Section 11

Section 11 — the law in short

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

• ACIT v Ahmedabad Urban Development Authority Supreme CourtCuts both ways
  We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
  Only if the fees are pitched above cost. Charging on a cost or nominal mark-up basis is not trade, commerce or business; charges noticeably higher than cost are. Even permissible commercial activity must be carried on in the actual course of achieving the general public utility object, and receipts from it must stay within 20 per cent of total receipts.
• Ananda Social and Educational Trust v CIT Supreme CourtHelps taxpayerNo later treatment found
  Our trust was formed weeks ago and has done nothing yet. Can registration be refused for that?
  No. Registration cannot be refused merely because a newly formed trust has not started activities. 'Activities' includes proposed activities, so at the registration stage the Commissioner looks at whether the objects are genuinely charitable and whether the proposed activities are genuine.
• Queen's Educational Society v CIT Supreme CourtHelps taxpayerPartly overruled — read this first
  My school makes a surplus every year and puts it back into buildings and equipment. Does that mean it no longer exists solely for education?
  No. The Supreme Court held that a surplus ploughed back into the institution does not destroy the exemption. What matters is the predominant object: if the institution exists solely for education and not for profit, the fact that receipts exceed expenditure is beside the point. The Court set aside the Uttarakhand High Court's contrary judgment in Queen's Educational Society, approved the Punjab and Haryana, Delhi and Bombay High Court decisions, and restored the Tribunal's view. It reaffirmed Surat Art Silk Cloth, Aditanar and American Hotel and Lodging as the governing tests, while stressing that the thirteenth proviso requires the authorities to monitor actual application of income year by year. Read subject to a date, though: on 19 October 2022 the Supreme Court in New Noble Educational Society v Chief CIT disapproved the reasoning of this judgment and of American Hotel and Lodging so far as it pertains to the interpretation of 'solely', and held instead that all the objects of the institution must relate to imparting education, so the predominant-object test stated here is no longer the test for that word. New Noble para 78 directs that the law it declares operate prospectively.
• CIT v Dawoodi Bohara Jamat Supreme CourtCuts both ways
  The Commissioner has refused my trust registration under section 12AA because our objects are tied to one religious community — can he refuse registration on that ground?
  No, not at the registration stage on this reasoning. The Supreme Court held on 20 February 2014 that section 13 is an exception to sections 11 and 12, so whether it bites is examined when exemption is claimed, not when registration is decided. On the merits the Court corrected both sides. Section 13(1)(b) is not confined to trusts that are purely charitable; a composite religious and charitable trust is not outside it merely because it is composite. But on these objects — food served on community occasions, a madarsa, help to the needy — the benefit was not channelled to the Dawoodi Bohra community alone, so section 13(1)(b) was not attracted and the appeals were dismissed.
• ACIT v Saurashtra Kutch Stock Exchange Ltd Supreme CourtHelps taxpayer
  A binding decision that covers my point was never considered when my order was passed. Is that a mistake apparent from the record?
  Yes. The Supreme Court held that non-consideration of a decision of the jurisdictional High Court or of the Supreme Court can be a mistake apparent from the record, and upheld the Tribunal recalling its own order on that ground. The section actually applied was s.254(2); the same test - patent, manifest and self-evident - is the one used under s.154.
• CIT v Gujarat Maritime Board Supreme CourtHelps taxpayer
  My body is a statutory authority, not a trust under any public trust law. Can it still be registered as a charitable institution under section 12A?
  Yes. The Supreme Court dismissed the Revenue's appeal and held that the Gujarat Maritime Board was entitled to registration under section 12A. Its predominant purpose is the development of minor ports in Gujarat, its management and control lie essentially with the State Government, and sections 73 to 75 of its own statute show it has no profit motive and must apply its income to that purpose. That is an object of general public utility within section 2(15). Section 10(20) and section 11 operate in different spheres, so ceasing to be a local authority after the 2002 amendment did not preclude the claim. The Court was concerned with registration, not application of income.
• ACIT v Thanthi Trust Supreme CourtCuts both ways
  Our trust runs a business and puts the profit into its objects. Does s.11(4A) still deny the exemption?
  No, on this decision. The Supreme Court read the substituted s.11(4A), in force from 1 April 1992, as more beneficial to a trust than the sub-section it replaced, and held that a business whose income is used by the trust to achieve its objectives is a business incidental to the attainment of those objectives. The trust ran a newspaper, applied the income to education and relief of the poor, and kept separate books, and was held entitled to s.11 from assessment year 1992-93 onwards. Read the disposal whole: for the earlier years, decided under s.11(4A) as it stood before that substitution, the exemption for the newspaper income was refused.
