Section 11(5)

Section 11(5) — the law in short

What the courts have decided on section 11(5), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Columbia Global Center in India v ITO (Exemptions), Ward-1(2), Mumbai High CourtHelps taxpayer
  My trust filed Form 10 only after the scrutiny notice came — 338 days after the due date. The Commissioner refused to condone under s.119(2)(b). Is that the end of the accumulation claim?
  No. Where the substantive conditions of s.11(2) are met — the accumulation is disclosed in the return, the Board resolution and the Form 10B audit report before the s.139(1) due date, the money is invested in a s.11(5) mode and is actually applied within the permitted period — the Bombay High Court held that a liberal view must be taken and the delay in filing Form 10 condoned. The refusal order under s.119(2)(b) was quashed and the delay condoned by the Court itself.
• Trust for Reaching the Unreached v CIT High CourtHelps taxpayer
  Our audit report was not e-filed with the return and exemption was denied. Can the delay be condoned?
  Yes. The requirement to furnish the audit report with the return is procedural and directory, so exemption under ss.11 and 12 cannot be refused merely for late filing. The Commissioner's refusal to condone was set aside because the s.119(2)(b) discretion must be exercised equitably and judiciously, not on an exclusively pro-revenue view.
• CIT v Fr. Mullers Charitable Institutions High CourtHelps taxpayer
  One deposit of ours breaks the s.11(5) modes. Will the department tax the trust's entire income?
  No. Only the income from the investment or deposit made in violation of s.11(5) is taxed; a breach of s.13(1)(d) does not take the trust's total income out of s.11. On that footing the s.263 revision was held unsustainable.
• Rashtrotthana Sahitya and Mudrana Trust v ITO (Exemptions) Ward 2, Bangalore ITATHelps taxpayerNo later treatment found
  From AY 2022-23 my spending out of a bank loan is not application, and I claim it when I repay. The officer says that is a double deduction. How do I prove it is not?
  By showing that you reduced the application of income in the year you took the loan by the amount borrowed, and claimed nothing then. On that evidence the Bangalore Tribunal deleted the disallowance of Rs.1,63,86,245 of loan repayment: the trust had claimed application only on repayment and not when the borrowed funds were spent, so there was no double deduction, and the lower authorities had ignored the computations and accounts filed and proceeded on a presumption.
• CBDT Circular 16/2024 CBDT Circulars & InstructionsHelps taxpayer
  Our Form 10B is years late. Who can condone the delay, and how long do I have to apply?
  Apply within three years from the end of the assessment year concerned. Delays up to 365 days are decided by the Principal Commissioner or Commissioner; delays beyond 365 days go to the Principal Chief Commissioner, Chief Commissioner or Director General. The circular covers Forms 9A, 10, 10B and 10BB for assessment year 2018-19 onwards.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.