Article
Situs of application of income vis-à-vis the expenditure made abroad for charitable purpose in India
By Neha Sharma
The phrase ‘applied for charitable purposes in India’ under Section 11 of the Income Tax Act has been a subject matter of litigation in the recent past. Considering the position as it was prevalent prior to the amendment in the Income Tax Act, 1922 in 1953 (effective from 1-4-1952), period post amendment and after introduction of Income Tax Act, 1961, the author is of the view that it can be said that the mandate under Section 11(1)(a) is only to apply the income in India for charitable purposes, while the actual expenditure could in fact be outside India. Therefore, if the expenditure is incurred outside India for the charitable purpose in India, then the exemption under Section 11(1)(a) should not be denied. According to the author, the mere incurrence of expenditure in foreign currency would not imply carrying on a charitable activity outside India, and that the exemption in Section 11(1)(c) strengthens the argument that the intention of the Legislature to grant exemption under Section 11(1)(a) is with respect to those cases where the purpose lies in India...
Statute update
- Taxation Laws (Amendment) Bill, 2019 receives Presidential assent
Ratio decidendi
- Manufacturing and trading transactions not closely linked if they are not inter-dependent – ITAT Pune
- Transfer pricing provisions not to apply when there is no possibility of income accruing – ITAT Delhi
- Internal comparables to be given preference over external comparables as per Rule 10B(1)(e) – ITAT Pune
- Where main transaction is at ALP, incidental benefits need not be benchmarked separately – ITAT Mumbai
- Assessment order passed without complying with DRP directions, though rectified later, is invalid – ITAT Delhi
- Trustee in representative capacity eligible for treaty benefit available to non-resident – ITAT Mumbai
- Expenses on telecast of founder’s address eligible for deduction where no personal benefit is derived – Delhi High Court
- Where assessee responds to SCN, plea of ambiguous SCN cannot be raised later – ITAT Chennai
- Acquisition of property by way of perpetual lease satisfies ‘purchase’ for purposes of Section 54F – ITAT Chennai
- Indirect utilisation of loan for industrial purpose would also qualify for exemption under Section 10(15)(iv)(f) – Madras High Court
