Income Tax Appellate Tribunal - Chandigarh
Sarbat The Bhala Gurmat Mission ... vs Cit(Exemption), Chandigarh on 30 March, 2021
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B, CHANDIGARH
BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
AND SHRI R.L. NEGI, JUDICIAL MEMBER
ITA No. 297/Chd/2020
(Assessment Year: 2020-21
Sarbat The Bhala Gurmat बनाम The CIT (Exemptions),
Mission Charitable Trust, Chandigarh.
# 311/7, Kurali Khanpur
Mohali.
थायी लेखा सं./PAN NO: AAPTS9191R
नधा रती क ओर से/Assessee by: Shri Ajay Kumar Jain, CA
राज व क ओर से/ Revenue by : Shri Sandeep Dahiya, CIT
सन
ु वाई क तार ख/Date of Hearing: 16.03.2021
उदघोषणा क तार ख/Date of Pronouncement: 30.03.2021
(Hearing through webex)
आदे श/ORDER
Per Anna pur na G upta, Account ant Member :
The appeal filed by the assessee is directed against the order of Learned Commissioner of Income Tax ( E xe m p ti on s ) [ i n s h o r t t he ' L d. CI T( E ) ] , Chandigarh dated 18.05.2020 ,denying grant of registration u/s 12A of the Income Tax Act, 1961 (in short 'the Act') as a charitable s oci e t y.2 ITA No.297/Chd/2020
A.Y.2020-21
2. The fa c ts, a s fi nd me nti on i n th e o rde r of t he Ld. C I T( E) , a re th a t t he ass e ssee is a tr us t in op e r a ti on si nce 30 . 12 . 2 01 4 a nd h a d a p p li e d f or g ra nt of re gi str a ti on u /s 12 A A, a s a ch a r it a bl e s ocie ty for th e p ur p ose s of cl a i min g e xe mp ti on of i ts i nc ome u /s 11 & 12 of the A ct , on 02 . 11 . 2 01 9 . Th e Ld . C I T( E) a f te r c a ll i ng f or r e q u i si te in for ma t ion a n d ma k in g d ue e nq ui r i e s, de n ie d re g is tr a ti on for the re a son tha t th e ob je cts o f th e tr ust p r ovi d e d for ope r a ti ons be in g ca r r i e d o ut/e xte n de d o uts ide I nd i a a ls o. Th e Ld .C I T( E) ob se r ve d th a t th e A ct r ule s ou t gr a n t of e xe mp ti on s of i n come s a p p l ie d for cha ri ta b le p u r po se outs id e I n d ia , a ll ow in g op e r a ti on ou tsi d e I nd i a onl y for li mi te d p ur p ose su bj e c t to a pp r ova l b y t he C e n tra l B oa r d of Di r e c t Ta xe s. A cc or di n gl y, h e de r iv e d f r om the s a me a nd he l d th a t the a c ti vi ti e s of a t ru st ca n be tr e a te d as cha ri ta b l e on ly w he n i ts i n come i s a p p l ie d for the a c tiv i tie s ca r r ie d out i n In d ia o nl y. Fo r t he a fore sa i d re a son s h e de nie d gr a n t of re gi str a ti on u/s 1 2 A of th e Ac t to th e a sse sse e . The r e le va n t f i nd i ngs of th e CI T(E) a t par a s 5 a nd 6 of th e or de r a re a s u nde r :
"5. In response to the fixation letter dated 20.12.201J, the applicant trust has not submitted the reply. The reminder was issued on 15.01.2020 to the trust to submit the reply to questionnaire on or before 24.01.2020. In response, the applicant trust has submitted the response online on ITBA. On perusal of the trust deed of the trust provided in the submission, it is noticed that operation will be extended outside INDIA also 3 ITA No.297/Chd/2020 A.Y.2020-21 which mentioned at Sr. no. 7(r) of the objects incidental or ancillary to the attainment of the main objects & same are reproduced as under:-
"7(r). To open branches of trust in India and Abroad. "
As per section 11(1) (c) of the income tax Act, any income applied on activities outside India is not eligible for exemption. A charitable organization cannot have activity outside India unless it happens to be a trust/company/society created before 1-4-1952 or it is engaged in promotion of international welfare in which India is interested. In other words, NGOs registered after 1-4-1952 are not allowed to have any international activity unless such activity is specifically exempted by CBDT.
Provisions of section 11 (1 )(c) are as under:-
(c) Income derived from the property held under trust-
* 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 * 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 board, by general or special order, has directed in either case that all not be included in the total income of the person in receipt of such income.
