ITAT: Board’s Permission Mandatory for International Projects under Income Tax Act
ITAT: Board’s Permission Mandatory for International Projects under Income Tax Act
The Commissioner of Income Tax (Exemptions) noted that the assessee had not sought permission for activities outside India
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has upheld the rejection of registration by the Commissioner of Income Tax (Appeals) for Sampark Livelihoods Promotion Trust.
The Coram of George George K (vice president) and Laxmi Prasad Sahu (accountant member) emphasized that obtaining permission from the Board was mandatory for international projects under Section 12AB of the Income Tax Act.
The assessee, a trust registered under the Indian Trusts Act, 1882, applied for registration under Section 12AA of the IT Act by filing Form 10A along with relevant documents.
Initially, provisional registration was granted to it, after which the assessee applied for registration under Section 12AB. However, on verification, it was found that the trust conducted activities outside India.
The trust was asked to submit a copy of the Special Order from the Board allowing such activities. The trust claimed to have undertaken projects for public utility and was filing returns and paying taxes as an AOP for activities outside the country.
The CIT (Exemptions) noted that permission from the Board was required for activities outside India under Section 11(1)(c), which the assessee had not sought.
The trust failed to provide necessary permission and other documents to establish the genuineness of its activities and compliance with Section 12AB(1)(b) (i&ii). Therefore, the CIT(E) rejected its application for registration under Section 12AB.
The bench noted that the assessee’s activities encompassed international projects, including ongoing studies on girls' landscaping in Nepal and Bangladesh, a Flamingo Research study involving adolescent girls in Nepal and India, rehabilitation and empowerment initiatives for Nepali women, a Netherlands CDI Training program, and a UNDP project in Myanmar.
The tribunal stated that obtaining permission from the Board was imperative according to Section 11(1)(c) for international projects or activities. It also noted a contradiction within the trust deed, wherein the preamble stipulated that the income shall be utilized for the trust's objectives in India, while the object clause at serial number 4 permitted work both in India and other countries.
ITAT observed that the CIT(E)'s order indicated that the assessee had not provided sufficient documents to substantiate the genuineness of the charitable activities it claimed to be undertaking. Thus, it upheld the CIT(E) decision.
