TMI Blog2020 (9) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of income, and not the amount so specified in the CBDT approval, will be covered by exemption available under section 11(1)(c). It goes without saying that where the actual application of income of the trust exceeds the permitted contribution in paragraph 1 of the CBDT approval, the exemption under section 11(1)(c) will be available only to the extent specified in paragraph 1 of the CBDT approval. That is the limited verification, in terms of the CBDT approval, required to be made by the Assessing Officer. Ironically, however, when we asked, during the course of hearing before us, as to what verifications would the Assessing Officer like to carry out now, learned Departmental Representative, as also the Assessing Officer appearing in person, submitted that the verification required is for the purposes of ensuring that such an application of income of the trust outside India, i.e. by contributions to the Cornell University and Harvard University, tend to promote international welfare in which India is interested . That exercise, for the detailed reasons set out above, cannot be conducted by the Assessing Officer, nor does the scheme of the Act, or facts of the case- part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to which such income is applied for such purposes outside India and that verification is not even in dispute as all the related payment details and RBI remittance approvals have already been filed before the Assessing Officer, at the assessment stage, and the same have not been faulted at all. When the Assessing Officer appeared before us in person, he did not even dispute that; all he wanted to verify was as to how the contributions to Cornwell University USA and Harvard University USA tend to promote the international welfare in which India is interested, but then, for the detailed reasons set out earlier in the order, that is what he cannot be permitted to do, as it falls beyond the call of his duty. We reject this plea as well. CIT(A) was in error in upholding the denial of claim of the assessee for exemption in respect of application of income of the trust outside India, by way of contributions made to Cornell University USA and Harvard University USA - Decided in favour of assessee. - ITA Nos. 1423, 1424 and 1535/Mum/2018 - - - Dated:- 24-7-2020 - Justice P P Bhatt, President, And Pramod Kumar, Vice President For the Taxpayer : P J Pardiwalla, Sr Advocate, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 197,79,27,500, and, for the assessment year 2012-13, was ₹ 25,37,00,000. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that in terms of proviso to Section 11(1)(c), unless the Central Board of Direct Taxes, by way of a general or special order, specifically approves that the income derived from property held under trust, applied for the purposes of specified under section 11(1)(c)(i) and (ii), shall not be included in the total income of the person in receipt of such income, it shall not be excluded from the total income of the person in receipt of such income. The Assessing Officer further noticed that as no such approval from the Central Board of Direct Taxes has been granted, the amounts remitted abroad for application of trust funds are required to be included in the income of the assessee. These amounts were thus added to the income of the assessee trust. Aggrieved, assessee carried the matter in appeal before the CIT(A), but, even as the appeal was pending before the learned CIT(A), the Central Board of Direct Taxes, vide order dated 10th November 2015, granted approval under section 11(1)(c), which was specifically stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with respect to claim of the assessee for exemption of income earned by the assessee trust in respect of the income applied for charitable purposes outside India. He submits that the appellant trust was constituted, in 2008, under the Bombay Public Trust Act 1950 (now known as Maharashtra Public Trust Act 1950), and had duly obtained its registration as a charitable institution under the Section 12A of the Income Tax Act, 1961. It was pointed out that admittedly there is no dispute about its objects being charitable in nature and this fact has been accepted as such all along by the Assessing Officer. It is submitted that during the previous years relevant to the assessment years 2009-10 to 2016-17, the assessee had spent monies, inter alia, on donations to two US based universities, namely Cornell University and Harvard University, pursuant to certain agreements. These payments were made with proper regulatory approvals of the Reserve Bank of India, and there is no dispute on that aspect. There is also no dispute, according to the learned counsel, that these amounts spent for the purposes for which the appellant trust was established. Learned counsel then submits that normally wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover several areas such as Nano Technology, agricultural sciences, climate change studies, ecological and human habitat studies, etc. The Trust will also support study and exchange programmes that promote the spread of knowledge by way of Scholarships and Freeships to students and teachers in Programmes in India or outside India with a view to bringing to bear upon Indian Institutions new technological initiatives and projects which foster the development of Indian capabilities. Foreign academic and research institutions will be duly selected for setting up such collaborative initiatives to be funded by the Trust in order to enhance India's strength. 