Appeal details
Counselvise Citation
652520114 RSA 2013
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-08-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
D
Next Hearing Date
20-08-2015
Assessment Year
2010-2011
Appeal Filed On
06-12-2013
Judgement Text
ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.6525/DEL/2013 ASSESSMENT YEAR : 2010-11 DDIT(E), VS THE ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY TRUST CIRCLE-IV, OF INDIA, 1, COMMUNITY CENT RE ZAMRUDPUR, NEW DELHI. KAILASH COLONY, NEW DELHI-110048 (APPELLANT) (RESPONDENT) APPELLANT B Y: SHRI ATIQ AHMAD, SR.DR RESPONDENT BY : SHRI VED JAIN, CA DATE OF HEARING: 20.8.2015 DATE OF PRONOUNCEMENT: 31 .08.2015 O R D E R PER C.M. GARG, J.M. THIS APPEAL BY THE REVENUE HAS BEEN PREFERRED AGAIN ST THE ORDER OF CIT(A)-XXI, NEW DELHI DATED 11.9.2013 IN APPEAL NO. 84/02012-13 FOR AY 2010-11. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT AS PER PROVISO TO SECTION 11(1)(C) OF THE INCOME TAX ACT, 1961, THE EXPENSES INCURRED BY THE ASSESSEE OUTSIDE INDIA ON ACCOUNT OF FOREIGN TRAVELING WERE NOT ALLOWABLE AS APPLICATION OF INCOME AS THE ASSESSEE WAS NOT NOTIFIED BY THE CBDT IN THIS R EGARD. ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THAT HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS. NATIONAL ASSOCIATION OF SOFTWARE AND SERVICES COMPANIES (NAS COM) HAS REFERRED TO THE JUDGMENT OF BENCH OF THREE JUDGES O F HON'BLE APEX COURT IN H.E.H. NIZAM'S RELIGIOUS ENDOWMENT TR UST VS. COMMISSIONER OF INCOME TAX (1956) 59 ITR 582 WHEREI N RATIO HAS BEEN LAID DOWN 'THE STATE DID NOT LIKE TO FORGO THE REVENUE IN FAVOUR OF CHARITY OUTSIDE THE COUNTRY', HAS HELD IN COME APPLIED OUTSIDE INDIA CANNOT BE CONSIDERED AS APPLICATION O F INCOME OF THE TRUST IN INDIA FOR CHARITABLE PURPOSES IN THE A BSENCE OF CBDT'S NOTIFICATION U/ S 11( 1)(C) OF THE INCOME T AX ACT, 1961 IN THIS REGARD. 3. BRIEFLY STATED THE FACTS EMERGING FROM THE ORDER S OF THE AUTHORITIES BELOW ARE THAT THE ASSESSEE IS A TRADE ASSOCIATION OF VAR IOUS MEMBERS AND ITS MAIN OBJECTIVE IS TO PROMOTE TRADE AND INDUSTRY AND TO P ROTECT ITS INTEREST. THE ASSESSEE ALSO SENDS VARIOUS DELEGATIONS TO FOREIGN COUNTRIES FOR THE PROMOTION OF TRADE AND INDUSTRY AND IN THIS PROCESS THE ASSESSEE HAS INCURRED THE EXPENDITURE OF RS. 90,54,426/- FOR THE FOREIGN TRAVELLING OF IT S DELEGATES. THE AO HAS DISALLOWED THE FOREIGN TRAVELING EXPENSES ON THE GR OUND THAT THE SAME IS NOT UTILIZED FOR THE PURPOSES AND TOWARDS MAIN OBJECTIV E OF THE ASSESSEE ASSOCIATION. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) A ND THE ASSESSEE SUCCEEDS. THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE BY OBSER VING THAT IT IS APPARENT THAT THE FOREIGN TRAVELLING EXPENSES FOR THE ASSESSEE AR E FOR THE PURPOSE IN INDIA AS THE MAIN OBJECTIVE OF THE ASSESSEE IS TO PROMOTE TR ADE AND INDUSTRY FOR WHICH SENDING OF DELEGATION TO FOREIGN COUNTRIES IS PART OF MAIN OBJECTIVE. NOW, THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL IN THIS S ECOND APPEAL WITH THE GROUNDS REPRODUCED HEREINABOVE AGAINST THE DELETION OF ADDI TION MADE BY THE AO. ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 3 4. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY PERUS ED THE RELEVANT MATERIAL PLACED ON RECORD. LD. DR SUPPORTING THE ACTION OF THE AO SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT AS P ER PROVISO TO SECTION 11(1)(C) OF THE INCOME TAX ACT, 1961, THE EXPENSES INCURRED BY THE ASSESSEE OUTSIDE INDIA ON ACCOUNT OF FOREIGN TRAVELING WERE NOT ALLO WABLE AS APPLICATION OF INCOME AS THE ASSESSEE WAS NOT NOTIFIED BY THE CBDT IN THIS REGARD. LD. DR VEHEMENTLY CONTENDED THAT THE CIT(A) HAS ERRED IN I GNORING THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS. NATIONAL ASSOCIATION OF SOFTWARE AND SERVICES COMPANIES (NASCOM) HAS REFERR ED TO THE JUDGMENT OF BENCH OF THREE JUDGES OF HON'BLE APEX COURT IN H.E.H. NIZAM'S RELIGIOUS ENDOWMENT TRUST VS. COMMISSIONER OF INCOME TAX (195 6) 59 ITR 582 WHEREIN RATIO HAS BEEN LAID DOWN THAT THE STATE DID NOT LIKE TO FOREGO THE REVENUE IN FAVOUR OF CHARITY OUTSIDE THE COUNTRY. LD. DR F URTHER POINTED OUT THAT IN THIS CASE, THE HONBLE APEX COURT HAS HELD THAT INCOME A PPLIED OUTSIDE INDIA CANNOT BE CONSIDERED AS APPLICATION OF INCOME OF THE ASSES SEE TRUST IN INDIA FOR CHARITABLE PURPOSES IN ABSENCE OF CBDTS NOTIFICATI ON U/S 11(1)(C) OF THE ACT IN THIS REGARD. LD. DR FINALLY PRAYED THAT THE IMPUGN ED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 5. LD. COUNSEL OF THE ASSESSEE SUPPORTING THE IMPUG NED ORDER SUBMITTED THAT IN THE CASE OF GEMS & JEWELLERY PROMOTION COUNCIL VS ITO REPORTED AS 68 ITD 95 ITAT MUMBAI ON THE SIMILAR ISSUE OF FOREGOING TRAVELLING EXPENS ES, ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 4 THE TRIBUNAL HAS ALLOWED THE RELIEF TO THE ASSESSEE ON THE GROUND THAT THE FOREIGN TRAVELLING EXPENSES ARE FOR THE PURPOSES OF PROMOTI ON OF TRADE AND INDUSTRY IN INDIA. LD. COUNSEL OF THE ASSESSEE FURTHER POINTED OUT THAT SIMILAR ISSUE WAS ALSO RAISED BEFORE ITAT I BENCH DELHI IN THE CASE OF ICAI VS DIT(E) DELHI IN ITA NO.1853/DEL/2010 WHEREIN FOREIGN TRAVELLING EXP ENSES WERE ALLOWED ON THE GROUND THAT THE EXPENSES ARE FOR THE PURPOSES O F MAIN OBJECTIVE OF THE ASSESSEE. LD. COUNSEL ALSO TOOK US THROUGH PARA NO . 