT with severa....
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....f income and are actually in need of scholarships which is contrary to the factual position explained by the appellant that financial and economic criteria are also evaluated along with merit. 7. That the Ld. CIT has grossly erred in erroneously and unfairly drawing adverse inference against the appellant for allegedly failing to explain and being silent on the issue of how the appellant contacts/follows up to contact students once they finish the courses in the foreign university by disregarding the appellant's explanations that law restrictions under Data Protection and Privacy Laws, that are in force both in the United Kingdom and in India, do not permit foreign universities from sharing details of graduating students directly with the appellant. 8. That, in view of the foregoing grounds, the impugned order of the Ld. CIT is erroneous, bad in law and against the principles of natural justice." 2.0 Before us the Ld. AR argued with the help of several ITAT orders of Coordinate Benches and also written arguments. It was averred that the funds are disbursed to students in India in their Indian Bank Accounts, or the Bank Accounts of their parents or guardians, fo....
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....tc. It was prayed that the assessee-Society will be attempting to raise funds for scholarships for the cycle 2026-27 in April-May, 2026, as the scholarships have to be disbursed by July, 2026. Thus, there was some urgency for the application u/s 12AB of the Act to be allowed. 2.1 The Ld. CIT DR supported the impugned order and stated that the Ld. CIT(E) was justified in rejecting the assessee's claim since the funds were being invariably utilized outside India. 3.0 We have considered the rival submissions and have gone through the records before us. The primary issue to be decided is whether disbursing scholarships in India, to Indian students for studies at a foreign university constitutes application of income "outside India" under Section 11(1)(c), justifying denial of 12A/80G registration. Admittedly the situs of disbursement of the scholarship is within India, as the assessee is seen to be paying the scholarships in India directly to scholars or their guardians in India, in Indian currency. No amount is remitted to the UK or to any foreign institution. We need also to consider the language of section 11(1)(c) of the Act: "Income from property held for charita....
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....n the bar of limitation. This is more so when the Legislature has, under Section 119(2)(b) of the Act, conferred discretionary powers to condone the delay on the authorities concerned with a view to avoid genuine hardship.", we, thus, are of the opinion that, the delay of 38 days, that too explained, to be on account of delay in receipt of Order from Charity Commissioner, the assessee should not be penalized for that, even otherwise the authority needs to adopt a liberal and justice oriented approach to while condoning the delay. We this direct to condone the delay in filing of for 10AB in present case. 7. On other issues, which forms the belief of Ld. CIT(E) to reject the application of assessee, that the payment in India for study outside India does equate to payments / expenses incurred outside India, does not inspire any confidence, particularly when the scholarship is granted to an Indian citizen in Indian rupees. This issue was decided ITAT Mumbai in the case of R. Mangaldas Charitable Trust, Mumbai Vs. CIT(E) (supra), observing that, "if the scholarship is granted by a charitable institution in accordance with their objects, whereby such financial assistance is prov....