3(a) Tata Education And Development Trust established an endowment fund through contribution totaling $50 million at Cornell University at USA to establish 'Tata Scholarships for Students from India Fund and Tata-Cornell initiative in Agriculture and Nutrition Fund . Generations of Indian undergraduate students from India would be able to access educational opportunities in one of the best Universities in the world, 'Cornell University' to meet their ambitious goals. - 'Tata Scholarships for Students fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) each year. With the construction of Tata Hall additional 1800 MBA and 100 Doctoral students will be benefited every year. Having a building named Tata Hall on the Harvard Business School campus, in and of itself, will benefit India. Having the name of one of the largest and most well-respected business houses in India prominently displayed at Harvard Business School will provide tremendous global visibility for India and Indian business to a high powered, global group of business leaders. 4. We now request for the issue of the Order u/s. 11(1)(c) for the three years period covered by the Assessment years 2009-10 to 2011-12 for the reasons set out in the succeeding paragraphs:- (a)(i) The Tata Scholarships is funded to provide: - assistance to undergraduate students with demonstrated financial need enrolled at Cornell University, who are citizens of India and who attended a secondary school in India. - assistance for enrollment of Tata Scholarship for international undergraduate students which has now increased to 128 percent - assistance preferentially to qualified students from the College of Architecture, Art and Planning; the College of Engineering; the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 US $ 5 million 2012 - 2013 US $ 5 million 2013 - 2014 US $ 5 million 2014 - 2015 US $ 5 million 2015 - 2016 US $ 5 million Total US $ 50 million 5) We shall be extremely grateful if the requisite order is issued at your earliest convenience, with a view to enable the Trust to continue its activities effectively. The delay, if any, in making Application u/s. 11(1)(c) for the Assessment Years 2009-2010 to 2011-2012 may please be condoned. Since, the part of the Income of the Trust is applied outside India, it is necessary to apply for an Order u/s. 11(1)(c) and hence this Application. 6. Learned counsel submits that this plea of the assessee, however, did not find favour, at that point of time, with the Central Board of Direct Taxes. Vide letter dated 2nd June 2014, a copy of which is placed before us in pages 5-6 of the paper-book, the CBDT declined approval under proviso to Section 11(1)(c) and observed as follows: 4. After examining the information and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration certificates are attached as Annexure 1. 1.2 The Trust has been set up, inter-alia with the object to invest in projects in India or outside India that promote the development of knowledge and expertise in several areas vital for India's growth and competitive ability. The projects that may be established by the Trust by Wily of foundations or grants will cover several areas such as namo technology, agricultural sciences, climate change studies, ecological and human habitat studies, etc. The Trust will also support study and exchange programs that promote the spread of knowledge by way of scholarships and freeships to students and teachers in respect to programmes in India or outside India with n view to introduce Indian institutions to the new technological initiatives and projects which foster the development of Indian capabilities. Foreign academic and research institutions will be duly selected for setting up such collaborative initiatives that will be funded by the Trust in order to enhance India's strength. 1.3 In furtherance of its charitable objects like promoting education, research, etc., TEDT has made/will make the following grants: USD 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. 2.6 While 'charitable purpose' is defined under Section 2(15) of the Act, no explanation, or clarification, or guidance is available under the Act for the words 'tend to promote international welfare in which India is interested'. In absence of any specific definition/explanation of the term, its meaning could be understood based on general parlance. Here, it is pertinent to note that the Section has two significant phrases, 'tend to promote' and 'international welfare in which India is interested'. The phrase 'tend to promote' only signifies that such an activity undertaken which may lead to promotion of international welfare, should have a tendency to lead to such promotion in present or in near future. Further, in absence of any specific definition, 'international welfare in which India is interested' will have to be interpreted in a wide manner, meaning thereby any activity in the nature of welfare on an international scale which will benefit/impact various co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of diverse undergraduate programmes compel Indian students to seek overseas opportunities for higher education. However, considering the high cost involved in pursuing studies abroad, this ambition for several Indian students remains a dream and does not become a reality for want of adequate financial resources. 3.5 Cornell is rated as one of the 8 prestigious universities in the USA and there are very few universities globally which can be ranked at par with it. Educationally and socially, Cornell is the most diverse university among other Ivy League universities. At a time, over 3,200 undergraduate and graduate international students from more than 120 countries are enrolled for various courses hi Cornell. Over years, the number of international undergraduates enrolled at Cornell increased many folds front 1,060 in 2006 to 1,464 in 2014. As per the latest data available, the proportion of international students (pursuing undergraduate program) is approximately 10 percent to total number of students. 