9911796707
TMI Blog2014 (11) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was violation of Section 13(1)(d) read with Section 11(5) of the Income Tax Act, 1961 ('Act' for short) as funds of the respondent Centre were deposited with a French financial services group, namely, Crédit Industriel et Commercial, Paris, France and interest of Rs. 11,37,438/- and Rs. 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 fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.5 Any other expenses which the French side agree to bear." (e) This was accepted by the Government of India. Pursuant to the aforesaid 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds:- "In exercise of the powers conferred by proviso to clause (c) of sub-section (1) of section 11 of the Income Tax Act, 1961 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objects of the Centre. This income, even when applied abroad, has to be excluded, subject to the verification stipulations 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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