INCOME TAX ACT, 1961

Section 11(1)(c) Section 11(1)(c), Proviso

Charitable trust - Application of income under section 11(1)(c) - Income applied outside India as contribution and financial assistance - Permission obtained from CBDT under proviso to section 11(1)(c)

Assessee, a public charitable trust, registered under Bombay Public Trust Act, 1950 (now known as Maharashtra Public Trust Act, 1950), as also as charitable institution under section 12A of the IT Act, 1961. In both of the assessment years, the assessee had returned outside India as application of income under section 11(1)(c). The AO 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 were required to be included in the income of assessee. The Central Board of Direct Taxes, vide Order dated 10-11-2015, granted approval under section 11)(1)(c), which was specifically 'stated to have effect for the period covered by assessment years 2009-10 to 2016-17. Based on this approval issued by the CBDT, the AO rectified, under section 154 the assessment orders for the assessment year 2011-12, and for the assessment year 2012-13, on 9-8-2016. The additions in question were thus deleted by the AO himself. However, CIT(A) disregarded these rectification orders. He proceeded to hold that the CBDT's Approval dated 10-11-2015 'is not retrospective in nature', that 'the said order of the CBDT has been passed in response to assessee's Application dated 31-3-2015, and therefore, it cannot apply to the assessment year 2011-12 (and 2012-13)'. The question for consideration was thus: CIT(A) was whether justified in denying deduction for the income applied outsied India under section 11(1)(c), even though the appellant had an order from the Central Board of Direct Taxes ('CBDT') as required by the proviso to section 11(1)(c)'.Held: Even though there is no res judicata in the income-tax proceedings, the 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 AO 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. One has taken note of the stand of the CIT(A) that the approval granted by the CBDT was not specifically stated to be retrospective in nature, and, therefore, it cannot be given retrospective effect. There was no 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 was no escape from the position that the order applies to the period so covered from the assessment years 2009-10 to 2016-17. CIT(A) had clearly been hyper-pedantic in his approach, and, in any case, there was no justification for his obsession with the expression 'retrospective effect', particularly when the fact of retrospective effect was so glaring from the contents of the CBDT approval. The CIT(A) was in error in upholding the denial of claim of the assessee for exemption in resepect of application of income of the trust outside India, by way of contributions made to Cornell University, USA and Harvard University, USA under section 11(1)(c) as assessee had obtained approval under proviso to section 11(1)(c).

Applied:Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 858 (SC). Relied:Gestetner Duplicatiors (P) Ltd. v. CIt 91979) 117 ITR 1(SC) : 1979 TaxPub(DT) 852 (SC), Prakash Chitra v. ITO (2001) 249 ITR 760 (Raj_) : 2001 TaxPub(DT0 1257 (Raj-HC), Nitin Babubhai Rohit v. Dharmendra Vishnubhai Patel (2018) 409 ITR 276 (Guj) : 2018 TaxPub(DT0 822 (Guj-HC), Pr. CIT v. KPC Medical College and Hospital (2018) 95 Taxmann 322 (Cal) : 2018 TaxPub(DT) 4869 (Cal-HC), Ram Jethmalani v. UOI (2011) 13 Taxmann.com 189 (SC),.

REFERRED : CIT v. Paharpur Cooling Towers (P) Ltd. (1996) 219 ITR 618 (SC) : 1996 TaxPub(DT) 1016 (SC), Pr. CIT v. Quest Investment Advisors (P) Ltd. (2018) 409 ITR 545 (Bom) : 2018 TaxPub(DT0 4218 (Bom-HC) and Bharat Sanchar Nigam Ltd. v. UOI (2006) 282 ITR 273 (SC) : 2006 TaxPub(DT) 1454 (SC)

FAVOUR : In assessee's favour.

A.Y. : 2011-12 & 2012-13

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