HIGH COURT OF DELHI
Director of Income-tax (Exemption)
v.
National Association of Software & Services Companies
IT Appeal Nos. 17 to 20, 472, 477, 480, 519 and 520 of 2011
Date – May 10, 2012
JUDGMENT
R.V. Easwar, J. – These nine appeals are filed by the Revenue for the assessment years 1998-99, 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07. They have been; filed under Section 260A of the Income Tax Act, 1961, hereinafter referred to as “the Act”.
2. The respondent-assessee is the National Association of Software and Services Companies (NASSOM). The appeals in ITA Nos.472/2011 and 18/2011 for the assessment year1998-99 are taken as the lead matters.
3. The assessee is a trust registered under Section 12A of the Act by order dated 29.06.1998. In respect of the assessment year 1998-99, it filed a return of income declaring “nil” income on 22.10.1998. The return was first accepted under Section 143(1)(a) on 26.03.1999 but-was subsequently selected for scrutiny. Accordingly notices were issued under Section 143(2) of the Act. In the course of the assessment proceedings the Assessing Officer examined the financial statements such as income and expenditure accounts, balance sheet, etc. On a perusal thereof he noted that the assessee had filed a declaration under the Voluntary Disclosure of Income Scheme, 1997 (VDIS) and had paid taxes of Rs. 43,76,812/- in respect of the income for several years up to and including the assessment year 1997-98. The payment of the taxes was claimed by the assessee to represent application of the income of the trust for purposes of Section 11(1)(a) of the Act. He also noticed that the assessee had incurred an expenditure of Rs. 38,29,535/- on events/activities held by the assessee outside India. (Hanover, Germany). The expenditure was also incurred outside India. The Assessing Officer took the view that the expenditure cannot be considered as application of income in India for charitable purposes. He accordingly considered the aggregate of these two amounts as income not applied for charitable purposes in India and computed the surplus of the assessee-trust in the following manner: –
