2021 (10) TMI 513 - AT - Income Tax

Exemption u/s 11 - denial of Exemption u/s 11 for violation of Section 13(1) (C) read with Section 13(3) - HELD THAT - It is pertinent to note that the CIT(A) has categorically given the finding that for the Assessment Years 2011-12, 2012-13, 2013-14 and 2014-15. The assessee s application of income of trust outside India was denied and thus Exemption u/s 11 was denied to the assessee on account of violation in terms of Section 11 (1)(c), Exemption under this Section cannot be denied under this Section and only the portion of income to the extent not applied in India will not be eligible for Exemption. The Assessing Officer was directed according by the CIT(A). CIT(A) has held that the Assessing Officer is not justified in deny the benefit of Exemption u/s 11 of the Act and thus deleted the disallowance made in Assessment Year 2014-15 being 15% of salary made u/s 40A(2) (a) and allowed the said ground of the assessee. As related to floating the levy of interest u/s 234B and Section 234D. CIT(A) relied the decision of Anjuman H Glass Ware 2001 (10) TMI 4 - SUPREME COURT , Hindustan Bulb Carriers 2002 (12) TMI 10 - SUPREME COURT as well as the decision of Kerala Chemicals and Proteins. 2010 (1) TMI 263 - KERALA HIGH COURT and Infrastructure Finance Company Ltd. 2011 (9) TMI 591 - MADRAS HIGH COURT for the period after 1/6/2003 irrespective of the Assessment Year involved as it was introduced w.e.f. that date and thus, dismiss the grounds of the assessee. The decision of the CIT(A) on each of the issues were elaborated and the same are as per law. Thus, there is no need to interfere with the findings of the CIT(A) - Decided against assessee.

Summary

Issues Involved:
Appeals filed against order by CIT (A) for assessment years 2011-12 to 2014-15; Denial of exemption u/s 11(1)(C) for payment to University of Texas, USA; Challenge of denial of exemption u/s 11 for violation of Section 13(1)(C) read with Section 13(3); Disallowance of amount remitted to University of Texas, USA as not an application of income u/s 11(1)(C); Levy of interest u/s 234B and Section 234D.

Analysis of Issues:

1. Denial of Exemption u/s 11(1)(C) for Payment to University of Texas, USA:
The appellant, a registered society, challenged the additions made by the Assessing Officer on account of payment/remittance to the University of Texas, USA, as not an application of income u/s 11(1)(C) of the Income Tax Act, 1961. The appellant argued that the funds were spent based on a sub-grant to the University of Texas, USA, from funds received earlier from the National Institute of Health (NIH), already included in the income and expenditure account. The Assessing Officer disallowed the amount remitted, citing it as not an application of income u/s 11(1)(C). The CIT(A) found that the assessee's application of income outside India was denied, leading to the denial of exemption u/s 11 due to a violation of Section 11(1)(C). The CIT(A) directed the Assessing Officer accordingly, and the appellant's challenge was dismissed.

2. Challenge of Denial of Exemption u/s 11 for Violation of Section 13(1)(C) read with Section 13(3):
The appellant contested the denial of exemption u/s 11 for violating Section 13(1)(C) read with Section 13(3). The CIT(A) held that the Assessing Officer was unjustified in denying the exemption u/s 11 and deleted the disallowance made in one of the assessment years. The CIT(A) referred to legal precedents and dismissed the grounds raised by the appellant, upholding the decision to deny exemption u/s 11. The CIT(A)'s decision on this issue was detailed and in accordance with the law.

3. Disallowance of Amount Remitted to University of Texas, USA:
The Assessing Officer disallowed the amount remitted to the University of Texas, USA, considering it not an application of income u/s 11(1)(C). The appellant's submissions were not accepted by the Assessing Officer, leading to the denial of benefits under Sections 11 and 12. The CIT(A) partly allowed the appeal but ultimately dismissed all the appeals, including the challenge against the disallowance of the remitted amount.

4. Levy of Interest u/s 234B and Section 234D:
Regarding the levy of interest u/s 234B and Section 234D, the CIT(A) relied on legal decisions to support the imposition of interest, dismissing the grounds raised by the appellant. The CIT(A) cited relevant court cases and upheld the Assessing Officer's decision on the levy of interest, concluding that there was no need to interfere with the findings.

5. Overall Decision:
Despite the appellant's challenge and submissions, the ITAT Delhi dismissed all five appeals of the assessee. The decision was based on the findings of the CIT(A) and the legal provisions cited in the judgment. The appeals were dismissed, and the order was pronounced in open court on October 11, 2021.

This detailed analysis covers the various issues raised in the appeals, the arguments presented by the appellant, the decisions of the CIT(A), and the final judgment delivered by the ITAT Delhi.