It is also worthwhile to mention that the activities will be treated as charitable when the expenses incurred on such activities will be borne by the applicant in INDIA only.
6. In view of the above, the present application for grant of registration u/s 12AA is hereby rejected."
3. Ag gr i e ve d b y the s a me th e a sse ss ee h a s c ome up i n a pp e a l be fo re u s. H e h a s ra i se d the fo ll ow i ng gr ou nd s :
"1. That the Ld. Commissioner of Income Tax Exemptions Chandigarh has wrongly rejected the registration u/s 12AA of Income Tax Act simply on the basis of general clause at sr no 7 in objects clause i.e To Open branches 4 ITA No.297/Chd/2020 A.Y.2020-21 of trust In India or Abroad without appreciating the fact that the appellant trust has neither incurred any expenses outside India nor intention to incur expenses abroad.
2. That the Ld. Commissioner of Income Exemptions Chandigarh has wr o n g l y r e j e c te d th e registration u/s 12AA of Income Tax Act particularly in view of fact that the appellant had given complete details to Ld. CIT and there is no material pointed out by Ld. CIT that the appellant had incurred any expenses outside India & he simply rejected registration on the basis of clause for opening of branches outside India & there is no provision in trust deed that the appellant society shall incur any expenses outside India out of funds collected from India & also there is no prohibition under Income Tax to open branches outside India.
3. That the Ld. Commissioner of Income Exemptions Chandigarh has wrongly rejected the registration u/s 12AA of Income Tax Ac during lockdown period and before 1-6-2020 hurriedly in order to avoid of benefit granted by Finance Act 2020 to appellant trust.
5. That the Assessee craves for permission to add, amend, alter or withdraw any grounds of appeal with approval of the hon'ble bench."
4. D ur i ng th e c our se of he a r i ng be for e u s, the Ld . Coun se l for th e a s se sse e c onte nde d t ha t the Ld .C I T( E) , wh i l e de ny in g gr a nt of r e g is tra ti on , ha d re fe rr e d to the p r ovi si on s of se c tio n 1 1 of t he Act wh i ch de ni e d e xe mp ti on t o in co me s a pp l ie d ou ts ide I nd i a f or cha ri ta b l e p ur p ose s, w h ic h pr ov is io n was a p pl i ca b l e onl y w h ile comp ut in g or de te r mi ni n g th e e xe mp t i nc ome o f e nti tie s w hi ch q ua li fi ed for the s a me un d e r t he s e cti on. Th a t f or t he p ur p os e of gr a nt of r e gis tra ti on the Ld .C I T( E) w a s onl y r e q ui re d to con si de r the ge nui ne ne ss of the ob j e ct s a n d a cti viti e s of the 5 ITA No.297/Chd/2020 A.Y.2020-21 a pp l ic a nt tr us t or e n ti ty, w h e the r the y q ua l if y a s e xi st ing for "c ha r i ta b le pur p ose " a s de fi ne d un de r the Ac t i n s e c tion 2( 1 5 ) of the Act. D r a wi n g our atte nt ion to the sa me , the Ld. C ou ns e l f or the a s se s se e po inte d ou t t ha t the d e fin i ti on of "ch a r it a b le p ur p os e " now he re re s tr i cte d the ca rr yi ng o ut of cha ri ta b l e a c tiv i tie s w i th in the g e ogr a p h ic a l b ou nd a r y of I nd i a a lone . Th e re f ore , wh i le g ra n ti ng r e gis tra ti on th e pos si b il i ty of t he a p p l ic a nt tr u st ca rr yi n g out t he a c ti vi tie s outs id e I n di a c ann ot l e a d t o the c onc lu si on tha t i t i s n ot i n e xi ste nce for ch a r i ta b le p u rp ose at a ll a nd , t he re fore , re gi str a ti on ca nno t be d e n ie d f or th e sa i d r ea s on. He con te n de d tha t it is onl y w he n the q ua n tum of i nc ome e xe mp t i s to b e d e te r min e d , tha t th e fa c tu m of i n come a pp l ie d for c ha r ita b le a cti vi tie s outs id e the I n di a w ou ld b e re le va n t f or the pu r p ose s of e xcl ud i ng the sa me for e xe mp ti on . H e poi n te d ou t th a t th is is su e h a s b ee n de a l t wi th in va r io us j ud i ci a l d e c is io ns i n f a vou r o f th e a sse ssee a s u n de r:
1) MK N a mb ya r S A ARC La w C h a r it a bl e Tr us t
Vs. U n io n of I n d ia & O th e r s ( De l)
2) Fou nd a ti on fo r I n do- Ge r ma n S tud i e s Vs.
