IT Exemption allowable on Sponsorship Receipt Received by Charitable Trust for Conducting Seminars: ITAT [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) in the case Income Tax Officer v. M/s Escorts Cardiac Disease Hospital Society wherein held that Income Tax exemption allowable on sponsorship receipt received by the charitable trust for conducting seminars.

In instant case, Assessee is a registered society engaged in the business of building and running hospital also do some medical relief. During the assessment proceedings, the Assessing Officer disallowed an amount of 9 Lakhs for non-deduction of tax to the assessee.

The first appellate authority sustained the action of AO and pointed that AO rightly made the addition on account of Assessee had paid the honorarium to the doctor from abroad who attended the seminars.

Also, they observed that the Assessee made the payment outside India through banking channels and not obtained approval from RBI and the same covered under FEMA, also the violation of provisions of section 11(1)(c) of the Income Tax Act, 1961.

The counsel for Assessee contended that the payment of honorarium is not liable to be taxed outside India and the same is not comes under the application of income under charitable purpose.

However, the counsel for Revenue supported the decision of Assessing Officer and relied on various cases. On counter-part Assessee also contended section 11(1)(c) would not attract since the matter is outside India and also added that such payments are done according to the laws which require the certificate of an accountant for making the payment.

The bench including Judicial Member H.S Sidhu and Accountant Member Anadee Nath Mishra heard the rival contention and perused the documents on record and found that the said Assessee is not running any hospital in spite they conducted a seminar for the benefit of the parent body which is a private company.

“The expense has been incurred outside India and therefore, it is a violation of Section 11(1)© and the above transaction is covered under the FEMA Act, for which the approval of the RBI is essential. Since assessee is remitting funds outside India and claiming it as the application of income, which is a violation of section 11(1)©, hence, the amount of Rs. 9,76,031/- was rightly disallowed by the AO,” the Tribunal said.