TMI Blog2014 (11) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... iation that the Centre should remain a non-taxable entity/institution. The order by the CBDT affirms and accepts that the objects were charitable and in categorical and positive terms, the order grants exemption from entire income held under trust applied in accordance with the objects of the Centre, without any other stipulation - The exemption is for the period covered by AYs 2005-06 to 2009-10 - It is not averred that the income derived from the property held under trust was not applied in accordance with the objects of the Centre - Application of income is different, from accrual - the interest earned applied for the purpose/objects of the Centre will not form a part of the total income - in respect of the income, there would be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited with a French financial services group, namely, Cr dit Industriel et Commercial, Paris, France and interest of ₹ 11,37,438/- and ₹ 9,37,722/- (upon conversion) was earned in the assessment year 2008-09 and 2009-10, respectively. The second issue relates to application of proviso to Section 164(2) of the Act because of violation of provisions of Section 13(1)(d) of the Act and accordingly the respondent-Centre should be taxed on the maximum marginal rate. 3. In order to appreciate the contentions, certain facts relating to formation of the Centre and the source of funds is required to be elucidated:- (a) Indo French Centre for Promotion of Advanced Research was formed in India, jointly by the Government of India and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid agreement, the Reserve Bank of India had permitted/ allowed opening of a foreign currency account by the respondent Centre in France with a French Bank in Paris. The Reserve Bank of India by letters dated 04.07.1988 and 05.09.1988 granted the following permissions:- i. Grants received from the French Govt. may be credited to the account freely. ii. Interest on balance may be credited to the account freely. iii. Debit in respect of bank charges and repatriation to India may be made freely. iv. Debits for the expenses in connection with conducting of research programs in French Laboratories and joint workshops, seminars abroad may be made freely. v. All other transactions will require the prior approval of Reserve Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 (43 of 1961), the Central Board of Direct Taxes hereby directs that the income derived from property held under the trust known as Indo-French Centre for the Promotion of Advanced Research, New Delhi shall not be included in the total income of the persons in receipt of such income to the extent to which such income is applied in accordance with the objects of the Indo-French Centre for the promotion of Advanced Research, New Delhi. This order shall have effect for the period covered by Assessment Years 2005-06 to 2009-10. The claim as above of the applicant regarding the extent to which such income is applied to such purposes outside India will be subject to verification during the course of assessment proceedings as per the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulations mentioned in the last paragraph. Once we give proper effect and recognition to the order dated 12.10.2010, the entire income derived from property held under trust would be exempt. It is not averred that the income derived from the property held under trust was not applied in accordance with the objects of the Centre. Application of income is different, from accrual. Thus, the interest earned applied for the purpose/objects of the Centre will not form a part of the total income. Therefore, in respect of the said income, there would be no violation of Section 11(5) read with Section 13(1)(d) of the Act. 8. It cannot be argued and stated by the Revenue that the CBDT was not aware of the factual position that the respondent Centre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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