SILA FOR CHANGE FOUNDATION ,MUMBAI V. .COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

ITA 4275/MUM/2024

AI Insights

The case involves the Sila for Change Foundation, which appealed against the decision of the Commissioner of Income-tax (Exemption) denying them registration under section 12AB of the Income Tax Act. The foundation argued that their activities, although mentioned in clause 12 of their memorandum of association, did not involve applying any income for activities outside India, and thus should not disqualify them from registration. The Tribunal examined the foundation's objectives and the legal provisions under section 11 of the Act, which restricts the application of income to activities within India unless specific conditions are met. The Tribunal concluded that the foundation's objectives did not align with the requirements of section 11, leading to the dismissal of their appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 37276 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: misc
• Other Referred Cases: CIT V/s. Dawoodi Bohara Jamat [2014] 43 Taxmann.com 243 (SC): 364 ITR 31 (SC), Shri Sachay Mataji Mandir Vikas Trust v/s. CIT(E) [2024] 165 Taxmann.com 306 (Rajkot-Trib.), National Real Estate Development Council V/s. CIT (E) ITA/487/Ahd./2024, Sh. Gurudwara Sahib Parbhandan Committee vs. Commissioner of Income-tax (Exemptions) [2023] 150 taxmann.com 181, Commissioner of Income-tax (Exemption) vs. Orissa Cricket Association [2024] 161 taxmann. Com 588 (Orissa), DIT (E) vs. National Association of Software and Services Companies (2012) 208 Taxman 178, Jamsetji Tata Trust v. Jt. DIT (Exemption) 148 ITD 388, CIT v. State Bank of India (1988) 169 ITR 298, Digamber Jain Society for Child Welfare v. DGIT (Exemptions) (2010) 228 CTR 517, Ewing Christian College Society v. CCIT [2009] 318 ITR 160, CWT v. Trustees of the Nizam's Religious Endowment Trust (1977) 108 ITR 229
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KISHORE DHULE
• Assessee Lawyers: MANDAR VAIDYA
• Keywords: Opportunity of being heard; Gift; Competent authority; Charitable institution; Cancellation of registration
• Section: 48; 11; 12AA; 208; 43; 12A; 13; 10(23C); 80G; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “G”, MUMBAI BEFORE SMT BEENA PILLAI, JUDICIAL MEMBER AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4274/M/2024 & ITA No.4275/M/2024 Sila for Change Foundation A-301, 3rd Floor, Neelam Centre, Plot 249A, Worli, Mumbai- 400030. PAN: ABGCS5333L Vs. Commissioner of Income-tax (Exemption) 601, 6th floor, Cumballa Hill, MTNL Building, Peddar Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Maharashtra- 400026. (Appellant) (Respondent) Present for: Assessee by : Shri Mandar Vaidya- Advocate Revenue by : Dr. Kishore Dhule- CIT D.R. Date of Hearing : 29.10.2024 Date of Pronouncement : 20.12.2024 O R D E R Per Beena Pillai, JM: Present appeals are filed by the assessee against order dated 26.07.2024 passed by CIT (Exemptions), Mumbai. ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 2 Brief facts of the case are as under: 2. The assessee was granted provisional registration on 01.10.2021 pursuant to filing of application in Form 10AB u/s.12A(1)(ac)(iii) before the Ld.CIT(E). It is submitted that the assessee was formed with following objections: 1. “To open, run and connect with other legal aid cells and advice centers to help underprivileged and their dependents to get benefits of their basic rights and privileges. 2. To facilitate provision of financial help, relief, aid, support, assistance to underprivileged that are, but not restricted to widows, destitute, orphans, aged, disabled or handicapped, for maintenance or education for themselves to be self- reliant, independent and employed, including social security measure and other government schemes. 3. To promote health and generate awareness regarding various relevant health related issues affecting urban settlements and direct underprivileged and their dependents to specific public health intervention programs that they can benefit from. 4. To undertake publications in forms of reports, papers, books, monographs and journals, magazines, newspapers, periodicals, thesis, researches, writings. discoveries, documents, news and information. On various media including social and online as well as electronic media. 5. To work with global consultants, sector associations, professional societies and NGOs/civil society groups as well as experts from national and international agencies associated with research and development, training, skill development, assessment, certification, affiliation, course accreditation or other required specializations in the Sector. 6. To liaise and collaborate with various associations or otherwise by suitable means (memorandum of understanding, collaboration agreements, partnering arrangements and others) for course content development, arrangement of apprenticeships, capacity building, placements. 7. To invite experts in the field from within and outside the country for advice, consultancy and participation in specific assignments. 8. To lend or make available the services of such professionals, technical experts, consultants and resource personnel wherever and whenever their services are required and to remunerate them in accordance with the applicable laws of the Country. ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 3 9. To sponsor, undertake and commission independent, regular and timely research to monitor and evaluate the performance of the projects and programs supported by the society to understand the impact of the activities and on the social lives of the communities targeted and convene internal and external consultation to use this result of this research to validate, update, revise, refine or correct for ongoing activates and to make public in full and transparent ways the finding of such research from time to time. 10. To accept grants, donations, gifts, subscriptions, contributions in cash or of any property, movable or immovable or assistance from public bodies, corporations, companies or persons or trusts, Indian / corporation/companies and foundations from within the country and or abroad and to manage efficient, effective and permissible fund flow and fund utilization in consonance with the objectives of the company as also in accordance to the applicable laws. 11. To pay salary/wages/fee including consultancy, retainership fee, professional fees, rent and incur all other expenses needed in fulfilment of the objects of the Company. 12. To provide support and other such developmental services to other organisations in India and outside India in the social sector. 13. To apply for registration of patents, copy rights to protect intellectual property for the products, interventions and services developed by the company by itself or in collaboration with others. 14. To appoint referees/arbitrators or such other consultants or other advisors in relation to any disputes affecting the company. 15. To appoint legal and technical advisers (not being members), bankers for the Company and to pay the necessary expenses for the same. 16. To raise funds or borrow with or without security in line with the objectives and repay the same. To deposit in banks or otherwise deal with the money or funds of the company and to subscribe for purchase, sell, hold, acquire, endorse and negotiate every way shares and securities of every description on the money market. 17. To alienate by way of sale, charge, mortgage, hypothecation, pledge, exchange, hiring out, gift or otherwise with or without security, the properties or funds of the company or any portion thereof including the marking or giving subscription(s), contribution(s) or assistance or there wise to charitable institution(s), educational, benevolent, social welfare or other institutional bodies, person(s) as from time to time may deem necessary. 18. To take financial assistance, take guarantee from any public charitable institutions, trusts, societies and other such organizations as the Board of Directors may deem it beneficial and in the interest of the company for furtherance of the objects of the Company and the doing of ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 4 all such other lawful things as considered necessary for the furtherance of the above objects. Provided that the company shall not support with its funds, or endeavor to impose on, or procure to be observed by its members or others, any regulation or restriction which, as an object of the company, would make it a trade union.” 2.1. Ld.CIT(E) observed that object clause no.12 of memorandum of association provides support to other such development services to other organisation in India and outside India in the social sector. The Ld.CIT(E) was thus of the opinion that the said object clause, violates section 11 of the Income Tax Act and therefore registration u/s. 12AB cannot be granted since the assessee has not established genuineness of the activities. The Ld.CIT(E) also noted that, the assessee has not established whether this object is in compliance with any other law for the time being in force as are material for the purposes of achieving its objects. The Ld.CIT(E) thus rejected the application seeking registration u/s. 12AB vide impugned order.As a consequences application seeking 80G registration was also deny. Aggrieved by the orders of the Ld.CIT(E), the assessee is in appeal before this Tribunal. 3. The primary contentions of the Ld.AR was that, the assessee was granted provisional registration in Form 10AC, and therefore the assessee may be granted registration u/s. 12AB of the Act. It is submitted that, subsequent to the provisional registration granted to the assessee activities of the trust/institution commenced and once Ld.CIT(E) is satisfied about activities undertaken by the trust/institution were genuine and in consonance with the aims ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 5 and objectives of the trust/institution, the denial of registration u/s. 12AB of the Act is bad in law. 3.1. The Ld.AR further submitted that, the activities of the trust/institution are bonafide and the assessee has not applied any income for activities outside India. He thus submitted that the genuineness therefore cannot be doubted. 