Di r e c tor of I n come - Ta x ( Exe mp ti on s) ( H yd )
3) N a ti ona l I n f or ma tic s C e ntre Se r vice s I n c. Vs .
DI T(Ex e mp ti on) ( N e w De l hi ) 6 ITA No.297/Chd/2020 A.Y.2020-21 C op i e s of the afor e s a i d o rde rs w e re p l a ce d be for e us. He fu rt he r c on te n ded th a t i n a n y c a se c a r r yin g o ut a c ti vi ti e s outs id e I nd i a w as n ot i ts ma i n ob je ct b ut onl y i n ci de nt a l a nd th e a p p li c a nt p r i ma r il y w ou l d c a r ry out it s a ct iv it ie s i n I nd i a onl y.
5. Th e Ld . DR , on the othe r ha n d sup p or te d the ord e r of the Ld .C I T( E).
6. W e h a ve he a r d bo th the p a rt ie s. The is su e be f or e u s re la te s to gr a nt o f r e g is tr a ti on u/s 1 2 AA o f th e Act, for the pu r po se s of c la imi ng e x e mp ti on u/s 1 1 & 1 2 of t he Ac t of in come s a pp l i e d f or c ha r i ta b l e p ur po se s .
7. Th e a p pl i ca n t a s s e ssee in the p re se n t ca se h a s b ee n de nie d re gi st ra tio n f or t he r e a s on t ha t i ts i nc i d e nta l a nd a nc il l a ry ob j e ct s i nc lu d e d c a rr y ing o ut the a ct iv it ie s ou tsi de the I n d ia . Th e Ld. C I T( E) h a s he ld t ha t fo r the a f or e s a id re a son the a sse sse e ca n n ot be sa i d to be i ndu lg in g in cha ri ta b l e a cti vi ti e s . An d f or h old i ng s o he ha s re fe r re d to the p r ovi si on s of se cti on 1 1 ( 1) ( c) of the A ct.
8. Th e p r i ma r y a r g ume n t of the a ss e ssee a g a in st the or de r of the Ld .C I T( E) i s th a t f or t he p ur p ose s of gr a n tin g re gi str a ti on on l y the c ond i ti ons me nti on e d in sec tio n 1 2A A nee d to be f ul f il le d a n d the p r ov is io ns of se cti on 1 1 (1 ) ( c) a re 7 ITA No.297/Chd/2020 A.Y.2020-21 not r e le va n t f or th e s a id pu r pose , be i n g a p p li ca b l e only wh i le de te r mi ni ng th e i nc ome e n ti tl e d t o e xe mp ti on u /s 11 of th e A ct. Th a t in any c a se c a r ry in g ou t ch a r ita b l e a cti vi ti e s ou ts ide I nd i a w a s no t th e sole or ma i n ob j e c t b ut onl y in ci d e n ta l /a nc il l a ry ob j e c t of the a p p l ic a nt ass e s see .
9. W ha t i s th e re f ore to be de ci de d i s w he the r th e la w pr ov id e s f or a ny su ch ge og r a ph ica l l imi ta ti on i n c a r r yin g out ch a r it a bl e ac tiv it ie s for the p ur p ose s o f re cogni si n g a n e nt ity a s ch a r it abl e a nd e li gi b le for r e g is tr a ti on as s uc h u/s 12 A of t he Ac t. W e ha ve g one thr ou gh th e p r ov isio ns of the Act r e l a ti ng to cha r i ta b l e e n ti tie s, r e le va n t f or a d ju di c a tin g the is sue be f ore u s, i. e se c tio n 11 , 12 , 1 2A ,1 2 AA & 2 (1 5 ) of the A ct. W hi le se c ti on2 ( 1 5) de fin e s c ha r i ta b le pu r po se s , se c tio n 1 1 e xe mpt s i nco me s, d er iv e d fr om p r op er ti e s he ld un de r tr us t, to th e e xte nt a p pl ied f or c ha r i ta b l e pu r po se s . Se c ti on 12 A i mpo se s the re q ui reme n t of s ee k i ng r e gi s tr a tion for th e p ur p ose s of a v a il i ng t he e xe mp ti on u /s 1 1 , a n d the pr oc e ss o f gr a nt in g re gi str a ti on i s gov e r ne d b y se cti on 1 2 AA . Si nc e in th e pre se n t ca se r e gi stra t ion ha s b e e n de n ie d u/s 12 A A of th e A ct, r e l yin g u p on p r ov is io ns of s e ct ion 1 1 , i t i s re le va n t to re prod u ce b oth the a fo re sa i d p r ovisi on s for a dj ud i ca t in g the i ss ue .
