BAREFOOT COLLEGE INTERNATIONAL, Ajmer V. CIT (EXEMPTION), Jaipur

ITA 795/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2105 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-03-2017
• Assessment Year: misc
• Appeal Filed On: 05-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VRINDER MEHTA
• Keywords: Charitable institution; Competent authority
• Section: 80G; 12AA; 63; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 795/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : BAREFOOT COLLEGE INTERNATIONAL, VPO- TILONIA, AJMER (RAJ.) CUKE VS. THE COMMISSIONER OF INCOME-TAX (EXEMPTION), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGCB3834J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SANJEEV JAIN (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VRINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/05/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 11/05/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (EXEMPTION), JAIPUR DATED 27.06.2016 PASSED U/S 80G (5)(VI) OF THE INCOME TAX ACT, 1961 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL:- 1 THE LD. CIT (EXEMPTION) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY REJECTING APPLICATION SEEKING EXEMPTION U/S 80G(5)(VI) OF THE I.T. ACT, 1961. ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 2 2. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE IS A COMPANY FORMED WITH CHARITABLE OBJECT S, REGISTERED U/S 8 OF THE COMPANIES ACT, 2013 (CORRESPONDING TO SECTIO N 25 OF THE COMPANIES ACT, 1956). THE LD. CIT (EXEMPTION) HAS G RANTED REGISTRATION U/S 12AA (1)(B) OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE COMPANY. HOWEVER APPROVAL U/S 80G(5)(VI) OF THE INCOME TAX A CT, 1961 HAS BEEN DENIED TO THE ASSESSEE COMPANY. IN THE ORDER DENYIN G APPROVAL U/S 80G(5)(VI), THE LD. CIT (EXEMPTION) HAS POINTED OUT THAT THE APPLICANT PRIMARILY INTENDS TO CARRY OUT THE ACTIVITIES OUTSI DE INDIA AND THE APPLICANT HAS NOT SUBMITTED ANY APPROVAL U/S 11(1)( C). FURTHER IT IS STATED BY THE LD. CIT (EXEMPTION) THAT THE APPLICAN T HAS SIMPLY COLLECTED FUNDS AND HAS NOT CARRIED OUT ANY SIGNIFI CANT CHARITABLE ACTIVITIES. IN VIEW OF THIS, THE CASE DOES NOT SEEM S TO BE FIT FOR GRANTING EXEMPTION U/S 80G. 2.1 IT WAS SUBMITTED THAT THE CONCLUSION DRAWN BY THE LD. CIT(EXEMPTION) IS NOT CORRECT AND OUR REFERENCE WAS DRAWN TO THE PROVISIONS OF SECTION 80G(5) OF THE ACT WHICH READS AS UNDER: (5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB-CLAUSE (IV) OF CLAUSE (A) OF SUB -SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURP OSE AND IF IT FULFILLS THE FOLLOWING CONDITIONS, NAMELY:- (I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCOM E, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OR CLAUSE (23AA) O R CLAUSE (23C) OF SECTION 10: PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CONDITION THAT SUCH ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 3 INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME UNDER THE PROVISIONS OF SECTION 11 