2022 (7) TMI 377 - AT - Income Tax

Exemption u/s 11 - assessee made foreign remittance as payment against education tour package - submissions of the assessee was that amount of expenditure incurred by the society was not for a charitable purpose which tends to promote international welfare in which India is interested - HELD THAT - In the case of the assessee it is a fact that die amount has been applied outside India. In view of the fact that die expenditure was incurred outside India and in view of the judgement in the case of Director of Income-tax (Exemption) Vs. National Association of Software Services Companies 2012 (5) TMI 204 - DELHI HIGH COURT and in the case of India Brand Equity Foundation 2012 (7) TMI 799 - ITAT DELHI , the disallowance of expenditure applied outside India is upheld. - Decided against assessee.

Summary

Issues:
1. Disallowance of education expenses amounting to Rs. 30,91,864.

Analysis:

Issue 1: Disallowance of education expenses amounting to Rs. 30,91,864

The appeal was filed against the order of the Ld. CIT(A) for the assessment year 2016-17, challenging the disallowance of expenditure amounting to Rs. 30,91,864. The assessee contended that the provisions of section 11(1)(c) were not applicable to them as the expenses were not for a charitable purpose promoting international welfare in which India is interested. The Assessing Officer observed foreign remittances made by the assessee for education tour packages and disallowed the expenditure as being in contravention of section 11(1)(c) of the Income Tax Act, 1961. The Ld.CIT(A) affirmed the AO's decision, leading to the appeal before the Tribunal.

The Ld. Sr. DR supported the lower authorities' orders, arguing that the expenditure incurred outside India did not have the required approval from CBDT as per section 11(1)(c) of the Act. The Tribunal considered the submissions and the orders of the authorities below. The assessee's argument that the expenditure was not for charitable purposes promoting international welfare in which India is interested was rejected. The Ld.CIT(A) provided a detailed reasoning based on legal provisions and case laws, including the requirement for income to be applied in India for charitable purposes to qualify for exemption under section 11(1)(c).

Referring to relevant case laws, the Ld.CIT(A) concluded that the expenditure applied outside India was not eligible for exemption under section 11(1)(c) unless specific conditions were met, such as approval by CBDT. The Tribunal upheld the disallowance of the expenditure based on the application of income outside India, in line with the legal interpretations provided by the Hon'ble Delhi High Court and the ITAT in previous cases. The Tribunal dismissed the grounds of appeal raised by the assessee, affirming the decision of the Ld.CIT(A) and rejecting the appeal.

In conclusion, the Tribunal dismissed the appeal of the assessee regarding the disallowance of education expenses amounting to Rs. 30,91,864, based on the provisions of section 11(1)(c) of the Income Tax Act, 1961 and the legal interpretations provided by relevant case laws. The decision was made after considering the submissions, legal provisions, and precedents cited by the authorities below, ultimately upholding the disallowance of the expenditure applied outside India.