The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has allowed foreign travel expenses incurred for obtaining charitable donations.
The Assessee, Agastya International Foundation, was a charitable trust registered under Section 12A of the Income Tax Act, 1961 w.e.f. 02.04.1999. The Assessee had also got registration under Foreign Contribution Regulation Act (FCRA). For the Assessment Year 2016-17, return of income was filed on 16.10.2016 declaring Nil income, after claiming exemption under Section 11 of the Income Tax Act.
Subsequently, a revised return was filed on 31.03.2018 declaring ‘Nil’ income. The assessment was selected for scrutiny and the assessment under Section 143(3) of the Income Tax Act was completed vide order dated 25.12.2018 by making disallowance of expenditure incurred on foreign travel.
The Assessee had filed a Paper Book enclosing therein the written submissions filed before the FAA, a chart showing details of the foreign travel expenses, FCRA received for the relevant Assessment Year, case laws relied on, etc
Suman Lunkar, who appeared on behalf of the assessee submitted that the expenditure incurred on foreign travel was to obtain donations from the donors who were abroad. Assessee had received substantial portions of donations from abroad. The donations received included from agencies such as Silicon Valley Foundation, Global Giving, etc.
He further submitted that the chart showing the details of the foreign travel expenditure incurred along with the purpose, details of the donations received and utilisation of the same were also enclosed.
Gudimella VP Pavan Kumar appeared on behalf of the revenue.
The two-member Bench of Chandra Poojari, (Accountant Member) And George George K, (Judicial Member) observed that the expenditure incurred was for obtaining the donations from the various donors who were stationed abroad and the utilisation of the donation was also for the objects of the Trust.
In view of the aforesaid reasoning, the Bench allowed the appeal filed by the assessee and held that since the donations received were utilised for charitable purpose which was never doubted by the AO, the foreign travel expenses incurred for obtaining the above said donations should be allowed as an expenditure.
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