2.1 AND 2.2 OF THE IMPUGNED ORDER AND SUBMITTED THAT AS PER EXPLANATIO N AND SUBMISSIONS OF THE ASSESSEE, IT IS APPARENT THAT THE FOREIGN TRAVELLIN G EXPENSES OF THE ASSESSEE WERE INCURRED FOR THE PURPOSES OF PROMOTION OF TRADE AND INDUSTRY IN INDIA AS THE MAIN OBJECTIVE OF THE ASSESSEE IS TO PROMOTE TRADE AND I NDUSTRY FOR WHICH SENDING A DELEGATION OF FOREIGN COUNTRIES IS AN ESSENTIAL PAR T OF MAIN OBJECTIVE. LD. COUNSEL FINALLY SUBMITTED THAT APPEAL OF THE REVENU E IS DEVOID OF MERITS AND THE SAME MAY KINDLY BE DISMISSED. 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF BOTH THE SIDES, AT THE VERY OUTSET, WE NOTE THAT THE CIT(A) HAS GRANTED RE LIEF FOR THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- 2.1 THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE AO AND IT IS SUBMITTED THAT THE ASSESSEE IS A CHARITABLE O RGANIZATION AND IT IS REGISTERED U/S 12A AND THE INCOME OF THE ASSE SSEE IS ALSO EXEMPT U/S 11. IT IS SUBMITTED THAT THE MAIN OBJECT IVE OF THE ASSESSEE IS TO PROMOTE TRADE AND INDUSTRY IN INDIA AND FOR THIS VARIOUS TRADE DELEGATIONS ARE SENT TO FOREIGN COUNT RIES BUT THE MAIN PURPOSE IS TO PROMOTE TRADE AND INDUSTRY IN IN DIA. IT IS ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 5 SUBMITTED THAT ALTHOUGH THE EXPENDITURE IS INCURRED FOR THE FOREIGN TRAVELING BUT THE SAME IS FOR THE MAIN OBJE CTIVES OF PROMOTING TRADE AND INDUSTRY IN INDIA FOR THE PURPO SES IN INDIA. IT IS SUBMITTED THAT THE CASE OF THE ASSESSEE IS AL SO FULLY COVERED BY THE CASE OF GEMS AND JEWELLERY PROMOTION COUNCIL VS. ITO 68 ITD 95, BOMBAY ITAT IN WHICH THERE WAS A SIMILAR ISSUE OF FOREIGN TRAVELING EXPENSES AND THE HON'BLE TRIBUNAL HAS ALLOWED RELIEF TO THE ASSESSEE ON THE GROUND THAT T HE FOREIGN TRAVELING EXPENSES ARE FOR THE PURPOSES IN INDIA. I T IS ALSO SUBMITTED THAT THE SIMILAR ISSUE ALSO CAME UP IN TH E CASE OF ICAI VS. DIT (EXEMPTION) DELHI IN ITA NO. 1853/DELH/2010 (I BENCH, ITAT, DELHI) IN WHICH THERE WERE FOREIGN TRAVELING EXPENSES AND THE TRIBUNAL HAS ALLOWED THE SAME ON THE GROUND THAT THE EXPENSES ARE FOR THE PURPOSES IN INDIA. 2.2 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN TH E SUBMISSIONS OF THE ASSESSEE. IT IS APPARENT THAT THE FOREIGN T RAVELLING EXPENSES OF THE ASSESSEE ARE FOR THE PURPOSES IN IN DIA AS THE MAIN OBJECTIVE OF THE ASSESSEE IS TO PROMOTE TRADE AND INDUSTRY FOR WHICH SENDING OF DELEGATIONS TO FOREIGN COUNTRI ES IS PART OF THE MAIN OBJECTIVE. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE VIEW THAT THE RE IS NO PROPER JUSTIFICATION FOR DISALLOWING THE FOREIGN TR AVELING EXPENSES AND ACCORDINGLY THE ADDITION MADE BY THE A O IS DELETED. 