A Trust whose objects include ‘international welfare’ cannot be denied S. 12A registration

In a decision by Income Tax Appellate Tribunal (ITAT), Mumbai it has been held that a Trust whose objects include ‘international welfare’ is a charitable entity and cannot be denied S.12A registration.

DIT (E) who rejected the application for S.12A registration of the Trust in its order had contended that Critical Art & Media Practice’s (to be referred as Trust) objects include charitable as well as non charitable activities, such as hosting of artists-in-residence programmes for international artists and raising funds for organizing trips, seminars and conferences within and outside the country. Considering S.11 applies only for income to be applied for charitable purposes within India, the Trust cannot be given the tax exemption status.

The trust filed an appeal before ITAT (Mumbai) against the Order. The Tribunal divided the issue into two parts, one for examination of charitable activity and second applicability of tax exemption (S.11) on the same. It after examining the case, held that while it is true that the objects of the Trust are such that it may apply some of its income outside India, however the test of an entity being charitable has to be based on definition of ‘charitable purpose’ under S. 2(15). It stated that this definition nowhere states that any activity undertaken by a Trust outside India is not a charitable activity. Thus even if an entity applies its income on welfare activities outside India, its charitable purpose needs to be seen in light of definition given under S.2(15).

It further stated that in case the Trust applies its income on objects which are outside India and if not authorized by CBDT that expenditure would not fall within the definition of application of income under S.11 and would need to be dealt accordingly.

– Citation : ITA No.736/M/2013 2 M/s. Critical Art and Media Practices vs DIT(E) dt 15 Mar 2015

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