3.6 It is noteworthy that the number of students applying for admission to undergraduate program from India has increased from 128 applications in 2004 to 291 applications i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for Admissions and Enrolment, in accordance with the financial aid policy of the university then in effect, as amended by the Board of Trustees of Cornell University from time to time. The grant of Tata Scholarship is solely at the discretion of Cornell and Cornell in its wisdom and judgment disburses scholarships to the qualified Indian students. All students who are offered the Tata Scholarship meet the university's criteria for need-based financial aid. In selecting the scholars, the university gives preference to students who attend non interactional/non-private secondary schools, are the first in their family to attend college, and demonstrate the greatest financial need. Priority is also given 5 students who attend schools from which a large number of students do not go on to attend elite American institutions. 3.11 The detailed procedure adopted by Cornell for selection of students for grant of Tata Scholarship is attach as Annexure 4. We have also attached the published data regarding the financial aid policy of Cornell University available on the website of Cornell as Annexure 5. 3.12 The goal of the This Scholarship is to ensure that the very best Indian stude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertise. Moreover, it is submitted that based on the Trust recommendation, Cornell has started: Specifically identifying Indian students in agriculture and nutrition to benefit from this scholarship, and Identifying prospective students from Tier 11 and Tier III cities in India, thus expanding the outreach of this Scholarship. 3.15 It is well recognised globally that Indians are technically world class and front runners in technological, scientific and astronomical fields and their presence has a positive impact on others. Apart from this, Indians also bring along with them rich heritage and cultural diversity. This has led to immense amount of cross-learning, which inter-alia benefit students of other countries by sharing of knowledge and experiences and vice versa. 3.16 This sharing of knowledge has created avenues for Indian students to learned address issues of Natural Resource Management (NRM) in Africa, after which they were keen to transfer this learning to Indian conditions. Similarly, international students visit India and bring their knowledge on nutrition, for example, to address issues of malnutrition in women tea plantation workers in Darjeeling. 3.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that Tata Scholarship has definitely promoted international welfare in which India is interested and thereby it has fulfilled all the requirements of Section 11(1)(c)(i) of the Act in respect of its grants to Cornell. Detail of grant to Cornell for TACO-AN initiative and our submissions: 3.22 Cornell is a major research hub and there are over 100 institutions and research centres that flourish at Cornell. In addition, research is also carried out at the colleges on the campus. 3.23 Cornell offers a significant edge to students who are interested in agriculture and nutrition. The University's College of Agriculture and Life Sciences is known worldwide as a leader in agriculture. It supports nearly 400 faculties, and serves 3,100 undergraduates, 1,100 graduate students. In terms of Cornell's stature among USA institutions, Cornell is the only Ivy League University with an agriculture program. In 2010, the National Research Council reviewed 15 of Cornell's graduate fields A agriculture and life sciences and ranked 14 of them among the top 20 in the USA, and 10 of them among the top 10 including crop and soil sciences, plant biology, entomology, natural resourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of malnutrition in the world. This burden is aggravated by the new challenges such as the declining per capita income in agriculture, landholdings that are increasingly fragmented and the shrinking natural resources. 3.29 The TACO-AN initiative has bought together Cornell faculty, researchers and students with their counterparts in India to collaborate on solutions to some of the greatest challenges facing India today. The activities undertaken are focused on improving the productivity, sustainability and profitability of India's food system, with the aim of reducing poverty and malnutrition as well as on improving the lives and nutritional status of rural poor in India. 3.30 TACO-AN has created a network of universities that participate in and benefit from the initiative's research efforts. TACO-AN has in fact already provided the impetus for Memoranda of Understanding ('MOUs') with the Tata institute of social Sciences ('TISS') and Dr. Panjabrao Deshmukh Krishi Vidyapeeth University in Akola ('PDKV'). These collaborations in India coupled with Cornell's extensive linkages around the world will result in creation of an effective network ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shop 70% fanners were well-versed with spray technology as compared to the 30% farmers who were aware pre-workshop. In respect to the same, the study report on pesticide application technique, provided by researchers at Cornell is attached as Annexure 9. Further, 6 Indian students (details of the students alongwith their travel plans is attached as Annexure 10) in Cornell had expressed their keenness to study various issues in Vidharbha, which would be a significant contribution in creating a knowledge repository on Vidharbha. This is in line with the idea proposed by TISS, Mumbai of having a 'Vidharbha Observatory' which would serve as a knowledge base for students, teachers, academicians, village level field workers, government officials etc. Ill addition, due to its broad based nature, the Vidharbha Observatory would generate awareness on the multi-dimensionality of issues faced by not only farmers, but also the women and children of the region. The experience so gained will also be shared with other countries. The representatives of Cornell covered under TACO-AN have not only visited areas such as Vidharbha in India but have extensively travelled in other deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia is interested. 3.36 Thus, the Hon'ble Board will appreciate that all the requirements of Section 11 (1)(c)(i) of the Act have been complied with by TEDT in respect of its grant to Cornell. 4. Grant to Harvard 4.1 TEDT has entered into an agreement dated 17 March 2010 with Harvard to donate USD 50 million for an educational infrastructure and facility within Harvard University campus which will provide classroom and residential facilities for Harvard's Executive Education program participants. A copy of the agreement is attached as Annexure 14. 4.2 The details of the amount of donation made/to be made are provided below: Financial Year (*FY') Amount USD (in Million) Date / proposed date of remittance 2010-11 25.00 4 March 20 11 2011-12 5.00 20 March 2012 2012- 13 5.00 22 February 2013 2013- 14 5.00 13 March 2014 2014- 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onomic activity in the world. 4.7 We have attached as Annexure 15, a list of Indians who have studied at Harvard University. The names of the leaders included in the list speak for itself about the significance and benefits of studying at Harvard University and the benefit to the global economy. 4.8 Considering the importance of infrastructure for students pursuing Executive Education program at Harvard, TEDT has agreed to give a grant to Harvard for construction of state of the art infrastructure facility within Harvard University campus. 4.9 In addition to the contribution committed by TEDT, Harvard has also invested USD 60 million of additional capital for the same. It is pertinent to note that the name or reference to the facility as 'Tata Hall' that has been constructed in the Harvard university campus was decided by Harvard and there was no condition attached to the grant provided by TEDT. 4.10 We have attached as Annexure 16, following documents in relation to the Tata Hall: Press release in relation, to approvals received for the construction of Tata Hall Request for quotation floated by Harvard for the construction of Tata Hall Pictures o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed that the Harvard experience truly creates a transformational impact on its participants, thereby not only elevating their knowledge of India but also bring India to the forefront in the global economic perspective. Thus, pursuant to its construction, Tata Hall has played/continues to play an ambassadorial role for India with regards to both domestic and international visitors to Harvard. 4.15 This fact is evident from the letter (attached as Annexure 17) from Mr. Nitin Nohria, the Dean of Harvard University to the Ministry of Finance, which explains as to how the contributions received from TEDT has helped/would help Harvard to support the cause of education for Indian as well as other international students. 4.16 As the above donation to Harvard by the TEDT is for furthering education, it falls within the objects of the Trust and also within the meaning of the term 'charitable purpose' as defined under Section 2(15) of the Act. Also, by contributing to the construction of Tata Hall, which has supported students from all over the world including India, the donation has promoted international welfare wherein India is interested. 4.17 Thus, the Hon'ble Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person in receipt of such income to the extent such income is applied outside India for charitable purpose for grant for creation of endowment funds through contribution at the Cornell University, for scholarship of Indian students as well as for joint collaboration project between Indian and Cornell scientists, and grant for financial assistance to Harvard Business School for construction of a New Executive Building named Tata Hall , as per the details provided below: Sl. No. Assessment Year Amount (in USD) 1. 2009 10 12.50 million 2. 2010- 11 18.75 million 3. 2011- 12 43.75 million 4. 2012- 13 5 million 5. 2013- 14 5 million 6. 2014-15 5 million 7. 2015- 16 5 million 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act in respect of the said amount of ₹ 197,99,94,581/- is correct and tenable in law for the following three independent reasons: i) The above referred order of the CBDT dated: 10-11-2015 is not retrospective in operation as nowhere in the said order it has been specifically mentioned that the said order would apply retrospectively for the year under consideration i.e. A.Y. 2011-12. Nor has the appellant cited any judicial precedent on the issue wherein claim of any assessee was allowed under the similar circumstances. ii) The said order of the CBDT has been passed in response to the assessee's application dated;31-03-2015 and therefore, it can not apply to A.Y. 2011-12. iii) Vide the aforesaid order of the CBDT, exemption has been granted in respect of income applied outside India subject to the condition that 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 Income-tax Act, 1961. However, it is seen that in the present case no such verification has been carried out by the AO during the assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant facts and taking a conscious call on the availability of benefit under section 11(1)(c) in respect of amounts spent by the assessee trust outside India. He submits that it is difficult to comprehend as to how a different treatment could be justified, so far as availability of benefit of application of income of the trust outside India is concerned, for these two assessment years. Learned counsel submits that there is no difference whatsoever in the facts of the cases for these two assessment year- the agreements under which the payments are made are the same, the recipients of remittances made by the assessee trust are the same, the CBDT approval specifically covers all these payments and the CBDT approval for all these years is the same. On account of the principle of consistency alone, according to the learned counsel, the assessee must succeed. He invites our attention to Hon'ble Supreme Court's judgment in the case of Radhasoami Satsang Vs CIT MANU/SC/0061/1992 : [(1992) 193 ITR 321 (SC)] wherein it is held that, while strictly speaking res judicata does not apply to income-tax proceedings but where a fundamental aspect permeating through the different assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of reserve which would result in creation of any asset owned by the assessee outside India, such asset should be created only after obtaining prior approval of the prescribed authority . It is then again pointed out that no such time frame for CBDT approval are set out in Section 11(1)(c). In the absence of a time limit for taking approval of the CBDT, such a time limit cannot be inferred, and, on the basis of that inference, benefit of section 11(1)(c) cannot be declined approval is subsequently obtained by the assessee and such an approval is specifically applicable to an earlier period as well. The third reason assigned by the learned CIT(A) is that in terms of the approval of the CBDT, the approval subject to verification during the course of assessment proceedings as per the Income-tax Act, 1961 but then, according to the learned CIT(A), no such verification is carried out. Learned counsel submits that its wholly incorrect to say that the verification has not been carried out as all the details of amounts applied for charitable proposes abroad have been duly given to the Assessing Officer, the RBI approval were duly obtained and the same have been duly placed before the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Hon'ble Bombay High Court's judgment in the case of CIT Vs Parrys (Eastern) Pvt. Ltd MANU/MH/0175/1988 : [(1989) 176 ITR 449 (Bom)] wherein it was held that once the Central Government granted approval the approval, the Assessing Officer could not have questioned the same. In the said case it was observed that the Central Government having found in respect of the assessee's application under section 85C that the three essential and common requirements were met, the Addl. Commissioner ought to have so proceeded and not held to the contrary . Our attention is then invited to Hon'ble jurisdictional High Court's judgment in the case of Maharashtra Academy of Engineering Educational Research Vs DGIT MANU/MH/1122/2009 : [(2009) 319 ITR 399 (Bom)] wherein it was held that when the approval is granted by the CBDT, a lower authority, i.e. Director General of Income Tax cannot rescind the approval so granted or act contrary to the approval. As summed up in the headnotes of the reported judgment, having held that the prescribed authority was CBDT for the years 1999-2000 to 2000-01, the authority to pass the order reviewing grant of permission would be CBDT. Once a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the learned Commissioner (Appeals) and justifies the same. He begins by pointing out that the learned counsel has gone to the merits without looking at the applicable legal position inasmuch as the CBDT approval is not an absolute or unconditional approval, and that this approval needs to be read in entirety, rather than partly. He then submits that as the CBDT approval itself states in so many words, the Assessing Officer is to examine the facts of the case and that is what is the condition on which the approval is granted. It is therefore the duty of the Assessing Officer to examine the facts of the case while considering application of CBDT approval on the facts of the case. It is then pointed out that admittedly the CIT(A) has not examined the facts of the case, and it is only upon such an examination that the effect of the approval can be implemented. Learned Departmental Representative then invites our attention to the written submissions filed by the Assessing Officer which, inter alia, states as follows: 2.0 GROUND NO. (1) 2.1 The first ground of appeal related to denial of deduction for income applied outside India under section 11(1)(c) of the Act even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to verification during course of assessment proceedings. The verification mandated by the Board is to be undertaken during assessment proceedings and the aforesaid order of the CBDT did not grant an automatic approval. Due application of mind was required after ascertaining the underlying facts/documents as to whether or not the application of income made by the appellant was consistent with and in compliance to the governing stipulations specified in the order of the CBDT. It is worth noting that the approval was accorded on the basis of details as mentioned in the