ITAT Clarifies: Financial Aid in India, Even for Studies Abroad, Not Foreign Application of Funds
The Income Tax Appellate Tribunal (ITAT), Mumbai, in one of its orders, ruled in favour of an assessee trust by granting Approval under 80G of the Income Tax Act, 1961, which was earlier rejected by the ld. CIT(E).
The assessee, Mitra Parivar, applied for approval under 80G(5)(iii) of the Income Tax Act, 1961. While the ld. CIT(E) was examining this application, and they found that in one of the objects of the Trust Deed, the assessee intends to apply funds outside of India. The assessee was issued a show cause notice seeking clarification regarding the same. The assessee replied that it meant to give financial assistance to students for further studies, either in India or Abroad and the money would be given in India and in Indian currency whether the study is in India or abroad.
The assessee also informed us that it has never remitted any donation in Foreign currency in the past and does not intend to do the same in the future either. It also passed a resolution to remove the word “abroad” from the objective clause, and the necessary changes may be carried out in the trust deed.
However, the ld CIT(E) was not satisfied by the submission made by the assessee and said that the explanation only gives a possibility that the trust (assessee) may make the changes. the CIT(E) further said that the assessee did not submit any documentary evidence that it had started the process for updating the Trust deed. Therefore, the CIT(E) rejected the applicant’s application seeking approval under section 80G of the Act. Therefore, the assessee filed an appeal before the ITAT Mumbai challenging the order of CIT(E).
The ITAT observed that the object clause in the Trust deed of the assessee did not specifically mention that it provides financial help for studies abroad and only outlined giving financial help to the students for studies in India or Abroad. It also noted that the trust has never provided any financial help in foreign currency in the past and does not intend to do the same in the future either. Further, the assessee passed a resolution and also submitted its copy.
Therefore, the tribunal believed that the assessee had submitted enough explanation and had substantiated that it intends to give financial assistance in indian rupees. The tribunal held that there is no factual or legal basis to reject the application of the assessee trust. Accordingly, the tribunal set aside the order passed by ld. CIT(E) and directed Ld. CIT(E) to approve the registration of the assessee trust under section 80G(5) of the Act.
Case Citation: Mitra Parivar Vs CIT(E) (ITAT Mumbai); ITA No. 16/Mum/2025; 31/10/2025