7. ON VIGILANT PERUSAL OF THE JUDGMENT OF HONBLE S UPREME COURT IN THE CASE OF H.E.H. NIZAM'S RELIGIOUS ENDOWMENT TRUST VS. CO MMISSIONER OF INCOME TAX (SUPRA), WE ARE IN AGREEMENT WITH THE CONTENTIO N OF THE LD. COUNSEL OF THE ASSESSEE THAT THE FACTS OF THE PRESENT CASE ARE DIS TINGUISHABLE FROM THAT CASE. ON CAREFUL READING OF SAID JUDGMENT OF HONBLE SUPREME COURT, IT IS AMPLY CLEAR THAT IN THAT CASE, THE ASSESSEE NIZAMS TRUST WAS D ENIED EXEMPTION IN REGARD TO THE APPLICATION OF INCOME FROM PROPERTY AS PER SECO ND PART OF CLAUSE (I) OF SECTION 4(3) OF THE INCOME TAX ACT 1922 ( AS APPLIC ABLE AT THAT TIME) WHICH ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 6 WERE APPLIED OR FINALLY SET APART FOR RELIGIOUS OR CHARITABLE PURPOSES OUTSIDE TAXABLE TERRITORIES. IN THE PRESENT CASE, IT IS NO T THE CASE OF THE REVENUE THAT THE ASSESSEE ASSOCIATION APPLIED ITS INCOME OR RECEIPTS OUTSIDE TAXABLE TERRITORIES BECAUSE THE ISSUE BEFORE US ONLY RELATES TO EXPENSE TOWARDS FOREIGN TRAVELLING OF DELEGATION SENT BY THE ASSESSEE ASSOCIATION FOR THE PURPOSES OF PROMOTION OF TRADE AND INDUSTRY IN INDIA WHICH IS THE MAIN OBJEC T OF THE ASSESSEE ASSOCIATION. IN VIEW OF ABOVE, WE RESPECTFULLY HOLD THAT THE BEN EFIT OF THE RATIO OF THE SAID DECISION OF HONBLE SUPREME COURT IN THE CASE OF H. E.H. NIZAM'S RELIGIOUS ENDOWMENT TRUST VS. COMMISSIONER OF INCOME TAX (SUP RA) IS NOT AVAILABLE FOR THE REVENUE AS THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE ARE DISTINGUISHABLE FROM THAT CASE. 8. UNDISPUTEDLY AND ADMITTEDLY, THE MAIN OBJECTIVE OF THE ASSESSEE ASSOCIATION IS TO PROMOTE TRADE AND INDUSTRY IN IND IA THAT IN THE PRESENT ERA OF ECONOMIC GLOBALIZATION, SENDING DELEGATION TO FOREI GN COUNTRIES CANNOT BE HELD AS OUTSIDE THE AMBIT OF MAIN OBJECTIVE OF THE ASSES SEE ASSOCIATION. PER CONTRA, FROM THE ARTICLE OF ASSOCIATION AVAILABLE AT PAGE 3 TO 38 OF THE ASSESSEES PAPER BOOK, IT IS VIVID THAT THE MAIN OBJECTS AS CONTAINE D IN CLAUSE (3) OF THE MEMORANDUM OF ASSOCIATION, OBJECTIVES CANNOT BE FUL FILLED WITHOUT SENDING FOREIGN DELEGATION AND, THEREFORE, FOREIGN TRAVELLI NG EXPENSES INCURRED BY THE ASSESSEE CANNOT BE HELD AS APPLICATION OF INCOME OU TSIDE TAXABLE TERRITORIES OF THE ASSESSEE. THEREFORE, WE ARE INCLINED TO AGREE WITH THE CONCLUSION OF THE ITA NO. 6525/DEL/2013 ASSTT.YEAR: 2010-11 7 CIT(A) AND WE ARE UNABLE TO SEE ANY INFIRMITY, PERV ERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, GR OUND NO. 1 AND 2 OF THE REVENUE BEING DEVOID OR MERITS ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2015. SD/- SD/- (N.K. SAINI) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 31ST AUGUST 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR
