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TMI Blog2024 (9) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for the purpose of education of Indian students/persons. Therefore, for taking education by beneficiary from abroad would not amount to application of income of the assessee outside India. DR could not controvert the findings of the CIT(A) with any new cogent material or information on the disputed issues to take different view as held disbursal of loan scholarship to students in India for study overseas as application of income for charitable purposes in India. Appeal filed by the revenue is dismissed. - Shri Pavan Kumar Gadale, Judicial Member And Smt. Renu Jauhri, Accountant Member For the Appellant : Shri Krishnakumar. Sr. DR For the Respondent : Shri. Atul Suraiya.AR ORDER PER PAVAN KUMAR GADALE, JM: The appeal is filed by the revenue against the order of National Faceless Appeal Centre (NFAC), Delhi /CIT(A) passed u/sec 143(3) and u/sec 250 of the Act. The revenue has raised the following grounds of appeal: 1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in directing the AO to allow the relief on the benefit of exemption u/s 11 of the Income-tax Act without appreciating the fact that the application of fund utilized for grants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque to them Its object along with financial assistance is necessarily connected with education of Indians outside India. Thus while executing the charitable purpose; latterly of charitable purpose which is foundation of its activity i.e education of students abroad, is happening outside India. Thus it can be concluded that: i. Application as well as charitable purpose should be in India. It is not the case that charitable purpose should be confined to India and execution of charitable purpose may be inside or outside India ii. Charitable purpose itself or activity related to charitable purpose should happen within Indian territories. iii. Income applied on charitable purpose on education means that education or activity related to education that is process of education should happen within Indian territories. iv. Here in instant assessee's case charitable purpose 'education' itself and activities related to education are happening outside Indian territories. v. If there is a charitable purpose 'education' in this case which tends to promote international welfare in which India is interested-CBDT's order to that effect is required. vi. Merely the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crux of the disputed issue as envisaged by the Ld.DR that the CIT(A) has erred in directing the Assessing Officer to allow the exemption u/sec 11 of the Act. At this juncture, we consider it appropriate to refer to the findings of the CIT(A) in granting relief to the assessee at Page 25 Para 6 to 7 of the order read as under: 6. Decision: 6.1 The appellant in its grounds of appeal 1 and 2 has raised the following grounds: 1. On the facts and circumstances of the case and in law, the learned Assessing Officer erred in holding that the loan scholarships given to the Indian Students in India in Indian Rupees is deemed to be expenditure incurred by the trust overseas because the students have used the scholarship for overseas education. 2. On the facts and circumstances of the case and in law, the learned Assessing Officer erred in denying the deduction of Rs. 4,04,35,275/- being income applied to charitable purposes in India towards loan scholarships, being the objects of the trust. Both the two grounds of appeal are being adjudicated together for the sake of convenience and to avoid repetition. 6.2 Brief facts of the case are that the appellant had filed its return of income on 29.9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities related to education are happening outside Indian Territories. 5. If there is a charitable purpose education in this case which tends to promote international welfare in which India is interested CBDT's order to that effect is required. 6. Merely the fact that person to whom payment is made for charitable purpose is Indian or payment is made within Indian territories is not sufficient but the charitable purpose or activity related to the charitable purpose for which payment is made should happen within Indian territories. 7. Payment to an Indian person for his education does not necessarily mean that payment of amount to an Indian person for his education abroad/outside India is Income applied on education in India. 8. That the act/event of paying amount happening within Indian territories is not sufficient since both conditions mentioned in 1 and 2 are to be satisfied. 6.2.2 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the objects of the trust may become effective. It may be pertinent to refer to section 1 of 16 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 pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the aforesaid ground of appeal relying on the judgment of the Jamestji Tata Trust and no further appeal has been filed by the department against the said order of the CIT (A). The appellant in its submission has also distinguished the judgments relied upon by the AO while passing the assessment order. 6.2.4 I have gone through the reply of the appellant and relying on the judgment of the Hon'ble ITAT Mumbai in the Jamestji Trust Case and the order of the CIT (A) in the appellant's own case the AO is directed to allow the exemption u/s 11 of Rs. 4,04,35,275/- as income applied to charitable purpose in India. The grounds of appeal 1 and 2 are allowed. 6.3 The appellant in its ground of appeal 3 has assailed the AO for charging interest u/s 234B. As the same is consequential the ground of appeal 3 is not being adjudicated upon. 6.4 The appellant in its ground of appeal 4 has assailed the AO for charging interest u/s 234 D. As the same is consequential the ground of appeal 4 is not being adjudicated upon. 7. The appeal is allowed . 6. Further, the Hon ble Tribunal in the assessee s own case for the A.Y.2012-13 has dismissed the revenue appeal in ITA No. 2188/Mum/2024 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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