No Trust towards Sports Trust on Foreign Expenditure: ITAT restores Registration Rejection [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) restored the registration of sports trusts to the file of CIT(E) for fresh decision and directed the assessee to amend the trusts objective with respect to foreign expenditure.

The assessee has appealed against the order passed by the Commissioner of Income Tax (Exemption) that rejected  applications filed by the assessee seeking registration under Section 12AB and Section 80G of the Income Tax Income Act 1961.

Coming to the fIncome Tax Income Tax Income Tax Acts of this case, the assessee, Sports Unlimited Foundation, had  filed an application in Form 10AB under Section 12A(1)(ac)(ii) of the Income Tax Act for seeking registration under Section 12AB of the Income Tax Act.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

The CIT(E) found the assessee’s application was incomplete and issued a notice to furnish the required documents under Rule 17A(2). Upon review, the CIT(E) noted that someof the trust objects violated Section 11 by allowing fund applications outside India. A show cause notice was issued, and after examination, the CIT(E) concluded that the trust’s objectives could lead to overseas expenditures. Finally, the CIT(E) rejected the application for registration under Section 12AB.

During the appeal, one of the contentions raised by the assessee was that the CIT(E) failed to consider that the object of the trust had a clause that allowed assistance to students to study in India and abroad, which in essence is not an expenditure outside of India.

The assessee’s counsel relied on the case of Jamsetji Tata Trust v/s Joint DIT, reported in (2010), in which it was held that education grant given to Indian students in India for education/higher education abroad fulfilled the condition of application of money for such purposes in India.

The bench noted that liberty was granted to the assessee by the authorities to modify the memorandum of object and file the application before the competent authority for registration under Section 12AB of the Income Tax Act. 

The tribunal bench restored the e application for seeking registration under section 12AB of the Act to the file of the CIT(E) for de novo adjudication. ITAT also directed the assessee to  file its amended object at the earliest before the  CIT(E).

The ITAT bench, comprising Narendra Kumar Billaiya (Accountant Member) and Sandeep Singh Karhail (Judicial Member), allowed the appeal filed by the assessee for statistical purpose and set aside the impugned order.

To Read the full text of the Order CLICK HERE

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