Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (4) TMI 93 - ITAT MUMBAI

2015 (4) TMI 93 - ITAT MUMBAI - TMI - Charitable purpose u/s 2(15) - Application for registration under section 12A rejected - application of funds of the trust outside India which renders it ineligible for exemption - Held that:- The objects of the trust suggest that the trust has been formed to promote art and culture of India within India and globally which, in our view, fall in the definition of ‘any other object of general public utility’ and hence included in the definition of charitable p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat the trust has received permission from the Home Ministry, Government of India, to carry out such activities outside India. Considering the overall discussion as made above, it is to be held that the activities of the trust would fall in the definition of charitable purposes. However, so far as the application of income outside India, as claimed to have been applied to promote international welfare in which India is interested is concerned, it is to be proved with necessary evidences and also .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rty is held wholly and exclusively under trust for charitable and religious purposes as provided under section 11 of the Act, then such a trust subject to the fulfilment of other conditions as laid down by the different provisions of the Act, will be entitled to registration and it cannot be denied registration because of the fact that its activities are extended outside India. However, while computing the income as per the provisions of section 11 of the Act, the income which is applied on such .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cerned, the matter is restored to the file of the Ld. DIT(E) for decision afresh after granting proper opportunity to the appellant trust to present its case and produce necessary evidences, if any, in this regard. - Decided in favour of assessee for statistical purposes. - ITA No.736/M/2013 - Dated:- 11-3-2015 - Shri R.C. Sharma And Shri Sanjay Garg JJ. For the Appellant : Shri Rashmikant D. Kundalia, A.R. For the Repondent : Shri Surinderjit Singh, D.R. ORDER Per Sanjay Garg, Judicial Member: .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ppellant trust has charitable as well as non charitable objects such as hosting of artistsin- residence programmes for international artists and raising funds for organizing trips, seminars and conferences within and outside the country etc. The Ld. DIT(E) has further observed that objects of the applicant trust were not merely confined to the territories comprising in India but also extended to and encompass the whole world. He has therefore observed that any activities carried out by the appli .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

icant trust had made payments of salary to its trustees/persons covered under section 13(3) of the Act. He has noted that salary of ₹ 4,55,496/- had been paid to Mr. Ashok Sukumaran and salary amounting to ₹ 5,24,225/- to Ms. Shaina Anand. He has observed that the applicant trust had not furnished any details of services rendered by these two trustees nor any supporting evidence had been furnished justifying the payment of such a hefty amount. He has therefore held that the provision .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

We have heard the rival contentions of the Ld. Representatives of both the parties and have also gone through the records. So far as the first ground for rejection of the applicant trust is concerned, the Ld. A.R. of the assessee has submitted that the main object of the trust as per trust deed is to promote non commercial artistic activity, discussion and education initiatives about the arts and emerging media forms for the benefit of the general public. He has further submitted that the trust .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the trust to promote Indian art and culture at an international level, an initiative that promotes the ethos of Indians. He, inviting our attention to section 11(1)(c) of the Act, has contended that the activities of the applicant trust fall within the definition of to promote international welfare in which India is interested . He has therefore contended that the said provisions do not prohibit the trust from incurring expenditure outside India. It has been further contended that even otherwise .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

trust has received international recognition for its project pad.ma. That the activities of the applicant trust fall within the definition of object of general public utility as defined under section 2(15) of the Act and further that its activities promote international welfare in which India is interested. He has further invited our attention to para 5 of the trust deed to show that the trust has restricted itself to utilize the funds within India only for charitable activities. The words or ou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e would like to discuss the relevant provisions of the Act. Sections 11 to 13 of the Act deal with the issue under consideration. The relevant part of section 11, for the sake of convenience, is reproduced as under: 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 u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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; (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, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that they shall form part of the corpus of the trust or institution.]…………. 5. A perusal of the clause a of section 11(1) reveals that: 1) Income is to be derived from property held under trust wholly for charitable or religious purposes. 2) The income to the extent to which such income is applied to such purposes in India is exempt from inclusion into the total income of the assessee trust. 6. Hence, the two conditions are that the property held under trust should be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the point that the requirement of the first condition is that the property should be held under trust for charitable purposes and whether the property is held in India or outside India is not relevant. As per second condition, it is not restricted that the whole of the income should be applied to charitable purposes in India only. The second condition suggests that the income to the extent to which it is applied in India for charitable purposes is not to be included in the total income. The int .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a charitable trust applies some of its income for charitable activities outside India and some of its income for charitable activities in India then it will be entitled to exemption up to the extent such an income is applied in India and not otherwise and subject to the other conditions laid down in other provisions of the Act. 7. To get more clarity, now we discuss the definition of charitable purposes as provided under section 2(15) of the Act which, for the sake of convenience, is reproduced .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or appli-cation, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;] 8. A careful reading of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o the poor, education, medical relief or advancement of any other object of general public utility etc. as mentioned above, then it is to be treated as a charitable trust. 9. Now reverting to the provisions of section 11 of the Act, a perusal of clause (c) of section 11(1) reveals that even under certain cases the exemption from inclusion in the total income is also granted even in cases of application of such an income outside India for the purposes which tend to promote international welfare i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ake up an example. Suppose, there is an epidemic in any region or country outside the Indian boundaries and an institution based in India extends help and support in providing food, medical and other assistance to the affected people; would it not be called a charitable activity? Now suppose, there is a pandemic involving India and neighbouring countries; an institution based in India, irrespective of the boundries of the country, offers help and support to the people at large without considerin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the activities done in India only, the charity remains the charity, whether it is done in India or whether elsewhere in any part of the world irrespective of the territorial boundaries. However, so far as the computation of income or the relief under the Income Tax Act is concerned, the Act has restricted the exemption from inclusion in total income to the extent such an income is applied in India. So in the given example, if an institution offers help and support not only in India but also out .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

application for registration as a charitable institution to the respective Commissioner or Principal Commissioner [hereinafter referred to as DIT(E)]. Section 12AA prescribes the procedure to be adopted by such a Principal Commissioner or DIT(E) for registration of such an institution as charitable institution. The requirement of the provisions is that the Commissioner may make necessary enquiries to satisfy himself about the genuineness of the activities of such an institution and if he is so s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ies, the trust is to be granted registration. For the purpose of grant of registration, the application of income in India is not a pre-condition, if its activities otherwise fall in the definition of charitable activities as observed above. However, so far as the computation of the income is concerned, such an institution will get exemption of income to the extent it is applied in India and not in relation to the income, even if applied for charitable purposes, outside India. Further, as per th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ect of general public utility and hence included in the definition of charitable purposes. So far as the application of income outside India is concerned, the Ld. A.R. has vehemently stressed that the projects, conferences and seminars had been carried out by the trust to promote Indian culture and art at international level, further that the activities such as to host artists-inresidence programmes for national as well as international artists for the benefit of society are the objects that pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a is interested is concerned, it is to be proved with necessary evidences and also subject to approval of the Board for entitlement of exemption from tax on such income. However, the registration cannot be refused on the ground that the income is applied for charitable purposes outside India. 12. So far as the second ground regarding the salary paid to the trustees is concerned, the Ld. A.R. has contended that the Ld. DIT(E) had not raised any question on this issue and thereby had not given any .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version