BAREFOOT COLLEGE INTERNATIONAL,KISHANGARH vs. CIT EXEMPTION, JAIPUR

आयकर अपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR JhlanhixkslkbZ]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA No. 596/JP/2023 fu/kZkj.ko"kZ@Assessment Year :2024-25 cuke Barefoot College International The CIT Tilonia Road, Harnara, Kishangarh Vs. (Exemption) Jaipur Ajmer LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAGCB 3834 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Sanjeev Jain, CA jktLo dh vksj ls@Revenue by: Shri Arvind Kumar, CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 14/02/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 20 /02/2024 vkns'k@ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(E), Jaipur dated 31-08-2023 for the assessment year 2024-25 wherein the assessee has raised the following grounds of appeal. ‘’1. The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by mentioning rejection of claim u/s 12ABwhereas assesse had filed application for approval u/s 80G(5)(iii).

2 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 2. The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of delayed application filed by the assesse whereas assesse there existed reasonable cause behind slight delay in submission of application. 3. The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of violation of FCRA willful wrong declaration and non-genuineness of activities whereas assessee had received consideration for providing services from outside India and no violation of FCRA has been made by it, no willful wrong declaration has been made and all the activities of the assesse are genuine. 4. The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of engaging in business activities and non-maintenance of proper separate books of accounts whereas assessee is carrying on business incidental to the attainment of its main objects and proper and separate books of accounts have been maintained by the assessee. 5. The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of discrepancies in Article of Association whereas Memorandum of Association of the assessee puts clear restriction on distribution of profits. 6. The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of not submitting the details in desired format resulting in non-genuineness whereas the assesse had duly provided all the details required from it.

3 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR ground of violation of section 11(1)(c) of the Income Tax Act, 1961 whereas there if no such violation made by the assesse. 8. The. Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by not following principal of nature justice during the course of hearing of application for approval u/s 80G(5)(iii).

2.1 Brief facts of the case, as emerges from the ld.CIT(E) order, are that the applicant filed application on 02.02.2023 in Form No. 10AB for seeking approval u/s 80G (5) (iii) of the Income Tax Act, 1961. The applicant was issued a letter/notice No. ITBA/EXM/F/EXM43/2022-23/1050720549(1) dated 14.03.2023 requesting it to furnish certain documents/explanations by 21.03.2023.. In response to the above the ld. AR of the applicant has submitted its reply which was not found tenable. Therefore, a show cause letter vide DIN No. ITBA/EXM/F/EXM43/2023- 24/1055524263(1) dated 28.08.2023 as final opportunity was issued for which date of hearing was fixed as 30.08.2023, which was duly examined place on record. Since it is a limitation matter, the case is decided on the basis of material placed on record and application of the applicant in Form 10AB for approval u/s 80G is liable to be rejected on following grounds:

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In response to the above, the applicant had submitted the submission which was not found tenable by the ld. CIT(E). It is noted that the ld. CIT(E) has elaborately discussed the issue as mentioned in his order but conclusively rejected claim of registration u/s 12AB for approval u/s 80G(5)(iii).of the Act by observing as under:- ‘’08. In view of above discussion assessee's claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds:-

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 Filing application after more than 3 years from commencement of activities, and also less than six month from the lapse of period for which provisional certificate was given.  Violation of FCRA, willful wrong declaration and non- genuineness of activities Assessee is engaged in business activities including export & no proper separate books of accounts are made  Discrepancies in Article of Association  Not submitting the details in desired format resulting in non- genuineness.  Violation of section 11(1)(c)

2.2 Being aggrieved by the order of the ld. CIT(E) , the assessee carried the matter before this Bench with the prayer that the order passed by ld. CIT(E) should be quashed and allow approval u/s 80G of the Act to the assessee. ‘’Facts of the Case :

6 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR activities. The incidental surplus arising from such activities is reinvested in growth and strengthening its social and humanitarian projects.

7 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 11. Projects A/cs are maintained for recording transactions relating to the charitable activities of the assessee carried out by Project Division of the Company.