application made to the CBDT by the appellant. An important component that required due consideration of the Assessing Officer was whether the application of income promoted international welfare in which India is interested. This is also evident from order/approval letter dated 10.11.2015 of the CBDT. On a careful analysis of the same, it is noted that nothing is mentioned about how the foreign donation of funds had promoted the international welfare in which India is interested. This aspect is clearly mentioned that the approval of the Board was subject to the verification of Assessing Officer. It is, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . When learned Departmental Representative was asked whether it was at all open to the learned CIT(A) to adjudication on a grievance, which did not at all survive at the stage of adjudication because the assessee was granted the relief by the Assessing Officer himself, learned Departmental Representative relied upon the stand of the CIT(A) and contented that once an issue is raised before the CIT(A), he was duty bound to adjudicate on the same. Learned Departmental Representative then painstakingly took us through these submissions filed by the Assessing Officer. It was submitted that no verification has at all been carried out in this case, and, for this reason alone, the judicial precedents relied upon by the learned counsel for the assessee are distinguishable. It is then submitted that in this case relief was granted under section 154, and, as such, such a factual verification was not possible, whereas, in the remaining six assessment years, the claim was allowed in the scrutiny assessment proceedings under section 143(3). It is contended that admittedly no verification was, and could have been, done in the proceedings under section 154- as in the present case. When asked as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative, on the strength of these submissions, urged us to confirm the order of the learned CIT(A), or at best remit the matter to the file of the Assessing Officer for fresh verifications in the terms indicated, and decline to uphold the plea of the assessee. 20. In his brief rejoinder, learned counsel for the assessee pointed out that the purpose for which the Departmental Representative states that factual verification is to be carried out is factually incorrect. He once again takes us through the approval granted by the Central Board of Direct Taxes, reads out the related observation to the effect and points out that the verification is only to verify the extent to which income is applied and submits that such a verification has been verified in the assessment proceedings itself as application of monies outside India is separately quantified and then exemption in respect of the same is declined. He submits that it is not the case that Board has done something and the Board wants the Assessing Officer to verify whether they have been correct, in this exercise, or not. He submits that, for example, when registration under section 12A to a chartable institution, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of trust income for the purposes of the trust outside India, and grant relief accordingly. Our analysis: 21. We have given our careful consideration to the rival contention in the light of the applicable legal position and the material on record. 22. It is necessary to bear in mind the fact that as on the point of time when the appeal came up for adjudication before the CIT(A), the impugned disallowance of claim of exemption, amounting to ₹ 197,79,27,500, for the assessment year 2011-12 and to ₹ 25,37,00,0000 for the assessment year 2012-13, was already deleted by the Assessing Officer by passing orders under section 154 dated 8th December 2015. These orders are identically worded, and, for ready reference, extracts from the order for the assessment year 2011-12 are reproduced below: The assessee has filed rectification application on 26.11.2015 for grant given to Cornell University and Harvard Business School to be considered income applied outside India. In support, the assessee has submitted copy of CBDT Order No. F. No. 180/9/2010-ITA-1 dated 10.11.2015. In the assessment order u/s. 143(3) passed in the case of the assessee on 28/03/2014 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectification order so passed and the original assessment order were, for all practical and for all legal purposes, stood merged, and the disallowance thus ceased to exist as on 8th December 2015. To this extent, grievances raised in the appeals before the CIT(A), against the aforesaid disallowances, became wholly academic and infructuous. Yet, on 29th December 2017, when learned CIT (A) disposed of these appeals, he proceeded to adjudicate on these issues. That course of action, in our considered view, was not permissible. When the very disallowance of exemption, which was agitated in appeal, stood deleted, it was not open to the learned CIT(A) to adjudicate on the correctness of the disallowance. While on this aspect of the matter, we may usefully refer to the following observations made by Hon'ble Gujarat High Court, in the case of Nitin Babubhai Rohit Vs Dharmendra Vishnubhai Patel MANU/GJ/0293/2018 : [(2018) 409 ITR 276 (Guj)] wherein Their Lordships have, inter alia, observed as follows: ....... we find it somewhat unusual to note that the Commissioner (Appeals) even after the revisional authority had set aside the order of penalty, proceeded to decide the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was passed but then when different sub clauses of section 251(1) provide for different appeals for the orders, while dealing with appeal against one order, the