Payments Made to Foreign Institution for Educational Purposes Held as Application of Income in India: ITAT
- Harshita Joshi and Dohit Muranjan
- 5 days ago
- 2 min read
Case: The Institute of Chartered Shipbrokers v. Deputy Director of Income-tax (Exemptions)
Court: ITAT Chennai
Assessment Year- 2007-08 to 2013-14
ITA No.: 1927-1931 (Chny) of 2025
Date of Order: 29th September, 2025
Brief Facts:
The assessee was a society registered under section 12AA of the Income-tax Act, and engaged in imparting education in the field of shipping and logistics.
It made payments to the Institute of Chartered Shipbrokers (ICS), London, towards the purchase of books, examination and exemption fees, and Distance Learning Centre Licence Fee.
The Assessing Officer disallowed these payments, holding that they did not qualify as application of income in India under section 11(1)(a).
Consequently, the Commissioner (Appeals) upheld this view.
Observations of the Tribunal:
The Tribunal observed that all materials and services sourced from ICS, London, were used exclusively for Indian students in India.
The books constituted tangible assets imported into India, and the examination and exemption fees facilitated Indian students in obtaining internationally recognised qualifications. Thus, both tangible and intangible benefits accrued within India.
Further, it was noted that the assessee’s activities had already been recognised as “education” under section 2(15) in earlier proceedings, and this position had not been reversed by any higher forum.
The Tribunal distinguished the Delhi High Court’s decision in NASSCOM, noting that it involved activities conducted abroad, whereas in the present case, all educational benefits arose within India.
Hence, the ITAT held that the payments made to ICS, London including for books, examination and exemption fees, and licence fees were integral to achieving the assessee’s educational objectives and constituted valid application of income in India under section 11(1)(a). The disallowance made by the Assessing Officer was accordingly deleted, and the appeals of the assessee were allowed.
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