Detailed Submission :

8 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 3. However, at Page No. 32 of CIT (Exemp) order, Para No. 8, relevant section is quoted as 12AB and no reference to section 80G(5)(iii) was made. In this case, our contention is that no order has been passed by CIT (Exemp) for our application regarding approval of 80G, which was required to be passed within 6 months of the end of the month in which relevant application was filed.

Please also note that relevant proceedings were closed on Income Tax Portal on dated 5. 01/09/2023, whereas the last date as per 3rd proviso to section 80G(5) was 31/08/2023. Copy of screen shot of E-Proceedings Tab of Income Tax Portal is attached herewith. In view of the order not being passed for relevant section together with delayed closure of the e-proceedings on Income Tax Portal, the order passed by the Ld. CIT (Exemp) is erroneous and liable to be quashed and 80G approval is allowable to the assessee. (Refer Paper Book No. 5, Page No. 487) Grounds of Appeal – No. 2 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of delayed application filed by the assessee whereas assessee there existed reasonable cause behind slight delay in submission of application.

Detailed Submission :

9 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 4. That the activities of the Company were already commenced as on the date of issue of provisional approval. As per the clause (iii) of the First Proviso to section 80G(5), application for grant of approval was to be made in Form No. 10AB, where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier. Relevant portion is reproduced hereunder : Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,— (i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021; (ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier;

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Grounds of Appeal – No. 3 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of violation of FCRA, willful wrong declaration and non- genuineness of activities whereas assessee had received consideration for providing services from outside India and no violation of FCRA has been made by it, no willful wrong declaration has been made and all the activities of the assessee are genuine. Detailed Submission : 1. The assessee company earned income from grants / donations / other activities of the nature of trade, commerce or business for achieving its charitable objectives as per section 2(15) of the I T Act. 2. The assessee is also carrying out activities of the nature of Trade, Commerce or Business. These activities are incidental to the attainment of the objectives of the Company. Separate Books of Accounts have been maintained.

11 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 3. Revenue earned from activities of the nature of trade, commerce or business includes sales of products and services, both domestic and out of India. Income earned from services includes income earned from Indian sources as well as Income earned from foreign sources (Export of Service). 4. We have entered into service contracts with these entities and provided various services as mentioned in the service agreements. Sample copies of service agreements are given at Paper Book No. 4, Page Nos. 399-424 5. All these services, whether provided to foreign entities or Indian entities, were for an agreed consideration and these are not charitable services. All of these services are incidental to the attainment of main objects of the Company. As these services were provided during the course of trade, commerce or business carried on by the company, separate books of accounts have been duly maintained and submitted the copy of the same to CIT Jaipur. 6. Disposal instructions were given to the Bank for foreign inward remittance, clearly mentioning the purpose of remittance, name of remitter, amount of remittance etc. 7. Foreign Inward Remittance Advice is thereafter issued by the Bank as per instruction given to it by the company which is in line with the instruction received by the Bank from remitter of money. 8. It is also to be noted that ultimately it is the remitter of money whose mandate is important. Whether it is engaging a vendor to carry out the work or providing grant-in- aid. In the present case, different entities, whether Indian or Foreign, obtained service of the company by virtue of the service agreement and paid agreed consideration. 9. The consideration for services rendered by the company resulted into some surplus in the hands of company because there was no stipulation regarding expenditure to be done to carry out the service activity. It is altogether different from the grant based working where the expenditure are to be incurred as per given line items and normally no surplus accrues or arises. 10. As far as services provided to various foreign entities are concerned, these services are classified as Export of Service. Though export of service has not been defined in the Income Tax Act, 1961, however we can refer to provisions of Goods and Service Tax Act, 2017 for this purpose. The said law is to regulate supply of goods and services. 11. Please refer to the Goods and Service Tax Act, 2017, Section 2(6) “Export of services” to understand the meaning of supply of any services (Refer Paper Book No. 4, Page No. 385-388). 12. As per our understanding on the subject matter and referring the laws of the land under IGST Act, all the above-mentioned conditions are clearly fulfilled, considering the provisions of IGST Act regarding Place of Supply as defined in Section 13 of IGST Act. As per the provisions of section 13, in the present case, Place of Supply will be the Location of Service Recipient. As per Section 2(93) of the CGST Act, 2017, ‘Recipient’

