TMI Blog2013 (12) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... said that there was any violation of provisions of sec. 11(5). - ITA Nos. 3065 & 6164/Del/2012 - - - Dated:- 31-12-2013 - S. V. Mehrotra (Accountant Member) And A. D. Jain (Judicial Member) For the Petitioner : Satpal Singh (Sr. DR) For the Respondent : N. K. Gupta (CA) ORDER S. V. Mehrotra (Accountant Member) These appeals filed by the Revenue are directed against the two separate orders of ld. CIT(A)-XII, New Delhi, dated 05/03/2012 for A.Y. 2008-09 and ld. CIT(A)-XXI, New Delhi, dated 04/09/2012 for A.Y. 2009-10. ITA No. 3065/D/12 for A.Y. 2008-09: 2. Brief facts of the case are that assessee was registered u/s 12A vide order dated 13th May, 2004 F. No. 45/I-993/03/168. It had filed its return of income declaring Nil income accompanied with audit report in Form No. 10B. In course of assessment proceedings the AO noticed that investments were not made in conformity with section 11(5) of the Income Tax Act. He, therefore, required the assessee to clarify as to why the same should not be taken as violation of section 13(1)(d) of the Income Tax Act. The assessee s reply has been reproduced at pages 2 to 3 of Assessment Order. In its reply the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licability to our case for the previous year in question does not arise, since the society has not parked any fund with Credit Industrial at Commercial Bank, Paris, France, either as an investment or as a deposit. Under the existing arrangement with the Government of France the funds representing the grant from the Government of France are directly deposited in this account for utilization by the Centre for the mandated purposes (Ref. is made to the Delhi High Court judgment clearly bringing out this distinction in the case of Director of Income Tax (Exemption) vs. Alarippu [2000-(244)-ITR-0358] copy of the judgment relied upon is enclosed. In view of the submissions made herein above, we trust the position of the requirements of section 13(1)(d) vis- -vis our case of explained and find the same in order. 3. The AO, however, did not accept the assessee s contention for the following reasons: 1. The submission of the assessee that money kept in Credit Industrial et Commercial Paris was neither investment nor deposit was misplaced. As assessee itself had shown the credit amount only under the head Investment . 2. The investment was earning interest which was reflec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether the amount lying with Credit Industrial et Commercial Paris was in violation of provisions of section 11(5) or not. Section 11(5) prescribes the forms and modes of investing or depositing the money which the assessee had not applied to charitable or religious purposes in India. This section is applicable, if in the previous year the income applied to charitable or religious purposes in India falls short of 85% of the income derived during that year and is accumulated or set up apart, either in whole or in part, for application to such purposes in India. The AO has also invoked section 13(1)(d) which is also attracted only when funds of the trust are invested or deposited after 28/02/1983, otherwise than in any one or more of the modes specified in sub-section (5) of section 11. Therefore, we have to examine two aspects in the present case-firstly whether assessee had applied less than 85% of its income towards the objects of the trust and secondly whether the amount lying with the Credit Industrial et Commercial Paris was in violation to sec. 11(5). We will first consider the second aspect relating to alleged violation of the provisions of section 11(5). In order to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also agreed for the opening of French France account by the centre in France with a French bank in Paris for the purpose of promotion of advanced research. Copies of letters from RBI dated 04.07.1988 and 05.09.1988 are enclosed as Annexure 2 and 3 . The permission by RBI was given subject to following conditions: 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. All other transactions will require the prior approval of Reserve Bank of India. 1.5 As per the arrangement the grants in aid from the Govt. of France is to be deposited in the bank account in France and after meeting the expenses incurred in France, balance grant in aid is freely remittable to India. 7. From the above arrangement it is evident that assessee had not parked any funds with Credit Industrial et Commercial Bank, Paris, France either as an inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 the1st 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; Therefore, to the extent amount was not applied to the objects of society outside India, the amount remained with the French Bank. Therefore, it could not be said that there was any violation of provisions of sec. 11(5). 9. As we have held that assessee s income was eligible for deduction u/s 11 12, the applicability of provisions of section 164 is ruled out. In view of the above discussion, we do not find any reason to interfere with the order of ld. CIT(A). Accordingly, Department s appeal is dismissed. 10. ITA No. 6164/D/12 for A.Y. 2009-10: The Department has taken following grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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