Amount spent outside India on account of boarding and lodging local transport is not application income u/s 11(1)(a), so was held by Income Tax Appellate Tribunal (ITAT), New Delhi.
The assessee, Church’s Auxiliary for Social Action was accorded Registration u/s 12A of the IT Act and in addition the Assessee society has been granted approval u/s 80G (5) (vi) of the Act for the period of Assessment Year 2012-13 onwards till it is rescinded. The object of the society claimed to be chargeable in nature within the meaning of Section 2(15) of the Act and benefit u/s 11 & 12 are allowed to the assessee.
During the year under consideration, the assessee society incurred expenses to the tune of Rs. 21,54,776/- on account of foreign travel and claimed it as application of income during the year. During the assessment proceedings the assessee has been given the opportunity to justify and substantiate the nature of foreign travel and purpose of the visit with supporting documents.
In reply, assessee submitted the details of visit, but failed to substantiate it with supporting documents stating that the ‘Office of the Society has already been closed’. The reply of the assessee found not satisfactory by the AO. Therefore, disallowed the foreign expenses of Rs. 21,54,776/- and passed assessment order dated 22/12/2016. As against the assessment order dated 22/12/2016, the assessee has preferred an appeal before the CIT(A).
TheCIT(A) disallowed the expenditure amount to Rs. 10,15,818/- which was spent outside India on account of boarding and lodging local transport etc. Further, allowed a sum of Rs. 11,38,958/- out of the amount of Rs. 21,54,716/- as application of income by partly allowing the appeal.Aggrieved, the assessee is in appeal before the Tribunal.
The Bench consisting of Shamim Yahya, Accountant Member and Yogesh Kumar US observed “It is well settled law that the expenditure incurred by the trust outside India cannot be considered as application of income as per Section 11(1)(a) of the Act. Therefore, in the present case, the disallowance of Rs. 10,15,818/- which was spent outside India on account of boarding and lodging local transport etc. cannot be considered as application income as per Section 11(1)(a) of the Act.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