12 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR is defined as the Person who is liable to pay consideration. Hence, in our case, Service Recipient are those entities who have remitted amount to Barefoot College International. Therefore, Place of Supply will be the location of such Entities which is outside India (Refer Paper Book No. 4, Page No. 385-388). 13. Accordingly company has classified these services as Export of Service and declared it accordingly in the GST Returns field by it for the relevant period. Copies of GST Annual Returns (GSTR-9) for FY 2019-2020, 2020-2021 & 2021-2022 are annexed with Paper Book No. 4 (Page Nos. 436-459) to verify the said fact. 14. Therefore, it can be concluded that the above service provided by Barefoot College International is covered under Export of Service. The service income (both domestic and foreign) earned by the Company is separate from Grant / Donations. 15. Ld. CIT (Exemp) has treated these services as charitable services and therefore opined that these are covered under FCRA. His main contention was that services like covid relief services, women education and empowerment are charitable services. However he did not specify the reasons why these to be treated as charitable services. However on the basis of these observations, Ld. CIT (Exemp), alleged violation of FCRA, willful wrongly declaration and non-genuineness of activities. 16. It is categorically stated that the Company has not received any donation, delivery or transfer from Foreign Sources which falls under the definition of Foreign Contribution as per Foreign Contribution (Regulation) Act, 2010. 17. Your kind attention is drawn to the provision of section explanation 3 u/s 2(1)(h) and section 4 (b) read with section 3 of the Foreign Contribution (Regulation) Act, 2010 which exempts payment in the course of international trade or commerce, or in the ordinary course of business transacted outside India (Paper Book No. 5, Page Nos. 488- 493) Relevant extract is reproduced hereunder : Explanation 3 – Any amount, received by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods of services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent of a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause. 18. Please also refer to the relevant extract of Frequently Asked Questions (FAQs) issued by Ministry of Home Affairs, Govt. of India, which are hosted on official website of FCRA. In the said FAQs, particularly FAQ No. 7 it is clarified that as per explanation 3 u/s 2 (1)(h), Foreign Contribution excludes earning from foreign clients by a person in lieu of goods sold or service rendered by it as this a transaction of commercial nature / quid pro quo in the normal course of business, trade etc. within or outside India (Refer Paper Book No. 4, Page Nos. 380-384).

13 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 19. In the present case, the amounts were received from foreign entities by the company for providing certain services and it should not be treated as foreign contribution, because of the following reasons : i. Whether any service is charity or otherwise, can not be decided by the nature of activity involved. Rather it is to be decided by the motive of service provider behind the provision of services. ii. For example covid relief services, provided by any entity without profit motive, with the main intention of providing relief to the patients can be treated as charitable services. However when similar services are provided by other entity, for agreed consideration (which normally involve profit margin as well), can not be treated as charitable services and FCRA approval is not required. Take example of a Hospital treating foreign patients and getting bill payment from foreign source is not subjected to FCRA Approval. iii. The services were provided under a service agreement as per mandate given by recipient thereof. The amount paid by the foreign entities to the assessee were not paid as grant or donation but were paid as charges for services to be provided by the company as per their instructions. iv. These services were provided by the company in the ordinary course of trade, commerce or business carried out by it. v. Amount received by the assessee as fee charged towards education and training services i.e. (i) Training Services to women tea worker in Assam, providing service under an education program through developing a video to create awareness, information and counselling to local audience in rural communities, (ii) Jacinta & Dasara – Under the service contract barefoot college international will engage in providing service under an education program through developing a video to create awareness, information and counselling to local audience in rural communities and Digital Night School to support girls education (iii) Women Light the World (though FOBC) – education service fee received for correspondence course are outside the ambit of foreign contribution. The Ld. CIT (Exemp) has treated these educational services as liable to FCRA in his own presumption, in complete disregard of the facts of the case and applicable law in respect thereof. vi.Please also note that owing to some clerical mistake, in one of disposal instruction given to the Bank for receiving foreign remittance USD 69276, name of the remitter was mentioned as “women light the world INC” whereas the actual remitter was Friends of Barefoot College. However the Invoice issued by the Company in the regard, (Inv. No. BCI/14/2021-22) was in the name of Friends of Barefoot College, USA and the advice for Foreign Inward Remittance issued by Bank of Baroda dated 31/05/2021 for USD 69276 also bears the name of remitter as Friends of Barefoot College, USA. Copy of agreement entered into with Friends of Barefoot College, USA is also available for verification. The Ld. CIT (Exemp), solely on the basis of clerical mistake in documents submitted to the Bank, commented that the assessee is receiving money from women light world in its books while he is disclosing the same as being received under service contract from Friends of Barefoot International, USA. He further