SHALL NOT APPLY IN REL ATION TO SUCH INCOME, IF (A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOK S OF ACCOUNT IN RESPECT OF SUCH BUSINESS; (B) THE DONATIONS MADE TO THE INSTITUTION OR FUND A RE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUC H BUSINESS; AND (C) THE INSTITUTION OR FUND ISSUES TO A PERSON MAKI NG THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTAINS SEPAR ATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS AND THAT THE DO NATIONS RECEIVED BY IT WILL NOT BE USED, DIRECTLY OR INDIRE CTLY, FOR THE PURPOSE OF SUCH BUSINESS; (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE IN STITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOSES OTHER THAN A CHARITABLE PURPOSE; (III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO B E FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; (IV) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCO UNTS OF ITS RECEIPTS AND EXPENDITURE; (V) THE INSTITUTION OR FUND IS EITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETI ES REGISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPON DING TO THAT ACT IN FORCE IN ANY PART OF INDIA OR UNDER SECTION 25 OF THE COMPANIES ACT, 1956 (1OF 1956), OR IS A UNIVERSITY ESTABLISHED BY ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 4 LAW, OR IS ANY OTHER EDUCATIONAL INSTITUTION RECOGN IZED BY THE GOVERNMENT OR BY A UNIVERSITY ESTABLISHED BY LAW, O R AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, OR IS AN INSTITU TION FINANCED WHOLLY OR IN PART BY THE GOVERNMENT OR A LOCAL AUTH ORITY; (VI) IN RELATION TO DONATIONS MADE AFTER THE 31 ST DAY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING APPROVED BY THE COMMISSION IN ACCORDANCE WITH THE RULES MADE IN THI S BEHALF; AND (VII) WHERE ANY INSTITUTION OR FUND HAD BEEN APPROV ED UNDER CLAUSE (VI) FOR THE PREVIOUS YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2007 AND ENDING ON THE 31 ST DAY OF MARCH, 2008, SUCH INSTITUTION OR FUND SHALL, FOR THE PURPOSES OF THIS SECTION AND NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISO TO CLAUSE (15) OF SECTION 2, BE DEEMED TO HAVE BEEN- (A) ESTABLISHED FOR CHARTIBALE PURPOSES FOR THE PRE VIOUS YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2008 AND ENDING 31 ST DAY OF MARCH, 2009; AND (B) APPROVED UNDER THE SAID CLAUSE (VI) FOR THE PR EVIOUS YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2008 AND ENDING ON THE 31 ST DAY OF MARCH, 2009. 2.2 IT WAS SUBMITTED BY THE LD AR THAT A BARE READI NG OF THE ABOVE PROVISIONS MAKES IT CLEAR THAT THE FUND OR INSTITUT ION SHOULD BE ESTABLISHED IN INDIA FOR CHARITABLE PURPOSES. NOWHE RE THERE IS A THE MENTION REGARDING THE SCOPE OF ACTIVITIES TO BE CAR RIED OUT WITHIN INDIA OR OUTSIDE INDIA. IT WAS ACCORDINGLY SUBMITTED THAT THE FACT THAT THE ASSESSEE INTENDS TO CARRY OUT SOME PART OF ITS ACTI VITIES OUTSIDE INDIA DOES NOT PUT A BAR ON IT BEING APPROVED U/S 80G(5)( VI). ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 5 2.3 IT WAS FURTHER SUBMITTED THAT ANOTHER OBJECTION BY THE LD. CIT (EXEMPTION) THAT THE ASSESSEE HAS NOT CARRIED OUT A NY SIGNIFICANT CHARITABLE ACTIVITIES ALSO DOES NOT SEEM TO HAVE AN Y MERIT. THE SECTION 80G NOWHERE PRESCRIBE THAT CARRYING OUT OF ACTIVITI ES IS A PRE-CONDITION FOR APPROVAL. THE ASSESSEE COMPANY HAS BEEN FORMED FOR THE CHARITABLE OBJECTS. IT HAS ALREADY BEEN REGISTERED U/S 12AA (1 )(B) OF THE I.T. ACT, 1961 AND THE DONATIONS THAT IT WOULD RECEIVE WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTION 11 AND 12 OF THE ACT. 2.4 IT WAS ACCORDINGLY SUBMITTED THAT IN VIEW OF TH E ABOVE SUBMISSION, THE ASSESSEE COMPANY FULFILL ALL THE CO NDITIONS LAID DOWN FOR APPROVAL U/S 80G(5)(VI) OF THE I. T. ACT, 1961 AND THE OBJECTIONS RAISED BY THE LD. CIT (EXEMPTION) ARE NOT RELEVANT IN THE CONTEXT OF APPROVAL SOUGHT FOR. THE NECESSARY DIRECTIONS MAY ACCORDINGL Y BEEN GIVEN TO THE LD. CIT(EXEMPTION) TO GRANT APPROVAL U/S 80G(5)(VI) OF THE I.T. ACT, 1961 TO THE ASSESSEE COMPANY. 3. WE NOW REFER TO THE RELEVANT FINDINGS OF THE LD. CIT(E) WHICH ARE UNDER CHALLENGE BEFORE US. THE SAME ARE REPRODUCED AS UNDER:- 3. FROM THE PLAIN READING OF SECTION 80G(5) AND RU LE 11AA, IT BECOMES CLEAR THAT ACTIVITIES CARRIED ON BY THE ORG ANIZATION AS WELL AS MAINTENANCE OF ACCOUNTS ARE TO BE GIVEN DU E IMPORTANCE AT THE TIME OF GRANTING EXEMPTION U/S 80G(5). THE T RUST HAS THE FOLLOWING MAIN OBJECT:- ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 6 1. TO ENCOURAGE TRADITIONAL AND RURAL HANDICRAFTS S KILLS AS WELL AS TO REASSESS AND PROVIDE SUPPORT TO THOSE WITH TALEN TS AND PROTECT THEIR PARTNERSHIP. 2. TO HELP THE ARTISANS CHANGE THE TRADITIONAL DESI GNS FOR EXISTING MARKETS AS WELL AS TO FIND NEW MARKETS. 3. TO PROTECT THE TRADITIONAL CRAFTS THROUGH BANKS AND OTHER FINANCIAL SUPPORT. 4. TO MAKE NEW AND RENEWABLE TECHNOLOGY ACCESSIBLE TO THE DEVELOPING WORLD THROUGH A PARTNERSHIP MODEL OF COM MUNITY ENGAGEMENT. TO PROMOTE SOLAR ELECTRIFICATION AND IN STALLATION OF SOLAR PLANTS. 5. TO ENGAGE IN GRASS ROOTS, R&D, PRODUCT DEVELOPME NT AND TESTING WITHIN ALL RENEWABLE TECHNOLOGIES APPLICABL E TO THE RURAL POOR. 6. TO PROMOTE COMMERCE, ARTS, SCIENCE, SPORTS, EDUC ATION, RESEARCH, SOCIAL WELFARE, CHARITY, RENEWABLE TECHNO LOGY AND PROTECTION OF ENVIRONMENT. 7. TO REHABILITATE VICTIMS OF NATURAL DISASTER, TO ASSIST PHYSICALLY AND MENTALLY DISABLED PERSONS, OLD AGED PEOPLES, CH ILDREN, WOMEN, PERSONS FROM ECONOMICALLY WEAKER SECTIONS OF THE SOCIETY, WITHOUT ANY DISTINCTION OF RELIGION, CASTE AND CREED. 8. TO ACHIEVE FINANCIAL SUSTAINABILITY, VIABILITY, AND SELF RELIANCE THROUGH ITS OWN ACTIVITIES. 9. TO REINVEST ANY INCIDENTAL SURPLUS INTO GROWTH A ND STRENGTHENING OF ITS SOCIAL AND HUMANITARIAN PROJEC TS, THROUGH ITSELF OR BY TRANSFER TO ANY OTHER NONPROFIT ORGANI ZATION, INSTITUTION, ASSOCIATION, COMPANY, TRUST ETC. SITUA TED IN INDIA OR OUTSIDE INDIA. 10. NO OBJECTS OF THE COMPANY WILL BE CARRIED OUT O N COMMERCIAL BASIS. 