CIT(A) cannot deal with the subject matter of the other order. This is evident from Their Lordships' observations to the effect that As would be evident from Section 251(1) of the Act, an appeal against an order of assessment is covered by clause (a) thereof and an appeal against an order imposing a penalty is covered by clause (b) thereof. In other words, independent appeals arise out of orders of assessment and orders imposing any penalty. In this case, the order that was before the Commissioner (Appeals) was an order imposing a penalty and not an assessment order. If the assessment order that resulted in the penalty proceedings being instituted was before the Commissioner (Appeals), the direction may have been justified. However, in the appeal arising out of the order imposing the penalty, the matter pertaining to some other income escaping assessment did not fall within the purview of the expression any matter arising out of proceedings in which the order appealed against was passed . It is only elementary in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd guidance from Hon'ble Supreme Court's judgment in the case of Gestetner Duplicators(supra) wherein Their Lordships have, inter alia, observed as follows: ...........However, we would like to make some observations with regard to the true impact of the recognition granted by the Commissioner of Income-tax to a provident fund maintained by an assessee. The facts in the present case that need be stressed in this behalf are that it was as far back as 1937 that the Commissioner of Income-tax had granted recognition to the provident fund maintained by the assessee under the relevant rules under 1922 Act, that such recognition had been granted after the true nature of the commission payable by the assessee to its salesmen under their contracts of employment had been brought to the notice of the Commissioner and that said recognition had continued to remain in operation during the relevant assessment years in question; the last fact in particular clearly implied that the provident fund of the assessee did satisfy all the conditions laid down in rule 4 of Part A of the Fourth Schedule to the Act even during the relevant assessment years. In that situation we do not think that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust is concerned, in respect of the trusts created on or after 1st April 1952, as long as such income is applied 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. There is, however, a common proviso to Section 11(1)(c) (i) and 11(1)(c)(ii) which lays down the condition that the CBDT, by general or special order, has directed that it shall not be included in the total income of the person in receipt of such income . 31. It is in this backdrop that the assessee trust made an application to the CBDT on 26th May 2010 but apparently this application did not adequately highlight as to who the proposed disbursements to Harvard University and Cornwell University promote international welfare in which India is interested and that was the reason as to why the said application was rejected by observing that (a)fter examining the information and documents as filed by the applicant from time to time, it is noted that while the aforesaid activities may be philanthropic in nature and for the purpose of aiding Higher Education, supporting research projects in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... world over, including India (as it would provide a holistic approach to treatment, rather than treating diseases as separate and unrelated). This is one of the many examples of promotion of international welfare in which India is interested . Similarly, justifying the contribution to Harvard University is concerned, it was explained that as the above donation to Harvard by the TEDT is for furthering education, it falls within the objects of the Trust and also within the meaning of the term 'charitable purpose' as defined under Section 2(15) of the Act. Also, by contributing to the construction of Tata Hall, which has supported students from all over the world including India, the donation has promoted international welfare wherein India is interested . The impact of the application of funds outside India, by way of contributions to Cornell University and Harvard University, on the promotion of international welfare in which India is interested was thus unambiguously addressed to, and quite clearly as a result of this exercise, the CBDT granted the approval under section 11(1)(c). If it was the case that the CBDT was not satisfied with these submissions on the manner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Gestetner Duplicator's case (supra), but also a wholly superfluous and parallel exercise by an authority which does not statutory powers to conduct that exercise. 32. A plain reading of the CBDT approval would show that only condition attached to in the CBDT approval, as learned counsel for the assessee so correctly point out, is the condition that the claim as above of the applicant (regarding contributions made to Cornell University USA and Harvard University USA)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 Income-tax Act, 1961 [Emphasis, by underling, supplied by us].While it is true that in terms of paragraph 2 of the CBDT approval dated 10.11.2015, a copy of which is set out below paragraph 8 earlier in this order, the approval of the CBDT does require verification in the assessment proceedings, but that verification is only with respect to the extent to which such income is applied for such purposes outside India . It is also important to bear in mind the fact that this paragraph 2 needs to be read in conjunction with paragraph 1 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was done by the CBDT, or, in the opinion of the Assessing Officer, the application of income outside India as such tends to promote the international welfare in which India is interested. Whichever way one looks at it, that is a fundamental fact which permeates from year to year, and, the principle of consistency requires that once a fundamental fact permeating through different assessment years has been found, as a fact, one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in another year. That is what Hon'ble Supreme Court has held in the case of Radhasoami Satsang (supra). 