14 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR pointed out that assessee is receiving money from party with whom it has no service agreement. This observation by the Ld. CIT (Exemp) are based on his own presumption, in complete disregard of the facts of the case and applicable law in respect thereof. (vii) These services were provided for an agreed consideration with included profit margin as well. vii. These services were accounted for in the business books (General A/c) of the assessee which are separate from the charity books (Project A/c) maintained by it. viii. These services were duly reported as export of services in the GST Returns filed by the company. 20. In view of the above discussion it is clear that no violation of FCRA has been made by the Company, no willful wrong declaration has been made. Ld. CIT (Exemp) has treated activities of the company as non-genuine because in his opinion there has been violation of FCRA. Since there is no violation of FCRA by the company, hence it is not justified to treat the activities as non-genuine.

Grounds of Appeal – No. 4 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of engaging in business activities and non-maintenance of proper separate books of accounts whereas assessee is carrying on business incidental to the attainment of its main objects and proper and separate books of accounts have been maintained by the assessee. Detailed Submission :

i. Maintenance of separate books of accounts of business carried on by the assessee. ii. Business activity should be incidental to the attainment of the objectives of the institution. Both these conditions were duly fulfilled in the case of the assessee company.

15 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 2. Company is engaged in doing charitable activities as per its MOA. Object Clause (iv) is preservation of environment by making available renewable technology to the developing world and promoting solar electrification. Object Clause (v) is to engage in Grass Roots, R & D, product development and testing within all renewable technologies applicable to the rural poor, object (xi) is related to women empowerment. 3. To fulfill its objectives, the Company provided training to trainees for manufacture and maintenance of solar systems and during the course of training various solar products i.e. HLS 40 WP, Diva 5200, Devi, Bindi, REW, etc. are manufactured which are subsequently sold by the company, both in domestic and international territories as an incidental business activity.

16 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 9. All such sales / service activities have been done by the Barefoot College International as Manufacturer / Vendor in the ordinary course of Trade, Business and Commerce carried out by it. The income earned by the Company from all these activities is used to promote main objectives of the company. A detailed chart is given hereunder for better clarity : Sr. Nature of activity Description of Reference to the MOA of the No. Activity Company 1. Sale of Solar Products – Relief to the poor, Incidental to Object Clause (v) Preservation of & (iv) – Product development and Manufactured during the Environment testing within all renewable course of training provided technologies applicable to rural poor, to the trainees. make new and renewable technology accessible to the developing world, promoting solar electrification and installation of solar plants. 2. Sale of Coffee, Honey & Relief to the poor, Incidental to Object Clause (xi) – Super 5 Advancement of Women Empowerment, training on General Public entrepreneurship, livelihood training – Women are trained to Utility of ethically sourced organic honey, grow coffee, trained for bee- coffee and nutritional products. keeping, making of nutritional products etc. The produce generated by women in the course of training and thereafter, is sold by the company. 3. Sale of Services Relief to the poor, Incidental to Object Clause (vi) – Education, Medical Education, Research, Social welfare – Digital Literacy Training, Relief, and Object Clause (xi) Women Covid Relief Services, Advancement of Empowerment, Women Health, Content creation services, General Public training on entrepreneurship, Education support Services Utility improving lives of community Community Support Services, Digitalization of course curriculum etc.

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19 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 26. Audit Reports in Form 10B for consolidated accounts and Audit Reports in Form 3CA- 3CD for General A/cs u/s 44AB were also obtained from Chartered Accountants. These audit reports were e-filed on the Income Tax Portal every year. (Refer Paper Book No. 2, Page Nos. 147-230 and Paper Book No. 3, Page Nos. 231-348).

2021- Net Income from Business of Net Income from Business was reported 22 Rs.23,73,992/- was shown under under Schedule AI and Exemption u/s 11 Schedule AI of Income Tax Return form. of the Income Tax Act, 1961 was claimed.

20 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 2022- Receipts from Business was shown Income and Application with respect to 23 under Schedule AI of Income Tax Business were shown under respective Return form and Application of Income schedules in order to avoid any TDS was shown under Schedule ER and mismatch as compared to Form 26AS and Schedule EC of Income Tax Return Exemption u/s 11 of the Income Tax Act, form. 1961 was claimed. 34. Regarding reporting of business income in ITR for AY 2021-22 and taxability thereof, please see Para No. 5 Related to Grounds of Appeal No. 7

Grounds of Appeal – No. 5 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of discrepancies in Article of Association whereas Memorandum of Association of the assessee puts clear restriction on distribution of profits. Detailed Submission :

21 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 2. The Company had not carried out any buy-back of shares till date. The buy-back of shares as mentioned in the AOA (a hypothetical presumption), can only take place at the face value of shares only, without including accumulated profits, due to restrictions imposed by Clause 5(ii) of the MOA. Hence in any case, buy back will not result into distribution of profits of the Company and there will no violations of the conditions of section 12AA / 80G.

Grounds of Appeal – No. 6 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of not submitting the details in desired format resulting in non- genuineness whereas the assessee had duly provided all the details required from it. Detailed Submission :

22 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR required by the Ld. CIT (Exemp) and even no further hearing date was given. (Refer Paper Book No. 5, Page Nos. 494-505)

Grounds of Appeal – No. 7 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by rejecting application on ground of violation of section 11(1)(c) of the Income Tax Act,1961 whereas there if no such violation made by the assessee.

Detailed Submission :

23 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 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—

c. income derived from property held under trust—

i. created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and

ii. for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income;

24 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 7. In the newly introduced section 115BBI of the Income Tax Act, specific provision has been for taxability of income of a trust for which exemption u/s 11(1)(c) is not available @ 30%, applicable w.e.f. AY 2023-2024. 115BBI. (1) Where the total income of an assessee, being a person in receipt of income on behalf of any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any specified income, notwithstanding anything contained in any other provision of this Act, the income-tax payable shall be the aggregate of,— (i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of such specified income; and (ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the aggregate of specified income referred to in clause (i). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the specified income referred to in clause (i) of sub- section (1). Explanation.—For the purposes of this section, "specified income" means,— (a) income accumulated or set apart in excess of fifteen per cent of the income where such accumulation is not allowed under any specific provision of this Act; or (b) deemed income referred to in Explanation 4 to the third proviso to clause (23C) of section 10, or sub-section (1B) or sub-section (3) of section 11; or (c) any income, which is not exempt under clause (23C) of section 10 on account of violation of the provisions of clause (b) of the third proviso of clause (23C) of section 10, or not to be excluded from the total income under the provisions of clause (d) of sub-section (1) of section 13; or (d) any income which is deemed to be income under the twenty-first proviso to clause (23C) of section 10 or which is not excluded from the total income under clause (c) of sub- section (1) of section 13; or (e) any income which is not excluded from the total income under clause (c) of sub-section (1) of section 11.]

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Grounds of Appeal – No. 8 The Ld. Commissioner of Income Tax (Exemption) erred in law as well as facts of the case by not following principal of nature justice during the course of hearing of application for approval u/s 80G(5)(iii). Detailed Submission :

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• Filing application after more than 3 years from commencement of activities, and also less than six month from the lapse of period for which provisional certificate was given. • Violation of FCRA, willful wrong declaration and non-genuineness of activities • Assesse is engaged in business activities including export & no proper separate books of accounts are made • Discrepancies in Article of Association • Not submitting the details in desired format resulting in non- genuineness • Violation of section 11(1)(c)