4. IN LIGHT OF ABOVE OBJECTS, THE ACTIVITIES COMMEN CED BY THE APPLICANT WERE EXAMINED. THEREFORE VIDE POINT NO. 5 OF LETTER NO. 3777, DATED 18.12.2015 APPLICANT WAS ASKED TO PRODU CE ACTIVITY DETAILS CARRIED OUT SINCE ITS INCEPTION. IN RESPONS E TO WHICH AR OF THE APPLICANT VIDE WRITTEN REPLY DATED 13.01.2016 STATED THAT ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 7 THE COMPANY HAS ENTERED INTO A MOU WITH DIGITAL E MPOWERMENT FOUNDATION ON DATED 10.08.2015 WITH A FOCUS TO BENE FIT THE INACCESSIBLE PEOPLE IN THE VILLAGES OF INDIA WITH W IRELESS CONNECTIVITY. IT MEANS THAT APPLICANT ONLY ENTERED INTO MOU AND ACTIVITY TO BE STARTED IN FUTURE TO FULFILL ITS OBJ ECTS. 5. FURTHER, THE CLAUSE NO.-4 OF MEMORANDUM OF ASSOCIAT ION READS AS UNDER:- 4.THE OBJECTS OF THE COMPANY EXTEND TO THE WHOLE O F INDIA AND ALL UNDER DEVELOPED AS WELL AS DEVELOPING COUNTRIES , AS IDENTIFIED BY THE UNITED NATIONAL ORGANIZATION. THUS THE APPLICANT INTENDS TO CARRY OUT THE ACTIVIT IES OUTSIDE INDIA. FURTHER IN THE INCOME & EXPENDITURE ACCOUNT SUBMITTED DURING THE PROCEEDINGS FOR THE F.Y. 2015-16, IT IS SEEN THAT THE APPLICANT HAS ALLOTTED FUNDS OF RS. 26,35,440/- FOR SOLAR WORK AT GUATEMALA CITY AND RS. 51,94,250/- FOR SOLAR WORK A T PHILIPPINE. THUS, THE APPLICANT PRIMARILY INTENDS TO CARRY OUT THE ACTIVITIES OUTSIDE INDIA. AS PER THE PROVISIONS OF THE ACT, TH E ACTIVITIES OUTSIDE INDIA CANNOT BE CARRIED OUT WITHOUT OBTAINI NG PRIOR APPROVAL FROM COMPETENT AUTHORITY U/S 11(1)(C). 6. THUS, IT CAN BE SEEN THE APPLICANT HIS SIMPLY C OLLECTED FUNDS AND HAS NOT CARRIED OUT ANY SIGNIFICANT CHARITABLE ACTIVITIES. IN VIEW OF THIS, THE CASE DOES NOT SEEMS TO BE FIT FOR GRANTING EXEMPTION U/S 80G AT THIS STAGE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. REGARDING THE FIRST CONTENTION OF THE LD. AR, IT WAS SUBMITTED THAT THE REQUIREMENT OF SECTION 80G IS TH AT THE INSTITUTION SHOULD BE ESTABLISHED IN INDIA FOR A CHARITABLE PUR POSE AND IT NOWHERE MENTIONS THAT THE SCOPE OF ACTIVITIES TO BE CARRIED OUT WITHIN INDIA OR ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 8 OUTSIDE INDIA. AS PER THE LD. CIT(E), THE ASSESSEE HAS ALLOTED FUNDS OF RS. 26,35,440/- FOR SOLAR WORK AT GUATEMALA CITY A ND RS. 51,94,250/- FOR SOLAR WORK AT PHILIPPINE AND ON BASIS OF THESE FACTS, IT WAS HELD THAT THE APPLICANT PRIMARILY INTENDS TO CARRY OUT THE A CTIVITIES OUTSIDE INDIA AND AS PER THE PROVISIONS OF SECTION 11(1)(C) OF TH E ACT, THE ACTIVITIES OUTSIDE INDIA CANNOT BE CARRIED OUT WITHOUT OBTAINI NG PRIOR APPROVAL FROM THE COMPETENT AUTHORITY AND THERE IS NO APPROV AL WHICH HAS BEEN SUBMITTED BY THE APPLICANT IN THIS REGARD. 4.1 ON PERUSAL OF PROVISIONS AS CONTAINED IN SECTIO N 80G(5)(VI), IT PROVIDES THAT IT APPLIES TO DONATIONS TO ANY INSTIT UTIONS OR FUNDS REFERRED TO SECTION 2(A)(IV) ONLY IF IT IS ESTABLISHED IN IN DIA FOR A CHARITABLE PURPOSES AND IT FULFILLS CERTAIN CONDITIONS. THE FI RST CONDITION WHICH HAS BEEN STIPULATED IS THAT WHERE THE INSTITUTION OR FU ND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE FOR INCLUSION IN IT S TOTAL INCOME UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT. 4.2 IF WE LOOK AT THE PROVISIONS OF SECTION 11 OF T HE ACT, IT PROVIDES THAT: (1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 , THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSONS IN RECEIPT OF THE INCOME WHICH INCLUDE S THE FOLLOWING: (A) . (B) . (C) INCOME FROM PROPERTY HELD UNDER TRUST - ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 9 (I) CREATED ON OR AFTER THE 1 ST DAY OF APRIL, 1952, FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFAR E IN WHICH INDIA IS INTERESTED, TO THE EXTENT TO WHICH SUCH INCOME IS A PPLIED TO SUCH PURPOSES OUTSIDE INDIA, AND (II) FOR CHARITABLE OR RELIGIOUS PURPOSES, CREATED BEFORE THE 1 ST DAY OF APRIL, 1952 TO THE EXTENT TO WHICH SUCH INCOME IS A PPLIED TO SUCH PURPOSES OUTSIDE INDIA. PROVIDED THAT THE BOARD, BY GENERAL OR SPECIAL ORDE R, HAS DIRECTED IN EITHER CASE THAT IT SHALL NOT BE INCLUDED IN THE TO TAL INCOME OF THE PERSON IN RECEIPT OF SUCH INCOME. 4.2 A CLOSE READING OF THE ABOVE PROVISIONS, NAMELY 11(1)(C)(I) WHICH IS APPLICABLE IN THE INSTANT CASE, IT IS CLEAR THAT INCOME DERIVED FROM PROPERTY HELD UNDER TRUST FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFARE IN WHICH INDIA IS INT ERESTED, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES OU TSIDE INDIA SHALL NOT BE INCLUDED IN TOTAL INCOME OF THE PERSON IN RECEIP T OF SUCH INCOME WHERE THE CBDT BY GENERAL OR SPECIAL ORDER SO DIREC TS. 4.3 FURTHER, IN THE FACTS OF THE PRESENT CASE, THE APPLICABILITY OF SECTION 11(1)(C)(I) HAS INFACT BEEN MADE PART OF AN D HAS BEEN STATED AS ONE OF THE CONDITIONS SUBJECT TO WHICH THE APPROVAL HAS BEEN GRANTED UNDER SECTION 12AA(1)(B) OF THE ACT WHEREIN IT IS S TATED THAT AS PER CLAUSE NO. 4 OF THE MOA, THE APPLICANT COMPANY INTE NDS TO WORK OUTSIDE INDIA, THEREFORE EXEMPTION UNDER SECTION 11 &12 WILL BE ALLOWED SUBJECT TO APPROVAL U/S 11(1)(C) FROM THE COMPETENT /PRESCRIBED AUTHORITY AS PER THE INCOME TAX ACT, 1961. ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 10 4.4 NEITHER ANY CONTENTIONS HAS BEEN RAISED BY THE LD AR BEFORE THIS BENCH NOR THERE IS ANY MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS CONTESTED THE APPLICABILITY OF SECTION 11(1)(C) IN ITS CASE OR FOR THAT MATTER, THE GRANT OF THE APPROVAL UNDER SE CTION 12AA SUBJECT TO FULFILLMENT OF SUCH CONDITION OF SEEKING THE NECESS ARY APPROVAL UNDER SECTION 11(1)(C) OF THE ACT. FURTHER, THE FACTS A S NOTED BY THE LD CIT(E) THAT THE ASSESSEE HAS ALREADY ALLOTED FUNDS OF RS. 26,35,440/- FOR SOLAR WORK AT GUATEMALA CITY AND RS. 51,94,250 /- FOR SOLAR WORK AT PHILIPPINE, IT SHOWS CLEARLY NOT JUST THE INTENT BU T ACTUAL CONDUCT OF THE ASSESSEE WHERE IT LIKES TO CARRY OUT ACTIVITIES OUT SIDE OF INDIA. THEREFORE, THE APPLICABILITY OF SECTION 11(1)(C) RE MAINS UNDISPUTED BEFORE US. 4.5 NOW, THE QUESTION THAT ARISES IS WHETHER THE AP PROVAL UNDER SECTION 80G CAN BE MADE SUBJECT TO APPROVAL UNDER S ECTION 11(1)(C) OF THE ACT. AS NOTED ABOVE, THE FIRST CONDITION WHICH HAS BEEN STIPULATED AND IS TO BE