35. As regards the caveat that Their Lordships put in the case Radhasoami Satsang(supra), by stating that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application , we may point out that the development of law did not stop at this judicial precedent. In the case of Quest Investment Advisors(supra), explaining the subsequent development of law on this point, Hon'ble jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent view. This mandate is subject only to the usual gateways of distinguishing the earlier decision of where the earlier decision is per incuriam. However, these are fetters only on a co-ordinate Bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction. (emphasis supplied) 9. The principle accepted by the Revenue for 10 earlier years and 4 subsequent years to the Assessment Years 2007-08 and 2008-09 was that the entire expenditure is to be allowed against business income and no expenditure is to be allocated to capital gains. Once this principle was accepted and consistently applied and followed, the Revenue was bound by it. Unless of course it wanted to change the practice without any change in law or change in facts therein, the basis for the change in practice should have been mentioned either in the assessment order or atleast pointed out to the Tribunal when it passed the impugned order. None of this has happened. In fact, all have proceeded on the basis that there is no change in the principle which has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles of consistency apply to the income tax proceedings nevertheless, and, in the light of these principles of consistency, it was not open to the Assessing Officer to decline the benefit of section 11(1)(c), in respect of application of income of the trust outside India by making contributions to Cornell University USA and Harvard University USA, only for these two years, when, on the same set of facts, the benefit of section 11(1)(c) has been allowed for all other years. 39. We have taken note of the stand of the CIT(A) that the approval granted by the CBDT is not specifically stated to be retrospective in nature, and, therefore, it cannot be given retrospective effect. We do not see any merits in this line of reasoning. Whether the expression retrospective effect is specifically used in the approval or not, when it is specifically stated that the order shall have the effect for the period covered by assessment years 2009-10 to 2016-17 , there is no escape from the position that the order applies to the period so covered from the assessment years 2009-10 to 2016-17. Learned CIT(A) has clearly been hyper pedantic in his approach, and, in any case, there is no justifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this count as well, does not meet our approval. The last reason for rejecting the impugned claim of exemption by the CIT(A) was that the exemption under section 11(1)(c) was subject to necessary verification during the assessment proceedings and that verification has not been done. There is no merit in this plea either. The only verification required, as we have held earlier in this order, was with respect to the extent to which such income is applied for such purposes outside India and that verification is not even in dispute as all the related payment details and RBI remittance approvals have already been filed before the Assessing Officer, at the assessment stage, and the same have not been faulted at all. When the Assessing Officer appeared before us in person, he did not even dispute that; all he wanted to verify was as to how the contributions to Cornwell University USA and Harvard University USA tend to promote the international welfare in which India is interested, but then, for the detailed reasons set out earlier in the order, that is what he cannot be permitted to do, as it falls beyond the call of his duty. We reject this plea as well. Our conclusions on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12. 44. Learned counsel for the assessee fairly submits that the only issue that requires our adjudication in this appeal is first ground of appeal, i.e. on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [ CIT(A) ] has erred in denying deduction for the income applied outside India under section 11(1)(c) of the Income Tax Act, 1961 [ the Act ], even though the appellant has an order from the Central Board of Direct Taxes [ CBDT ] as required by the proviso to Section 11(1)(c) of the Act , and that in the event of this ground of appeal is being allowed, all other grounds of appeal will be rendered academic and infructuous. For the detailed reasons set out earlier in this order, we have decided this issue in favour of the assessee and thus allowed this ground of appeal. We, therefore, uphold the plea of the assessee, and delete the resultant disallowance of claim of exemption of ₹ 197,79,27,500. The assessee gets the relief accordingly. 45. In the result, appeal for the assessment year 2011-12 is allowed in the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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