TMI Blog2021 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... d only to the extent of income which is applied for charitable purpose in India. The issue we find, is squarely covered in favour of the assessee by the decisions relied upon by the Ld. Counsel for the assessee before us. In the case of MK Nambyar SAARC Law Charitable Trust [ 2004 (5) TMI 51 - DELHI HIGH COURT] , we find, the application for grant of registration was rejected on the ground that the applicant itself had admitted that the scholarship could be paid to members even outside India. The Hon' ble High Court held that the application of income outside India is not a relevant criteria for rejecting the application for grant of registration u/s 12 AA of the Act and the officer has to only restrict himself to the satisfaction about the objects and genuineness of the activities of the trust while granting registration with no restriction on the activities being carried out inside or outside India. The aforesaid decision of the Hon'ble Delhi High Court has been followed by the Coordinate Benches of the Tribunal in the case of National Informatics Centre Services Inc. [ 2017 (6) TMI 872 - ITAT DELHI] . The order passed by the Ld.CIT(E) denying registration u/s 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- 7(r). To open branches of trust in India and Abroad. As per section 11(1) (c) of the income tax Act, any income applied on activities outside India is not eligible for exemption. A charitable organization cannot have activity outside India unless it happens to be a trust/company/society created before 1-4-1952 or it is engaged in promotion of international welfare in which India is interested. In other words, NGOs registered after 1-4-1952 are not allowed to have any international activity unless such activity is specifically exempted by CBDT. Provisions of section 11 (1)(c) are as under:- (c) Income derived from the property held under trust- * 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 * For charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that board, by general or special order, has directed in either case that all not be included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the genuineness of the objects and activities of the applicant trust or entity, whether they qualify as existing for charitable purpose as defined under the Act in section 2(15) of the Act. Drawing our attention to the same, the Ld. Counsel for the assessee pointed out that the definition of charitable purpose nowhere restricted the carrying out of charitable activities within the geographical boundary of India alone. Therefore, while granting registration the possibility of the applicant trust carrying out the activities outside India cannot lead to the conclusion that it is not in existence for charitable purpose at all and, therefore, registration cannot be denied for the said reason. He contended that it is only when the quantum of income exempt is to be determined, that the factum of income applied for charitable activities outside the India would be relevant for the purposes of excluding the same for exemption. He pointed out that this issue has been dealt with in various judicial decisions in favour of the assessee as under: 1) MK Nambyar SAARC Law Charitable Trust Vs. Union of India Others (Del) 2) Foundation for Indo- German Studies Vs. Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration has been denied u/s 12 AA of the Act, relying upon provisions of section 11, it is relevant to reproduce both the aforesaid provisions for adjudicating the issue. 12AA. (1) The [Principal Commissioner or] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) [or clause (ab) of sub-section (1)] of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. [Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, of 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 of application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility and (ii) the aggregate receipts f rom such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]] 11. As is evident from the above, the section lists various activities which qualify as charitable purpose but there is no restriction to the scope of such activities within the geographical bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome which is applied for charitable purpose in India. 15. The issue we find, is squarely covered in favour of the assessee by the decisions relied upon by the Ld. Counsel for the assessee before us. In the case of MK Nambyar SAARC Law Charitable Trust (supra), we find, the application for grant of registration was rejected on the ground that the applicant itself had admitted that the scholarship could be paid to members even outside India. The Hon' ble High Court held that the application of income outside India is not a relevant criteria for rejecting the application for grant of registration u/s 12 AA of the Act and the officer has to only restrict himself to the satisfaction about the objects and genuineness of the activities of the trust while granting registration with no restriction on the activities being carried out inside or outside India. The relevant findings of the Hon ble High Court is as under: The judgment of the court was delivered by B.C. Patel C.J. - M.K. Nambyar SAARC Law Charitable Trust has filed this petition against the order made by the Director of Income-tax (Exemptions) New Delhi, on February 24, 2004. The aforesaid trust submitted two ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration. Reading the section, it becomes clear that after the application is made, the officer has to call for documents or information from the trust to satisfy himself about the genuineness of the activities of the trust, He can make further enquiry as he may deem necessary. It is only after satisfying himself about the objects of the trust and the genuineness of its activities that he has to pass an order in writing registering the trust or institution. And if he is not satisfied, he can reject the same. This section does not refer to the activities in India or outside India. It refers to application of income for charitable or religious purposes in India as also with direction or order of the Board for application of income as aforesaid outside India. Reading the order dated February 24, 2004, it is very clear that there is non-application of mind, it was necessary for the Commissioner to examine the purpose for satisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AAof the said Act. So far as income which is applied outside India is concerned, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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