SHILA ASHOK SHAH FOUNDATION,MUMBAI vs. CIT EXEMPTIOM, MUMBAI

The fact and circumstances of the case supra is similar to that of the appellant trust. Hence, it will be illegal, unjustified and uncalled for as a reason to reject the registration u/s 12AB of the Act.”

At the outset, Ld.AR submitted that, there is delay of 265 days in filing the present appeal before this Tribunal. The Ld.AR in support has furnished an application seeking condonation of delay alongwith affidavit of the trustee of assessee that states as under:-

Admittedly, the Ld.DR could not controvert the submissions filed by assessee and the arguments advanced by Ld.AR to substantiate the delay caused in filing the appeal before this Tribunal. It is noted that assessee, under genuine circumstances, could not respond to the notices issued by revenue during the assessment proceedings. 3.1. It is noted that there is no malafide intention on behalf of assessee in not filing the present appeal before this Tribunal, within the period of limitation. Nothing to establish any such intention has been filed by the revenue before this Tribunal. In our opinion there was sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions. 3.2. We refer to the Third Member decision of Hon’ble Chennai, ITAT in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein it was held that "when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay". 3.3. It is also necessary to ascertain whether there was excessive or inordinate delay in the present facts of the case. Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered a situation of condonation of delay and held that where there exists a reasonable cause, period of delay may not be a relevant factor. Hon’ble Madras High Court relying on this principle had condoned the delay of nearly 21 years. 3.4. We also refer to the decision of Co-ordinate Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) wherein this Tribunal has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Hon’ble Supreme Court. It was noted that, the revenue had not file any counter-affidavit opposing the application of the assessee for condonation of delay. The Hon’ble Supreme Court under similar circumstances had noted in case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause to condone the delay. 3.5. In the present facts of the case, we note that no such affidavit has been furnished by the revenue countering the condonation application of the assessee. At this juncture, we also take assistance and support from the observation of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that "any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities". Similar is the observation by Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471. Based on the above discussions, in the interest of justice, we condone the delay in filing the present appeal before this Tribunal.

On merits, Ld.AR submitted that, assessee had filed application in Form 10AB seeking registration u/s 12AB of the Act, in respect of which various submissions were called for by Ld.CIT(E) vide notice dated 23/09/2024. Assessee in response to the notice furnished its reply dated 25/11/2024. The Ld.CIT(A) noted that assessee had given educational grant of Rs.4,00,000/- to an Indian student for pursuing a course at Brunel University, London. Ld.CIT(E) was of the opinion that, assessee had violated the provisions of Section 11(1)(c) of the Act as income was applied outside India. The Ld.CIT(E) thus rejected the application of assessee and denied the exemption claimed u/s 11 of the Act. Aggrieved by the order of Ld.CIT(E), assessee is in appeal before this Tribunal.

Ld.AR submitted that without giving any opportunity to assessee, application u/s 12AB of the Act was rejected by Ld.CIT(E). He submitted that, assessee had not made the payment directly to the foreign university but had provided the money to the student in India and, therefore, there is no violation u/s 11(1)(c) of the Act. Ld.AR submitted that, assessee fulfilled its condition of application of funds within India. He relied on the decision of Co-ordinate Bench of this Tribunal in the case of Jamshedji Tata Trust vs. Joint Director of Income Tax (Exemption) v. Joint Director of Income Tax (Exemption) reported in 44 taxmann.com 447, wherein it was observed that where assesse had applied money for charitable purposes in India, the fact that final execution of such purpose takes place outside India will not constitute violation of provisions of Section 11(1)(c) of the Act and will not be treated as application of fund outside India. He thus prayed for the claim to be allowed. 5.1. On the contrary, Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advanced by both sides in light of the records placed before us.

Admittedly, assessee had given the funds to the student in India in Indian currency. There is no iota of evidence with revenue regarding the funds having paid directly by assessee to the foreign university. Under such circumstances, there cannot be any doubt to hold that, the funds were very much applied in India. Drawing support from the decision of this Tribunal in case of Jamshedji Tata Trust vs. Joint Director of Income Tax (Exemption) v. Joint Director of Income Tax (Exemption) (supra), we are of the opinion that, claim of assessee cannot be denied merely on the ground that student to whom the educational grant was provided utilised it to seek education in foreign university. We, therefore, remit this issue to Ld.CIT(E) to consider the claim of assessee in light of ratio laid down in case of Jamshedji Tata Trust vs. Joint Director of Income Tax (Exemption) v. Joint Director of Income Tax (Exemption) (supra). Accordingly, grounds raised by assessee stands allowed. In the result, appeal of the assessee stands allowed.