FULFILLED BY THE ASSESSEE UNDER SECTIO N 80G(V) IS THAT WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH IN COME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE P ROVISIONS OF SECTIONS 11 AND 12 OF THE ACT. IN THE INSTANT CASE, THE ACTIVIT IES OF THE INSTITUTION INCLUDE ACTIVITIES INTENDED TO BE CARRIED OUTSIDE O F INDIA, THUS ITS INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT PROVIDED IT HAS TH E NECESSARY APPROVAL OBTAINED UNDER SECTION 11(1)(C) OF THE ACT BESIDES OTHER REQUIREMENTS AS SPECIFIED UNDER THE PROVISIONS OF SECTION 11 AND 12 OF THE ACT. ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 11 4.6 THUS, ON COMBINED READING OF SECTION 80G(5)(VI ) AND SECTION 11(1)(C) OF THE ACT, THE APPROVAL UNDER SECTION 80G IS SUBJECT TO GRANT OF APPROVAL UNDER SECTION 11(1)(C) OF THE ACT. IN THE INSTANT CASE, SINCE SUCH APPROVAL IS NOT IN PLACE, THE REQUIREMENT OF S ECTION 80G(5)(VI) CANNOT BE SAID TO BE SATISFIED. THEREFORE, THE ISS UE IS NOT THAT THE SCOPE OF ACTIVITIES SHOULD BE RESTRICTED TO INDIA A ND IT CANNOT BE CARRIED OUT OUTSIDE OF INDIA. THE ISSUE IS LIMITED TO CARR YING OUT THE ACTIVITIES OUTSIDE INDIA AFTER SEEKING APPROVAL FROM COMPETENT AUTHORITY U/S 11(1)(C) OF THE ACT. THE LD CIT(E) WAS THEREFORE C ORRECT IN DENYING THE APPROVAL UNDER SECTION 80(G)(VI) IN ABSENCE OF APPR OVAL OF COMPETENT AUTHORITY UNDER SECTION 11(1)(C) OF THE ACT. 4.4 NOW COMING TO THE SECOND CONTENTION OF THE LD A R WHERE HE HAS OBJECTED TO FINDINGS OF THE LD. CIT (EXEMPTION) THA T THE ASSESSEE HAS SIMPLY COLLECTED FUNDS AND HAS NOT CARRIED OUT ANY SIGNIFICANT CHARITABLE ACTIVITIES AND IN VIEW OF THAT, THE MATTER DOESNT SEEM FIT FOR GRANT OF APPROVAL UNDER SECTION 80G OF THE ACT. IT WAS SUBM ITTED BY THE LD AR THAT SECTION 80G NOWHERE PRESCRIBE THAT CARRYING OU T OF ACTIVITIES IS A PRE-CONDITION FOR GRANT OF APPROVAL AND SO LONG AS IT HAS FULFILLED THE PRESCRIBED CONDITIONS, THE APPROVAL UNDER SECTION 8 0G SHOULD NOT BE DENIED. 4.5 ON PERUSAL OF MATERIAL ON RECORD, IT IS OBSERVE D THAT THE ASSESSEE HAS BEEN INCORPORATED AND REGISTERED UNDER SECTION 8 OF THE COMPANIES ACT, 2013 ON 20 JULY 2015. THEREAFTER, ON 15.12.20 15, THE ASSESSEE MOVED AN APPLICATION BEFORE THE LD. CIT (E) FOR GRA NT OF REGISTRATION U/S 12AA(1)(B) OF THE ACT AS WELL AS AN APPLICATION SEE KING APPROVAL U/S ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 12 80G(5)(VI) OF THE ACT. INTERESTINGLY, ON THE SAME DATE I.E, 27.06.2016 WHEN THE APPROVAL UNDER SECTION 12AA(1)(B) WAS GRAN TED BY THE LD CIT(E), THE APPLICATION UNDER U/S 80G(5)(VI) WAS RE JECTED. 4.6 ON PERUSAL OF SECTION 80G(5) AS WELL AS RULE 11 AA, WHAT IS REQUIRED TO BE SEEN IS WHETHER THE INSTITUTION/FUND HAS BEEN ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE OR NOT. SECONDLY , IT LAYS DOWN CERTAIN ADDITIONAL CONDITIONS UNDER CLAUSE (I) TO CLAUSE (V ) WHICH ARE REQUIRED TO BE FULFILLED. RULE 11AA PROVIDES THAT WHERE THE CI T IS SATISFIED THAT ONE OR MORE OF THE CONDITIONS SPECIFIED IN CLAUSE (I) T O CLAUSE (V) OF SECTION 80G(5) ARE NOT FULFILLED, HE SHALL REJECT THE APPLI CATION FOR APPROVAL AFTER RECORDING HIS REASONS FOR SUCH REJECTION. IN THE I NSTANT CASE, THE APPELLANT HAS BEEN DULY REGISTERED UNDER SECTION 12 AA WHICH SHOWS BEYOND ANY DOUBT THAT LD CIT HAS ALREADY VERIFIED T HE GENUINENESS OF THE OBJECTS AND ITS ACTIVITIES ARE NOT DOUBTED BY THE CIT. HENCE, HAVING GRANTED REGISTRATION U/S 12AA, THE FIRST CON DITION REGARDING ESTABLISHMENT OF INSTITUTION FOR CHARITABLE PURPOSE S IS FULFILLED. REGARDING SATISFACTION OF ADDITIONAL CONDITIONS SPE CIFIED IN CLAUSE (I) TO CLAUSE (V) OF SECTION 80G(5), THERE IS NO DISPUTE A S APPARENT FROM THE ORDER OF THE LD CIT EXCEPT THE NON-FULFILMENT OF TH E CONDITION RELATING TO CARRYING OUT ACTIVITIES OUTSIDE OF INDIA IN ABSENCE OF APPROVAL UNDER SECTION 11(1)(C) OF THE ACT WHICH WE HAVE ALREADY D ISCUSSED ABOVE. 4.7 REGARDING THE ACTIVITIES CARRIED OUT BY THE APP ELLANT TOWARDS ACHIEVEMENT OF ITS CHARITABLE OBJECTIVES, THE LD CI T(E) HAS STATED THAT THE ASSESSEE HAS ENTERED INTO MEMORANDUM OF UNDERST ANDING WITH DIGITAL EMPOWERMENT FOUNDATION ON DATED 10.08.2015 WITH A FOCUS TO ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 13 BENEFIT THE INACCESSIBLE PEOPLE IN THE VILLAGES OF INDIA WITH WIRELESS CONNECTIVITY. FURTHER, THE LD CIT(E) NOTED THAT TH E ASSESSEE HAS ALLOTED FUNDS OF RS. 26,35,440/- FOR SOLAR WORK AT GUATEMALA CITY AND RS. 51,94,250/- FOR SOLAR WORK AT PHILIPPINE. TH E LD CIT(E) THEREFORE ACKNOWLEDGES ALL THESE FACTS AND THE ONLY REASON ST ATED TO BE NON CARRYING OUT ANY SIGNIFICANT ACTIVITY BY THE ASSESS EE. IN OUR VIEW, GIVEN THE FACT THAT THE ASSESSEE HAS ONLY BEEN INCORPORAT ED AROUND AN YEAR BACK AND THERE ARE ACTIONS WHICH ARE TAKEN BY THE A SSESSEE TOWARDS ACHIEVING ITS CHARITABLE OBJECTIVES WHICH ARE NOT D OUBTED, THE APPROVAL UNDER SECTION 80G CANNOT BE DENIED SOLELY ON THIS G ROUND AND TO THIS EXTENT, WE DO NOT CONCUR WITH THE LD CIT(E). 4.8 IN LIGHT OF ABOVE DISCUSSIONS, THE FACT REMAINS THAT THE ASSESSEE HAS NOT OBTAINED THE APPROVAL UNDER SECTION 11(1)(C ) OF THE ACT AND IN ABSENCE OF THE SAME, THE APPLICATION UNDER SECTION 80G(5)(VI) HAS RIGHTLY BEEN REJECTED BY THE LD CIT(E). THE APPEAL OF THE ASSESSEE THUS STANDS DISMISSED. 4.9 BEFORE PARTING, IT IS APPROPRIATE TO ADD THAT T HE ASSESSEE WOULD BE AT LIBERTY, IF SO ADVISED, TO APPROACH THE LD. C IT(E) FOR SEEKING APPROVAL UNDER SECTION 80G(5)(VI) ONCE IT HAS OBTAI NED THE APPROVAL FROM COMPETENT AUTHORITY UNDER SECTION 11(1)(C) OF THE ACT. ORDER PRONOUNCED IN THE OPEN COURT ON 11/05/2017 SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 795/JP/2016 BAREFOOT COLLEGE INTERNATIONAL, AJMER VS. CIT (E) 14 TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/05/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- BAREFOOT COLLEGE INTERNATIONAL VPO- TILONIA, AJMER (RAJ.) 2. IZR;FKHZ@ THE RESPONDENT- THE COMMISSIONER OF INCOME-TAX (EXEMPTION), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 795/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR