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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 24.12.2024 of Learned Commissioner of Income Tax (Exemption), Mumbai [hereinafter referred to as the “CIT(E)”], wherein the Ld.
K.M. & S.K. Trivedi Charitable Trust CIT(E) has rejected the appellant application for grant of registration u/s 80G(5)(iii) of the Income Tax Act
The brief facts of the case are that, assessee has filed an application in Form 10AB and requested for approval u/s 80G of the Act under clause (iii) of first proviso to sub section (5) of section 80G of the Act. On verification of Form 10AB filed by the assessee, the Ld. CIT(E) found that the application was not complete and all the documents required to be accompanying the application were not furnished, hence a notice was issued to the assessee on 09.11.2024 requesting the assessee to furnish the complete set of documents mentioned in Rule 11AA. Further the assessee has made submission vide letter dated 27.11.2024 and after going through the submission made by assessee, the Ld. CIT(E) has noticed that the trust deed/MOA, point no. c(v) and c(x) of the objects are in violation of provisions of section 11 of the Act as the trust intends to apply /receive funds outside India. For these reasons, the Ld. CIT(E) has rejected the application of assessee for grant of approval u/s 80G(5)(ii) of the Act.
Aggrieved by the order of Ld. CIT(E), Assessee preferred the present appeal before us and has raised the following grounds of appeal:- Page |
2. K.M. & S.K. Trivedi Charitable Trust 1) On facts and circumstances, the Learned Commissioner of Income-tax (Exemptions), Mumbai, has erred in refusing to grant registration of the Appellant Trust u/s. 80G(5) (iii) of the Income-tax Act, 1961 due to violation of provisions of Section 11 of the I.T. Act, 1961
2) The Learned Commissioner of Income-tax (Exemptions), Mumbai, has erred in not considering the affidavit given during the course of hearing to the effect that Appellant has not carried on any activities of spending any amount outside India and thereby ignoring the facts of the case.
3) The Learned Commissioner of Income-tax (Exemptions), Mumbai, has erred in not following the decisions in the case of Jamsetji Tata Trust V. Jt. CIT (Exemption) (2014) 44 taxmann.com 447/148 ITD 388 (Mumbai), where awarding scholarships for Education to Indian Students or expending money for charitable objects is held not in violation of Provision of Sec. 11 of the Act, 1961 and therefore not issuing the certificate u/s. 80G of the I.T.Act is rejecting grant of Certificate is not in accordance with the provisions of the Act.
4) The Appellant reserves right to add, amend or alter grounds of appeal.
We have heard Ld AR and DR and examined the record as well as disputed clause of the objects of the trust. At the outset, it is pointed out by Ld. AR that the impugned order passed by the Ld. CIT(E) is not legally sustainable because there was no violation of section 11 of the Act K.M. & S.K. Trivedi Charitable Trust in assessee’s trust. Secondly, it is argued that Ld. CIT(E) in para 4 of the impugned order has not reproduced the entire clause c(v) and c(x) of the objects of the trust deed. Thirdly, it is argued that the charitable activities as per objects of the trust are to be carried out in India and no money is to be received or spent outside India and Ld CIT(E) while rejecting the application has misdirected itself. In support of his argument, Ld. AR relied on the judgment of Coordinate Bench of ITAT in the case of ITO vs. JN Tata Endowment for the Higher Education of Indians (2024) 165 taxmann.com 758 (Mum-Trib). He further relied the other similar judgment of Coordinate Bench of ITAT in the case of ITO vs. JN Tata Endowment for the Higher Education of Indians (2024) 166 taxmann.com 126 (Mum-Trib) wherein one of us was the member of the Coordinate Bench. The relevant portion of the order of Coordinate Bench in ITR (2024) 166 taxmann.com 126 Mumbai (supra) is reproduced below:-
5. We have heard rival submission of the parties and perused the relevant material on record. The 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 K.M. & S.K. Trivedi Charitable Trust 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.) wherein the Hon'ble ITAT has held that the education grant given to the Indian Students in India for education/higher education abroad fulfills the conditions of application of money for such purpose in India. The appellant has 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 K.M. & S.K. Trivedi Charitable Trust application of income of the assessee outside India. In the case of Bharata Kalanji (supra) the Chennai Bench of this Tribunal while deciding a question arising from the payment of Rs. 1.55 lakh made to a travel corporation of Indian for sending a troop on tour. The AO treated the expenditure as application of income of the trust for charitable purpose. However CIT revised the assessment and was of the opinion that this expenditure was prohibited and was not applied for purpose of trust in India and, therefore, not eligible for exemption u/s 11. The main object of the trust was to advance, propagate, increase and promotion of Indian classical and Folk arts and Indian music etc. The trust was invited by the Government of Nigeria to give certain dance performance abroad. Accordingly the trust sends a troop and paid a sum of Rs. 1.55 lakh being the passage money to the Travel Corporation of India. The Tribunal held in para 6 as under:- "6. The crucial question is only whether the conditions in section 11 are complied with. That section states that the income derived from property held under trust wholly for charitable 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 K.M. & S.K. Trivedi Charitable Trust the objects of the trust may become effective. It may be pertinent to refer to section 16(10) 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 exemption u/s 11 of Rs. 3,47,50,026/- αε income applied to charitable purpose in India. The grounds of appeal
1,2 and 3 are allowed." (emphasis supplied externally) 5.1 In the above case relied upon by the ld CIT(A), the coordinate bench held the disbursal of loan scholarship to students in India for study overseas as application of income for charitable purposes in India. As the facts and circumstances of the instant case are identical to the facts of decisions relied upon by the Ld. CIT(A) therefore, we uphold the order of the Ld. CIT(A) on the issue in dispute. The grounds of appeal of the Revenue are accordingly dismissed.
6. In the result, the appeal of the Revenue is dismissed.
On the other hand, Ld. DR supported the impugned order of Ld. CIT(E) and stating that the appeal is liable to be dismissed.
We have also examined the disputed clause of the trust which are extracted below:-
Clause c(v):- “Awarding scholarships and fellowships in cash or in such other form and on such terms and conditions as the Trustees may think fit for the purposes of undertaking prosecuting and encouraging studies PROVIDED THAT such scholarships and fellowships shall be awarded to deserving students and those studying in schools, colleges, universities and other educational institutions in India or abroad and who cannot afford, and have no means to prosecute the K.M. & S.K. Trivedi Charitable Trust same PROVIDED FURTHER THAT in case of students studying abroad such scholarships and fellowships should be awarded in India.”
Clause c(x):- “To render financial help to needy persons to enable them to obtain medical treatment either in India or abroad in cash or in such other forms and on such terms and conditions as Trustees shall deem fit PROVIDED HOWEVER that in case of medical treatment to be obtained abroad, financial help should be rendered in India.”
On perusal of the contents of the trust deed as extracted above, it is evident that the charitable activity will be carried out in India as money will be disbursed for education and medical aid in India and not abroad. The facts and circumstances of the case before us are exactly similar to the facts of the case decided by the Coordinate Bench of ITAT Mumbai wherein one of us was member of that Bench in the case of ITO vs. JN Tata Endowment for the Higher Education of Indians (supra). Therefore, respectfully following the earlier judgment of Coordinate Bench, we are of the considered view that there is no violation of section 11 of the Act in assessee’s trust and the impugned order passed by the Ld. CIT(E) is not legally sustainable in the eyes of law and accordingly, we set aside the impugned order passed by Ld. CIT(E) and restore the matter to the file of Ld. CIT(E) for fresh adjudication of the case of assessee for grant of approval u/s 80G(5)(iii) of the Act after considering Page | 8 K.M. & S.K. Trivedi Charitable Trust the documents brought on record by the assessee and following the judicial precedents therein. The appellant/assessee shall present its case before the Ld. CIT(E) within 90 days of this order.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 21.03.2024