3.2. The Ld.AR further submitted that, clause 12 of the memorandum of association is not meant to enable the assessee to carry out the charitable activities outside India. He submitted that all that the clause states that the assessee can render support and coordinate with trust/institution outside India. In support he placed an exampleof a student if granted education loan for seeking education outside India and the assessee paid tution fees to a university outside India of such student, it cannot mean that the such amount is utilised to apply for other charitable activities outside India. The Ld.AR placed reliance on the decision of Coordinate Bench of this Tribunal in case of Gem & Jwellery Export Promotion Council reported in 68 ITD 95, wherein it is submitted that an organisation carrying out with exhibition and promotional activities outside India and money is spent outside India but nevertheless the ‘charitable purpose’ is served in India . He also placed reliance on the following decision in support of his arguments:- “1. CIT V/s. Dawoodi Bohara Jamat [2014] 43 Taxmann.com 243 (SC): 364 ITR 31 (SC) 2. Shri Sachay Mataji Mandir Vikas Trust v/s. CIT(E) [2024] 165 Taxmann.com 306 (Rajkot-Trib.) ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 6 3. National Real Estate Development Council V/s. CIT (E) ITA/487/Ahd./2024” 3.3. On the contrary the Ld.DR submitted that the objectin clause 12 clearly states that, it would provide support and carry out such developmental activities to other organisations in India and outside India in the social sector. The Ld.DR submitted that, sub clause 3A of section 11requires that,the activities mustbe carried out in India. As clause 12 of the assessee is clearly in contravention to the primary requirement u/s.11,the claim of exemption by the assessee is rightly denied. He placed reliance on the decision of Hon‟ble Amritsar Tribunal in case of Sh. Gurudwara Sahib Parbhandan Committee vs. Commissioner of Income-tax (Exemptions) reported in [2023] 150 taxmann.com 181and on the decision of High Court of Orissa in case of Commissioner of Income-tax (Exemption) vs. Orissa Cricket Association reported in [2024] 161 taxmann. Com 588 (Orissa). He submitted that, sub section 4 of section 12AB widened the scope of violations specified under sub section 5. 3.4. The Ld.DR thus vehemently supported the impugned order and submitted that unless and until the Ld.CIT(E) is not satisfied about the objects of the trust/institutions and the genuineness of its activities, registration u/s. 12AB cannot be granted. 3.5.In the rejoinder, Ld.AR submitted that, the decisions relied by the Ld.DR are distinguishable on the facts from the present case. He submitted that in the above decisions the genuineness of the activities carried on by the assessee were not established.Referring to the decision of Hon‟ble Orissa High Court in case of Orissa Cricket ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 7 Association (Supra). The Ld.AR submitted that, there is a categorical finding regarding the benefits being used by the trustees vis-a-vis for general public utility.He submitted that,in case of Sh. Gurudwara Sahib Parbhandan Committee (supra),there was huge withdrawals from the bank for which, no details were furnished. He brought to our notice that,there was categorical observations that funds of the trust/institution were misused by the trustees therein. 3.6.The Ld.AR also submitted that, the above decisions are on the denial of exemption u/s. 11 in respect of application of funds. He submitted that, in the present facts of the case there is no such apprehension raised by the Ld.CIT(E) regarding genuineness of the activities of the assessee. However, only for the object clause 12 the application inform 10AB by assessee was rejected. We have perused the submissions advanced by both sides in the light of the records placed before us. 4. The process of obtaining registration under section 12A has undergone change that is detailed as under: 1) Up to 31.03.2021 the registration/approval was permanent in nature. 2) During the period from 01.04.2021 to 31.09.2023, this was the period of two step registration i.e. first provisional and subsequently regular registration. 3) Amended process w.e.f. 01.10.2023 where in only organizations who have not started any activity may apply for provisional registration and where the activity is commenced then direct application for five-year registration is permissible. 4.1. In the present facts of the case, the assssee, was incorporated on 28/07/2021 and filed its application under section ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 8 10Asubsequently. Thus, the assessee falls under the new regime of registration process, seeking registration/approval from 01.04.2021 to 30.09.2023, w.e.f. 01.04.2021 under section 12AB of the Act. The key features of registration under the amended scheme from 01.04.2021 to 30.09.2023 under section 12AB are as under: (i) Concept of provisional registration introduced for charity institutions is applicable to all applying for the first time, irrespective of whether they are new or existing institutions. (ii) Concept of perpetuity of registration stands withdrawn under the new scheme and provisional registration is valid for a maximum period of 3 years. The provisional registration is subsequently required to be regularized into five years regular registration within six months of commencement of activities or at least 6 months before the expiry of the provisional registration period. (iii) All the existing trusts or institutions which were registered under section 12A/ 12AA or approved under section 10(23C) and section 80G are mandatorily required to obtain registration under new scheme of registration under section 12AB or to obtain approval under section 10(23C) and section 80G. The registration/approval shall remain valid for a period of five years from 1 April, 2021 i.e. from the AY: 2022-23. (iv) Registration/approval was subject to renewal every 5 years. 4.2. The assessee in the present facts of the case preferred application for the first time post July 2021. Thus, as per section 12AB and Rule 17, the assessee is required to pass through following two stages: ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 9 1) Firstly, the application is to be filed in Form 10A for provisional registration. The assessee in the present facts filed Form 10A r.w. Rule 17, on 06/09/2022. Based on the application made, a provisional registration was issued to the assessee u/s.12AB effective from 01/10/2021, placed at page 48 of the PB filed in ITA no. 4274/M/2024. 4.2.1. For seeking Provisional Registration, apart from the documents and information required for filing application under Form 10A, no other information will be sought for granting provisional registration. The relevant provision of section 12AB is reproduced as under: (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall, (a)… (b)… (c) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, 4.2.2. Thus, it is apparent that, upon filing application in Form 10A (for Provisional registration) the concerned Income-tax Authority (CIT or PCIT) has to issue provisional registration certificate without any further verification or examination. ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 10 4.3. In the second stage, this provisional registration is required to be converted into regular registration. The application for conversion is to be filed in Form 10AB at least 6 months before the expiry of the provisional registration period or within 6 months of the commencement of its activities, whichever is earlier. For Converting provisional registration into final registration, procedure is identical to what it was prevailing prior to 01.04.2021, under section 12AB(1)(b)(i). That is, the Ld.PCIT/CIT shall call for such documents or information or make such inquiries as he thinks necessary in order to satisfy himself about genuineness of the activities of the trust or institution and the compliances of other laws.The relevant provisions are as under: (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,— a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub- clause (iv) or sub-clause (v) 66[or item (B) of sub-clause (vi)] of the said clause,— i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— a) the genuineness of activities of the trust or institution; and b) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (emphasis supplied) 4.3.1. Thus once the Ld.PCIT/CIT is satisfied on above aspects, then registration shall be granted in Form 10AD. In other case the application will stand rejected after granting an opportunity of being heard (as per section 12AB(1)(b)(ii) of the Act). Further, according to Sub-section 4 and 5 of section 12AB inserted by Finance Act, 2022, with effect from 01/04/2022, Ld.PCIT/CIT may cancel the ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 11 registration (after providing reasonable opportunity of being heard) if it is found that, the activities are not genuine or are not carried out in accordance with the objects of trust/institution. At this juncture, we note the fact that provisions of sub sections are applicable to the present assessee based on the date of application filed seeking registration under section 12B of the Act. 4.3.2. Registration will also stand cancelled under section 12AB, if the authorities notice that, the activities of the trust or institution are carried out in a manner that the provisions of section11 and 12 do not apply due to operation of section 13(1), or, the trust or institution has not complied with the requirement of any other law for the time being in force as is material for the purpose of achieving its objects etc. In case there is a specified violation as mentioned in Explanation to sub section 4, the Registration under section 12AB would be denied or stand cancelled, as the case may be. For the sake of convenience, relevant portion of sub section 4 are reproduced as under: (4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,— (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall— ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 12 (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.—For the purposes of this sub-section, the following shall mean \"specified violation\",— (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being carried out by the trust or institution— (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality. (5) The order under clause (ii) or clause (iii) of sub-section (4), as the case may be, shall be passed before the expiry of a period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) of sub- section (4). ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 13 4.3.3. One of the intention of Legislature to introduce sub clause (4) and (5) to the section 12AB is to address the issue related to the process of approval or cancellation or withdrawal thereof. Clause 3.3(a)(i) of memorandum explaining the provisions in finance bill, 2022 is as under: “3.3. Reference to the Principal Commissioner or Commissioner (PCIT/CIT) for the cancellation of registration/approval: a)The following issues related to the process of approval or registration, or cancellation or withdrawal thereof, have been noticed, namely:- i) Registration or approval of non-genuine trusts or institution under automated approval system: First and second provisos to clause (23C) of section 10 of the Act were substituted by new provisos by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 w.e.f. 01.04.2021. These provisos provided that the application for the approval of any trust or institution under the first regime, shall be made to the jurisdictional Principal Commissioner or Commissioner and such Principal Commissioner or Commissioner shall grant approval after examination of the application. Earlier such applications were required to be filed before the prescribed authority. Similarly, provisions of clause (ac) of sub-section (1) of section 12A provide that application for the trusts or institution under the second regime shall be made to the principal Commissioner or Commissioner. The provisional registrations or provisional approval orre-registrations or approvals in certain cases, under these clauses, are granted in an utomated manner and the respective rules have been amended accordingly. It is essential to ensure that non-genuine trusts or institutions do not get exemption provided by these provisions.” Thus, we do not agree with the argument advanced by the Ld.AR that since provisional registration is granted to the present assessee before u/s.12AB, final registration cannot be denied. 4.4. In the present facts, the assessee’s objects include clause 12, which is not in consonance with the main purpose to grant ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 14 exemption under section 11(1)(a) of the Act for sale of convenience, the relevant portion are excluded as under. It is noted that, the assessee was offered opportunity of being heard, is apparent from the paper book filed before us. However, nothing on record is filed, to demonstrate that, the assessee took necessary steps to amend the objects which is in contravention to section 11(1)(a) of the Act. Admittedly it is not the case that, the assessee has already applied its funds as per object clause 12 of the memorandum. 4.4.1. It is relevant to note that section 11 (1) (a) was on statute from its inception to the provisions of section 11(1)(c ) that reads as under: Section 11…. (1)…. (a) to (b)….. (c) income derived from the property held under trust— (i) 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 (ii) 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 it shall not be included in the total income of the person in receipt of such income; 4.4.2. From the above provisions, it is clear that, even otherwise, organisations created after 01/04/1952 were not empowered to do activities outside India, prior to the insertion of amended section under section 12A/AB. However, CBDT in certain circumstances ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 15 may direct by a general or special order permitting certain activities, which tend to promote international welfare in which India is interested. “11. (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 person in receipt of the income— (a) income derived from property13 held under trust wholly13 for charitable or religious purposes13, to the extent to which such income13 is applied13 to such purposes in India13; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart16 is not in excess of 17[fifteen] per cent of the income from such property;” 4.4.3. Hon‟ble Delhi High Court in case of DIT (E) vs. National Association of Software and Services Companies reported in (2012) 208 Taxman 178 interpreted natural grammatical meaning of the words “to the extent to which such income is applied to such purposes in India” appearing in section 11(1)(a) of the Act. Courts have held that, the words „in India‟ appearing in section 11(1)(a), qualifies only the words ‘such purposes’, would not only be contrary to the plain grammatical meaning of section but also render the provisions of section 11(1)(c) redundant and otiose. Further the Courts have held that, if it was accepted that income of trust can be applied even outside India so long as the charitable purposes are in India, then there is no need for a trust which tends to promote international welfare in which India is interested and was created on or after 01/04/1952 to apply to the CBDT for a general or special order for exemption. Hon‟ble Delhi High Court in case of DIT ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 16 (E) vs. National Association of Software and Services Companies reported in (2012) 208 Taxman 178 explained that the literal interpretation of the statute was not, probably in consonance with the intent of the statute. Hon‟ble Court however agreed that, it was illogical to allow expenditure paid to a student to study abroad but the same was not permissible if the payment was made directly to the foreign university. 4.4.4. In case of Jamsetji Tata Trust v. Jt. DIT (Exemption) reported in 148 ITD 388 coordinate bench of this Tribunal held that education grant given to Indian students for studying abroad fulfils conditions of application of money in order to claim exemption under section 11. It was observed that, the assessee applied the money for charitable purpose in India and the final execution of the purpose may be outside India but the same will not affect the conditions satisfied by the assessee. 4.4.5. The Courts have always proceeded on the footing that, section 11(1)(a) do not attract forfeiture over the entire income unlike the provisions of section 13(1). In other words, the Courts have held that, if a trust or institution is willing to pay taxes to the extent of its activities outside India, then to that extent it can have such activities. The decisions and the those referred in the written submissions filed by Ld.AR as well as submitted at the time of hearing, leads to support the contention of the Ld.AR that, the section 11(1)(a) are attracted only if, actual expenditure is incurred ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 17 outside India. Section 11(1)(a) cannot be invoked only on the ground that the trust deed provides for activities outside India. Some decisions on this Principle are: A. Hon‟ble Bombay High Court in the case of CIT v. State Bank of Indiareported in (1988) 169 ITR 298, considered the issue whether a trust for charitable purposes in India and abroad can claim exemption from its income where the trustees have discretion to apply the income either in India or abroad? Hon‟ble Court observed that the trust deed provided, at the discretion of the trustees, to give 45 per cent of the income to the University of Athens. It was thus held that, the trust was eligible for exemption even though it provided for application of income abroad. However, the portion of income actuallyapplied abroad or accumulated for application abroad was not exempt. B. Hon‟ble Delhi High Court that in case of Digamber Jain Society for Child Welfare v. DGIT (Exemptions)reported in (2010) 228 CTR 517that, existence of other objects can not affect the charitable status of a Trust or NGOs. Hon‟ble Allahabad High Court in the case of Ewing Christian College Society v. CCITreported in [2009] 318 ITR 160 held that, the objective to serve the church and nation would not mean that the society was not existing solely for educational purposes; therefore, any ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 18 additional object clauses normally should not affect the charitable status of a trust/institution/NGO. C. Similarly, Hon‟ble Andhra Pradesh High Courtin CWT v. Trustees of the Nizam‟s Religious Endowment Trustreported (1977) 108 ITR 229 relied by the Ld.AR, it was held that,the charitable or religious expenditure incurred in India will not be affected by a provision for activities outside India or even actual expenditures abroad. Exemptions towards activities in India remain intact and in the case of a clause in the trust deed empowering the trust to have activities outside India, there is no impact. And in the case of trust having activities outside India, the exemptions will be denied to the extent of the income applied outside India. 5. Be that as it may, by insertion of sub section 4 & 5 inserted by Finance Act, 2022 widened the scope of violations by including violations specified in explanation therein. This was not the legal position u/s. 12A/12AA prior to amendment. The condition to satisfy that the objects of the trust are not in violation to compliance under any other law for time being in force towards achieving the material purposes of the objects is now become necessary to be established by the assessee at the time when its application is scrutinised for converting provisional to final registration. The explanation (f) to sub clause (4) of 12AB mandates compliance with the requirement of any other law as referred to item (B) of sub-clause (i) of clause (b) to subsection (1) of 12AB. ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 19 With such compliance required at the stage of registration, pertaining clause 12 in the memorandum of the assessee trust will be an hurdle to grant final registration. 6. We therefore do not find any merit in the arguments advanced by the Ld.AR and the same stands rejected based on the discussions and analysis of the relevant provisions and decisions on the issue. As a consequence, the application seeking 80G also stands rejected. Accordingly, the Grounds raised by the assessee in both appeal stands dismissed. 7. Liberty is granted to the assessee to specify the memorandum of the objects and file the application seeking final registration before the competent authority which may be considered in accordance with law. In the result appeals filed by the assessee stand dismissed. Order pronounced in the open court on 20/12/2024. Sd/- Sd/- PRABHASH SHANKAR BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 20/12/2024. Snehal C. Ayare, Steno/Dragon Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File ITA No.4274 & 4275/MUM/2024 Sila for Change Foundation; Page | 20 5. CIT //True Copy// BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "