Sports Unlimited Foundation Vs CIT (Exemption) (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai has set aside the rejection of Sports Unlimited Foundation’s applications for 12AB and 80G registration, directing the Commissioner of Income Tax (Exemption) [CIT(E)] to conduct a fresh adjudication. The rejection was based on concerns that the trust’s objectives left room for potential expenditure outside India, which could violate Section 11 of the Income Tax Act, 1961. The trust argued that it does not intend to use funds abroad and submitted an affidavit affirming this stance.
The CIT(E) found that the trust deed contained a clause allowing financial assistance to students for education in India and abroad. Citing this, the department rejected the application, stating that trusts must satisfy the conditions of Section 12AB(1)(b), which mandates that their objects and activities align with tax-exempt purposes. The trust relied on Jamsetji Tata Trust v. Joint DIT (2010) 148 ITD 388 (Mum.), where it was held that grants for higher education abroad still qualify as an application of money in India. However, the CIT(E) relied on the Sila for Change Foundation v. CIT(E) [ITA No. 4274/Mum/2024], which upheld a similar rejection.
The tribunal noted that the trust had initiated amendments to its objectives to clarify that no expenditure or benefit would accrue outside India. Given this development, the ITAT found it appropriate to remand the case for fresh adjudication, directing the trust to submit its amended objects to the CIT(E) at the earliest. The tribunal emphasized that an affidavit is legally binding, but it must align with the trust’s official objectives to be considered valid.