" 12AA. (1) The [Principal Commissioner or] Commissioner, on receipt of an application for 8 ITA No.297/Chd/2020 A.Y.2020-21 registration of a trust or institution made under clause
(a) [or clause (aa) [or clause (ab) of sub-section (1)] of section 12A, shall--
(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he-
(i) shall pass an order in writing registering the trust or institution;
ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant :
Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard."
"Income from property held for charitable or religious purposes.
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--
(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property;
(b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of fifteen per cent of the income from such property;9 ITA No.297/Chd/2020
A.Y.2020-21
(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;
(d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution."
10 . As p e r se ct ion 1 2 AA of th e A ct, th e C om mis si on e r , wh i le con si de r i ng the a p p li ca ti on of th e tr u st/s oc i e tie s , h a s to s a ti sf y h i mse l f r e ga r d i ng the ge n u ine ne ss of the ob je c ts a nd th e a c tiv i tie s of th e tr u st/s oci e tie s, whe t he r t he y a re for ch a r it a b le p ur p ose s or not. C h a r it a bl e p ur p ose is de fi ne d u /s 2( 1 5 ) of th e Ac t a s u nd e r :
"S .2 (15 ) ( 1 5) Ch ar i ta bl e pu r po se inc l u de s rel ief of th e poor, ed u ca tio n , [ yog a, ] med ic al r el ief , [ pre serv a ti on of en viro n men t ( inc l ud in g wa te r- sh e d s, f or ests and wi l d l if e) an d pre serv a tio n of mon u men ts o r pl ac e s or ob jec ts of ar ti stic o r h i sto r ic in tere s t, ] an d th e ad v anc e men t of an y o th er o b jec t of ge n eral pu bl ic u til i ty .
[P r ovi ded th a t th e ad v an ce men t of an y o th er o b jec t of gen er al pu bl ic u til i ty sh all n o t be a ch ar i ta b l e pu r po se , if it i n vo lv es th e c ar ry in g on of an y ac ti v i ty in th e n a tu re of tr a d e, c om merc e o r bu sin e ss, of an y ac ti v i ty of ren derin g an y serv ic e in rel a ti on to an y tr ad e, co mme rce or bu sin e ss, f or a c e ss or f ee o r an y o th e r con s id er a tio n, 10 ITA No.297/Chd/2020 A.Y.2020-21 irre s pe c ti ve of th e n a ture of u se of ap pl ic a ti o n, or re ten ti on , of th e in co me f rom suc h ac ti v i ty, u n le ss--
( i) su ch ac tiv ity is u n d er take n in th e co ur se
of ac tu al c ar ry ing ou t of su ch
ad v an c e men t of an y o the r o b je c t of
gen eral pu bl ic u ti l ity an d
( i i) th e ag greg a te re cei p ts f rom su c h ac ti v i ty
or ac tiv iti e s d ur i n g th e prev iou s ye ar, d o no t exc ee d t we n ty per ce n t of th e to ta l rece i pts, of th e tru s t or in sti tu ti on un d er tak in g su c h ac ti v i ty or ac ti v i tie s, of th a t prev iou s ye a r; ] ]"
11 . As is e vi d e n t fr om th e a b ove , th e se c ti on l i sts v a r iou s a cti vi ti e s w hi ch q u a li f y a s ch a r ita bl e pu r po se b ut t he re i s no re str i cti on to th e s cope of su ch a ct iv it ie s w i th in th e ge og ra p h ic a l boun d a ry of I n di a. I t is on ly se cti on 11 , a s re p ro du ce d a b ove , wh i ch pl a ce s a g e ogr a p h ic a l r e s tr ic tio n a ll ow i ng e xe mp tio n onl y to i nc ome s a p p li e d to ch a r ita b l e pu r po se s i n I ndi a . But e ve n the sa i d se c tio n d oe s n ot comp l e te l y r u le out e xe mp ti on t o in co me s a p p li e d ou tside I nd i a for ch a ri ta b l e pu r p ose s, gr a n ti ng e xe mp ti on to c e r ta in suc h a p pl i ca ti on s, a s me n ti one d in se c ti on 1 1( 1 ) © ,s ub j e ct to be in g a p pr ove d by th e B oa r d .
12 . As i s e vi de n t fr om the a b ove , in the s che me of the Act , in come s a p p li e d ou tsi d e I nd i a for c ha r i ta b le p ur p ose s are not co mp l e te ly a n d ca te gor i ca lly r ul e d ou t from be in g e l igi b le for gr a nt e xe mp ti on.
11 ITA No.297/Chd/2020
A.Y.2020-21 13 . Th e Ld. P r .C I T' s or d e r , i n the p re se nt c a se , the re f ore de nyi n g re g is tr a ti on t o th e a p p li ca n t a s se s se e me r e ly for the re a so n t ha t its ob j e ct s i nc lu d e d a p p li ca t ion of i nc ome outs id e I nd i a , we hol d , i s not i n a c cor d a nc e w ith la w . Mor e pa r ti cu l a rl y w h en , a d mi tte dl y, th is w a s n ot th e s ole a nd ma in ob j e ct of t he a p pl i ca n t a sse ssee , b u t on ly it s a n ci ll a r y a nd i nc id e n ta l ob j e c t. I t i s n ot the ca se the re fore th a t the re is t o be n o a p p lica t ion of i n come w i thi n I nd i a a t al l a s p e r the ob je c ts. I n fac t t he ma i n ob j e ct of th e a p p li can t a sse ssee in vol ve s c a r ry in g out ch a r ita ble a cti vi ti e s i n I n dia . I n t his fa ct ua l si tua t io n, de nyi n g r e gi st ra tio n u/s 12 A A of the Act , for th e re a son tha t i ts in ci d e n ta l ob je ct e nt a ile d ap p l ic a ti on of in come ou tsid e I nd i a , we f ind , w oul d re s ult in the a sse ssee be in g de nie d e xe mp ti on to in come a p p li ed in I nd ia, wh i ch i t wo ul d oth e r w i se be e n ti tle d to un de r la w . 14 . F ur th e r a s r i gh tl y p oi nte d out by the Ld. C ou ns el for the a sse s see , the p r ovi si on s of se c tio n 1 1 ( 1) ( c) of t he Ac t, wh i ch th e Ld .C IT( E ) ha s r e l ie d up on fo r hol d in g t hat onl y a cti vi ti e s ca r r ie d ou t in I nd i a w i ll q u a l if y a s c har i ta b l e for gr a nt of r e gi str a tion , i s onl y f or t he p ur p ose of dete r min in g the in come w hi ch q u a li f ie s f or e xe mpt ion u/s 1 1 of t he Act . Th e sa i d se cti on come s i n to op e r a t ion on l y on ce r egi s tr a tio n is gr a nt e d u/s 1 2A of th e Ac t a n d the re f ore c a nn ot b e re le va n t f or the p ur p ose s o f gr a nt in g r e gis tr a ti on u/s 1 2 A of 12 ITA No.297/Chd/2020 A.Y.2020-21 the Act . Th e sc he me of t he Act is tha t a ll e n ti ties c a r r yin g out c ha r i ta b le a cti vi ti e s , a s de f ine d i n se ct ion 2 (1 5 ) of the Act , q ua l i fy to b e re gi ste re d a s cha r i ta b le e nti ties su b je ct to s a ti sf a cti on of th e con ce rne d off i ce r vi s a v is th ei r ob j e c ts a nd a c ti vi ti e s, b ut th e e xe mp ti on i s p r ov id e d /r e s tr i cte d onl y to th e e x te n t of in come w hi ch i s a p p li e d f or ch a r ita b l e pu r po se i n I n di a .
15 . Th e i ss ue w e f ind , is sq u a r e l y c ove re d i n f a vou r of the a sse sse e b y t he d e ci si on s re l ie d u po n b y t he Ld. C ou ns e l for the a s se s se e be fo re u s. I n the ca s e of MK N a mb ya r S AA RC La w C ha r i ta b le Tr u st (s up r a ), w e fin d , t he a pp l ica ti on for gr a nt o f re gi s tr ati on w a s re je cte d o n the gr ou nd th a t the a pp l ic a nt i ts e l f h a d a d mi tte d tha t the sch ol a r sh ip cou l d be pa i d to me mb e r s e ve n ou tsi de I nd ia . The H on' bl e H ig h C our t he l d th a t t he a pp li ca t ion of i nc ome outs id e I n d ia is n ot a re le va n t cr i te r i a f or r e je ct in g the a p pl i ca ti on f or gr a n t o f re gi str a ti on u/s 12 A A of th e Ac t a n d t he off ice r has to onl y re str i ct h ims e l f to th e sa t is fa c tio n a b out th e ob j e ct s a nd ge n ui ne ne ss of th e a c tiv i tie s of the tr us t w h ile gr a nt ing re gi str a ti on w ith no r e s tr ic ti on on t he a cti vi ti e s be in g ca r r ie d o ut i n si de or out si de I n d ia . The r e l e va n t fin d in gs of the H on 'b le H i gh C ou r t i s a s un d er :
"The judgment of the court was delivered by 13 ITA No.297/Chd/2020 A.Y.2020-21 B.C. Patel C.J. - M.K. Nambyar SAARC Law Charitable Trust has filed this petition against the order made by the Director of Income-tax (Exemptions) New Delhi, on February 24, 2004. The aforesaid trust submitted two applications in Form No. 10A for registration under section 12A and recognition under section 80G of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The application was rejected on the ground that the applicant itself has admitted that the scholarships can be paid to the members even outside India. It is in view of this admission that the activities will be extended outside India as per the objects laid down, it was held that the registration cannot be granted under section 12A of the Act and the approval of exemption under section 80G also cannot be granted.
Section 11 of the Act refers to income from property held for charitable or religious purposes. The relevant provisions are reproduced hereunder:
"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-fa) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent, of the income from such property; . ..
(a) income derived from property held under trust-
(b) (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
(c) (ii) for charitable or religious purposes, created before the 1 st day of April, 1952, to the extent 1o which such income is applied to such purposes outside India:
(d) 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;. .."
(e) So far as the benefit of section 11 (1 )(a) is concerned, it can be extended only to the extent to which such income is applied to such purposes in India. However, if the income is applied to the purposes outside India, then clause (c) will be applicable and if the permission is granted by the Board either by general or special order then, benefit can be extended. Section 12AA prescribes the procedure for 14 ITA No.297/Chd/2020 A.Y.2020-21 registration. Reading the section, it becomes clear that after the application is made, the officer has to call for documents or information from the trust to satisfy himself about the genuineness of the activities of the trust, He can make further enquiry as he may deem necessary. It is only after satisfying himself about the objects of the trust and the genuineness of its activities that he has to pass an order in writing registering the trust or institution. And if he is not satisfied, he can reject the same. This section does not refer to the activities in India or outside India. It refers to application of income for charitable or religious purposes in India as also with direction or order of the Board for application of income as aforesaid outside India. Reading the order dated February 24, 2004, it is very clear that there is non-application of mind, it was necessary for the Commissioner to examine the purpose for satisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AAof the said Act. So far as income which is applied outside India is concerned, it is not a relevant criteria for rejecting the application. In the absence of an order under section 11(1)(a) and (c), one cannot seek benefit for application of income for charitable or religious purposes, outside India. Therefore, the order dated February 24, 2004 made by the Director of Income-tax (Exemptions), annexed at page 32, which is based on irrelevant criteria is quashed and set aside with a direction to consider the application strictly in accordance with law. It is made clear that even the application under section 80G is required to be considered afresh. It is directed that the applications shall be disposed of within a period of four weeks by the Commissioner." 16 . Th e a fo re sa i d de ci si on of t he Hon'b l e De l hi H i gh C our t ha s b ee n fol l ow ed b y th e C oor d in a te Be nc he s o f the Tr i b un a l in th e c a se of N a ti ona l I n f or ma ti cs C e nt re Se rvi ce s I nc. (s up r a ).
17 . I n v ie w of th e a bov e , the or de r p a s se d b y the Ld .C I T(E ) de nyi n g re g is tr a ti on u/s 1 2 A of t he Ac t i s se t a s id e a nd the 15 ITA No.297/Chd/2020 A.Y.2020-21 Ld. C I T( E) is d i r e ct e d to gr a n t re gi str a ti on a s a p p l i e d fo r b y the a s se s se e .
18 . I n the re s ul t, the a p p e a l of t he a sse s se e i s a l lo we d.
O r d e r p r on o u n ce d o n 3 0 . 0 3 . 2 0 2 1 .
Sd/- Sd/-
(R.L. NEGI) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
Dated: 30th March, 2021
*रती*
आदे श क % त&ल'प अ*े'षत/ Copy of the order forwarded to :
1. अपीलाथ+/ The Appellant
2. %,यथ+/ The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar