Institute of Chartered Shipbrokers Vs DDIT (Exemptions) (ITAT Chennai)
ITAT Chennai Allows Application of Income on Payments to ICS London – Shipbrokers Institute Gets Relief
ITAT ruled that exam fees and related payments to overseas institutes, when benefiting Indian students, constitute valid application of income in India under Section 11, rejecting Revenue’s disallowance. The Tribunal held that payments towards books, exam fees, and license fees for Indian students’ education abroad qualify as application of income under Section 11, as the benefit accrues in India. Disallowance deleted.
Chennai ITAT dealt with disallowances made on the ground that payments remitted to the parent Institute of Chartered Shipbrokers (ICS), London were not “application of income in India” u/s 11(1)(a).
Assessee, a public charitable trust registered u/s 12AA, runs educational programs in shipbroking. It collects fees from Indian students & remits part of it to ICS, London towards books, exam fees, exemption fees & Distance Learning Centre licence fee. AO held that such remittances were application of income outside India, relying on NASSCOM (Del HC), and disallowed exemption. CIT(A) confirmed.
On appeal, ITAT condoned a delay of 829 days in filing appeal, finding sufficient cause. On merits, the Tribunal observed:
- The Institute is engaged in imparting professional education in India, with ICS London affiliation only for academic recognition. Books are imported into India for students, and exams are conducted in India for Indian candidates.
- Payments to ICS London directly further charitable purpose of advancement of education in India. Tangible (books) & intangible (qualification) benefits accrue entirely within India.
- Reliance on NASSCOM misplaced, since that case involved foreign events/activities. In contrast, here the expenditure benefits Indian students domestically.
- Following earlier Tribunal order in assessee’s own case (ITA No.348/Mds/2012) & Karnataka HC ruling in Ohio University Christ College (408 ITR 352), ITAT held that such remittances qualify as valid “application of income in India” u/s 11(1)(a).
For AYs 2012-13 & 2013-14, ITAT also allowed claim of foreign exchange loss on such transactions as integral to educational activity, and directed AO to verify & allow carry forward under Explanation (2) to Section 11(1) in line with Madras HC ruling in Abhinitha Foundation (396 ITR 251).
