ITAT Delhi Sets Aside Rejection Of Charitable Status On Ground Scholarships Paid In India Were For Overseas Studies

The Delhi Income Tax Appellate Tribunal (ITAT) has directed the tax department to grant Oxonian India Foundation registration as a charitable organisation and approval under Section 80G.

It held that scholarships paid in India to Indian students studying abroad cannot be treated as money spent outside India merely because the students later pursue their education overseas.

“Admittedly, there is no dispute tha t the funds are being utilized on the scholarships to the Indian students and amount is also being remitted in India through bank s in Indian currency. There is nothing contrary in the impugned order which may show that the said activity is not covered within the ob jects of the trust as one of the primary ob jec t of the trust is 'education'. Therefore , respec tfully relying upon the case of judicial tribunal , we are of the considered opinion that the ld. CIT(E) has un justifiably denied the regis tra tion on the ground that scholarship amount is being utilized for the studies of Indian students abroad and further that the selection criteria of the scholarship is not transparent and justified,” the tribunal observed

A coram comprising Judicial Member Raj Kumar Chauhan and Accountant Member Amitabh Shukla passed the order on September 25 in appeals filed by the Oxonian against the order of Commissioner of Income Tax (Exemptions), Delhi.

Oxonian India Foundation is a Section 8 company incorporated in 2015.

Its objects include education, research, training, skill development, and higher education, including scholarships and financial assistance to students pursuing higher education in India or abroad.

The Foundation was initially granted registration under Section 12A in 2016 and later received registration under Section 12A(1)(ac)(i) for assessment years 2022-23 to 2026-27. It applied for continuation from assessment year 2027-28 under Section 12AB(1)(ac)(ii), and separately sought approval under Section 80G, which enables eligible donors to claim a deduction for donations made to an approved charitable organisation.

The CIT(E) rejected both applications. It held that although the scholarships were transferred to students in India, they were ultimately used for studies abroad. It therefore treated the scholarships as application of income outside India under Section 11(1)(c), which deals with charitable income applied to charitable purposes outside India.

The CIT(E) also questioned the role of Somerville College, Oxford, in shortlisting and selecting scholarship recipients. It further referred to the absence of financial criteria and a beneficiary who received scholarships for BCL and MPhil courses at Oxford.

The CIT(E) also questioned consultancy and professional payments, including those made to Canta Consultants LLP, where an OIF director was a designated partner. It treated the payments as raising an issue under Section 13(1)(c), which concerns use of charitable income for the benefit of specified persons.

The tribunal relied on its earlier decision in Oxford Cambridge Society of India v CIT(E). It held that where scholarships are disbursed in India to Indian students in Indian currency, a student's subsequent travel abroad does not by itself convert the payment into application of income outside India.

The tribunal also held that the CIT(E) had entered the arena of assessment by invoking Sections 11(1)(c) and 13(1)(c) while deciding the Foundation's registration and approval applications.

It held that the inquiry under Section 12AB was concerned with the genuineness of the Foundation's activities and compliance with other laws material to its charitable objects. It found no material showing that the Foundation failed either requirement.

The tribunal set aside the CIT(E)'s order and directed him to grant registration under Section 12A(1)(ac)(ii) and consequent Section 80G approval within four weeks. Both appeals were allowed.

For Appellant: Arjun Raghvendra, Akshay Rana, Khushpreet and Shaurya Veer Singh Kapoor

For Respondent: Vikram Singh Sharma, CIT-DR