28 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR Assessee has taken total 9 grounds of appeals to challenge the order passed by the CIT (Exemp). As the issue involved is rejection of approval sought under clause (iii) of first proviso to section 80G(5), therefore, all the grounds taken by the assessee are being summarized and decided taking into consideration all the facts and circumstances in the case. It is noted that the ld. AR has also filed the detailed written submission to counter the order of the ld CIT(E). From the entire conspectus of the case, it is observed that the assessee had filed application in Form 10AB for approval under clause (iii) of first proviso to section 80G(5), rejection of claim u/s 12AB is not applicable in this case. It is observed that the assesee could not file application in Form 10AB within prescribed time limit due to reasonable cause. It was submitted to us that there were technical glitches on the Income Tax Portal, which caused delay in filing of application in Form 10AB by the assessee. We also noted that CBDT had extended the date of filing of Form 10AB, firstly upto 31-03-2022, secondly upto 30.09.2022 and finally upto 30-09- 2023 through circulars. The difficulties reported by the taxpayers and other stakeholders in electronic filing of certain forms was the main reason behind the extension. Though in the final extension, reference to section 80G was missing, however for other sections due date of Form 10AB was extended to mitigate genuine hardship. As in the present case the assessee was also required to file Form

29 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR 10AB for 80G approval, hence the contention of the assessee that there existed reasonable cause behind the delay needs to be accepted and rejection of application on ground of delay is not justified. It is also worthwhile to mention that no violation of FCRA provisions has been committed by the assessee as all the activities carried out by it are covered by the exemptions given by the FCRA Act and no willful wrong declaration has been made by the assessee, hence it is incorrect to treat the activities of the assesee as non-genuine by the ld. CIT(E). We also find from the documents available before us that the payment in the course of international trade or commerce, or in the ordinary course of business transacted outside India are not covered under FCRA provisions. We also noted that proper separate books of accounts have been maintained by the assessee for carrying on the business which is incidental for attainment of its main objects, thereby fulfilling the conditions laid down by section 11(4A) of the Act and therefore assessee’s income from business is eligible for exemption u/s 11. The Hon’ble Supreme Court in the case of Asst. CIT vs. Thanthi Trust (2001) 247 ITR 785 (SC) has held that all that is required for the business income of a trust or institution to be exempt from tax is that the business should be incidental to the attainment of objective of the trust or institution. In Asstt. CIT (Exemptions) v. Ahmedabad Urban Development Authority [2022] 143 taxmann.com 278, the Hon’ble Supreme Court held that for a business to be an incidental business, it should be carried on

30 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR as a part of the objects or be related to the objects of the trust. We have observed that one of main objects of the assessee is preservation of environment by making available renewable technology to the developing world and promoting solar electrification. The assessee carried out business including export of Solar Products which is directly related to the objects of the assessee. Separate books of accounts were duly maintained by the assessee which were also got audited and audit report in Form 44AB was also filed electronically. In view of the aforesaid, rejection of 80G approval on ground of assessee engaging in business activity including export and non-maintenance of separate books of accounts is not justified. It is also brought to our notice that the Assessee has already altered its Articles of Association and removed the Clause related to buy-back of shares and since no buy-back of shares has taken place since inception of the company till date then rejection of approval on ground of discrepancy in Articles of Association is no longer justified. It is also found that during the course of hearing of the case by the ld CIT (Exemp), the assessee had duly provided all the details / information required from it in desired format. We also found from the records available before us that no claim of exemption u/s 11 has been made by the assessee in relation to expenditure incurred outside India by assesee which requires approval of CBDT, hence no violation of 11(1)(c) is proved. We also noted that only 3 days time was given to the assessee to reply to the show cause notice, however since the assesee

31 ITA NO.596/JP/2023 BAREFOOT COLLEGE INTERNATIONAL VS CIT (E), JAIPUR had complied with the show cause notice issued by the ld. CIT (Exemp), therefore the grounds taken by the assessee for violation of natural justice is infructuous. In view of the above facts and circumstances of the case, the rejection of application for approval u/s 80G(5) by the ld CIT (Exemp) is held to be not justified and thus he is directed to allow approval u/s 80G(5) as per application in Form 10AB dated 02.02.2023 filed by the assessee. Thus the appeal of the assessee is allowed.

3.0 In the result, the appeal filed by the assessee is allowed Order pronounced in the open court on 20/02/2024.

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fnukad@Dated:- 20 /02/2024 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Barefoot College of International, Ajmer 2. izR;FkhZ@ The Respondent- The CIT(E), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 596/JP/2023) vkns'kkuqlkj@ By order,

Asstt. Registrar