• CIT v Nagpur Hotel Owners Association Supreme CourtHelps department
  My trust never filed the accumulation notice for the year. Can I file it now, after the assessment was completed, and still get the exemption?
  No. The Supreme Court held that the notice under section 11(2) must reach the Assessing Officer before he completes the assessment. The requirement is mandatory, and without the particulars the officer cannot know what income is being accumulated or for what purpose, so he cannot exclude it. Even if no valid time limit had been prescribed by the rules, it is reasonable to presume that compliance must come at some point before the assessment proceedings end. Allowing the notice afterwards would mean reopening the assessment, which the Act does not contemplate.
• CIT v Programme for Community Organisation Supreme CourtHelps taxpayer
  We spent most of our donations on our objects in the same year. The officer now says our 15 per cent accumulation is worked out on what was left over after that spending. Is it worked out on the receipts or on the balance?
  On the receipts. The Supreme Court dismissed the Revenue's appeal and left standing the Kerala High Court's answer: on the plain language of s.11(1)(a) the accumulation a trust is allowed is a percentage of its income derived from property held under trust, and the donations the trust received are that property. It is not a percentage of what survives after part of the income has been applied. The trust had received Rs 2,57,376 and applied Rs 1,70,369, leaving Rs 87,010. The Court held it could accumulate 25 per cent of Rs 2,57,376 and said it was unclear on what basis the Revenue contended for 25 per cent of Rs 87,010. The percentage is now 15, not 25.
• S.Rm.M.Ct.M. Tiruppani Trust v CIT Supreme CourtHelps taxpayer
  My trust filed Form 10 to accumulate income but then spent the money on a hospital building instead of buying government securities. Have I lost the exemption altogether?
  No. The Supreme Court held that a trust which fails the conditions of section 11(2) still keeps the whole of the exemption section 11(1)(a) gives it. Income actually applied to charitable purposes in India is exempt whether or not a declaration was filed, and buying a building to be used as a hospital is such an application. On top of that the trust may accumulate up to 25 per cent of its total income - the limit then in force - and claim exemption on that accumulation without investing it in government securities. Section 11(2) only lifts the ceiling; it does not cut down section 11(1).
• CIT v Kamla Town Trust Supreme CourtCuts both ways
  Our company trust builds quarters for our own workmen and staff. Is that a public charitable trust, and does a civil court decree rectifying the trust deed help for earlier years?
  It depends on the deed, and a rectification decree does not reach back. The Supreme Court held that under the 1945 rectified deed the trustees were obliged to build quarters in particular for the workmen, staff and other employees of the settlor company and its allied concerns, who may include the affluent. That made the reference to workmen in general illusory, so the object was not public charitable and the whole trust failed the wholly charitable test. Under the 1955 rectified deed the objects were wholly charitable. The second decree operated only from assessment year 1956-57. The assessing officer could not go behind the decree, but could construe the deed as rectified.
• Radhasoami Satsang v CIT Supreme CourtHelps taxpayer
  The department accepted your position for years and has now reversed it. Can it?
  Not without a material change. Res judicata does not strictly apply between years, but where a fundamental aspect running through several years has been found as a fact and allowed to stand, it should not be changed in a later year.
• Addl CIT v Surat Art Silk Cloth Manufacturers Association Supreme CourtHelps taxpayerSuperseded by amendment
  Our trade association promotes commerce in our industry, but the work it does throws up a surplus every year. Does the surplus stop it being charitable?
  No, not by itself. A five-judge Bench of the Supreme Court held that the test is whether the predominant object of the activity carried on in advancing an object of general public utility is to subserve the charitable purpose or to earn profit. Profit-making must be the end to which the activity is directed; it is not enough that the activity in fact results in profit. Where the dominant object is the charitable purpose, the character of the purpose is not lost merely because some profit arises. The exclusionary clause does not require the activity to be run so that it yields no surplus.
• Ahmedabad Rana Caste Association v CIT Supreme CourtHelps taxpayer
  Our trust benefits one caste. Can that be a charitable purpose at all?
  Yes. It is not necessary that the object benefit the whole of mankind or all persons in a country; it is enough that a section of the public, as distinguished from specified individuals, is intended to be benefited. The Supreme Court held that the members of the Rana caste of Ahmedabad — whether natives or admitted to the caste under custom or usage — are united by a quality that is impersonal, so they form a section of the public and the trust's objects were charitable.
• CIT v Andhra Chamber of Commerce Supreme CourtHelps taxpayer
  My trade association only helps its own trade and its members get a benefit from it — can it still be charitable?
  Yes. The Supreme Court held that promotion and protection of trade, commerce and industry is an object of general public utility and therefore a charitable purpose, even though the members of the chamber benefit incidentally. An object need not benefit all mankind; it is enough that a section of the public, defined by some common quality of a public or impersonal nature, is intended to be benefited. Rental income from the chamber's building, held under a legal obligation to apply it to those objects, was exempt. The Revenue's appeals were dismissed with costs.
• Swasth Foundation v CIT (Exemptions) High CourtHelps taxpayerNo later treatment found
  The Commissioner rejected my condonation application for late Form 9A for an old year. Was Form 9A even required then?
  Not before AY 2016-17. The Bombay High Court held that the requirement to file Form No. 9A to exercise the option under clause (2) of the Explanation to s.11(1) was introduced by the Finance Act 2015 with effect from 1 April 2016, so for AY 2015-16 there was no prescribed format and no delay capable of being condoned. Where the option had been exercised in time by stating it in the Form 10B audit report and in the return, the substantive requirement was met and the s.119(2)(b) rejection was quashed.
• 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.
• People's Mobile Hospitals v CIT (Exemption) High CourtHelps taxpayer
  Form 10 was 51 days late because our accountant left mid-year, but it was on the file before the return was processed. The Commissioner still refused to condone. What now?
  The Bombay High Court quashed the refusal and condoned the delay itself. Where the delay is short, unexplained by any wilful default, and the Form was on record when the return was processed, refusing condonation is a pedantic rather than a justice-oriented approach and produces genuine hardship within the meaning of s.119(2)(b).
• CIT (E) v IILM Foundation High CourtHelps taxpayerNo later treatment found
  Our trust pays a salary to its chairperson, who is a trustee. Does that cost us the s.11 exemption?
  No, provided the salary is no more than what the services are reasonably worth. Section 13(2)(c) is not a bar on paying a specified person at all: it deems a salary to be application for that person's benefit only to the extent it is in excess of what may reasonably be paid for the services, so a payment that is reasonable for the service is not caught by s.13(1)(c) at all. The Delhi High Court answered both questions of law against the revenue and dismissed its appeals. Note what was not in issue: the reasonableness of the Rs 16,20,000 salary had been found below and was not contested before the High Court, which recorded that there was no cavil about it, so the decision is on the legal point and not a finding on the facts of this trust's remuneration.
• Andhra Pradesh State Civil Supplies Corporation Ltd v ITO High CourtHelps taxpayer
  The trust held an investment that breaches s.11(5) read with s.13(1)(d). Does that cost us exemption on everything, or only on the income from that investment?
  Only on the income from that investment. The Telangana High Court read ss.11 and 13 together and held that the legislature did not intend the denial of s.11 to extend to the entire income; only the income from the investment made in violation of s.13(1)(d) is liable to tax. It agreed with the Bombay, Delhi and Karnataka High Courts, which had all taken that view.
• CIT (Exemptions) v Shree Sai Baba Sansthan Trust High CourtHelps taxpayer
  Our trust is religious and charitable and holds 80G approval. Can the officer tax our hundi collections under s.115BBC?
  No. Section 115BBC(2)(b) takes a trust created or established wholly for religious and charitable purposes out of the charge, except for a donation given with a specific direction that it is for a university or other educational institution or a hospital or other medical institution run by the trust. The Court held that whether the trust is religious and charitable is determined from the trust deed, and that s.80G registration is a separate and independent question which cannot be used to deny that character. Rs 159.12 crores of hundi collections out of Rs 228.25 crores of donations stayed outside s.115BBC(1).
• Paani Foundation v DCIT High CourtHelps taxpayerNo later treatment found
  The Assessing Officer has reopened an old year saying my trust could not claim provisioned expenditure as application because s.11 requires the sum to be actually paid. Does that rule apply to years before AY 2022-23?
  The Delhi High Court, at the notice stage, said it was prima facie unable to sustain the assumption of jurisdiction under s.148 on that reasoning, because the Explanation requiring a sum to be treated as applied in the previous year in which it is actually paid was inserted only by the Finance Act 2022 and would not govern AY 2017-18. This is an interim order in a writ petition that is still pending; there is no final adjudication.
• Bar Council of India v CIT (Exemption) High CourtHelps taxpayerNo later treatment found
  Our professional body has always claimed s.10(23A). We realised mid-assessment that we needed s.11 and filed Form 10 late. Can the Commissioner refuse to condone the delay?
  Not on the reasoning used here. The Delhi High Court set aside the Commissioner's refusal, holding that the explanation offered — that the body's officials had not noticed the amendments to ss.11 and 13 made by the Finance Act 2015 with effect from 1 April 2016 — was not one there was reason to disbelieve, and that no benefit could accrue to the body from delaying. The failure to claim accumulation in the return cannot itself be read as showing an intention not to file Form 10.
• CIT (E) v Hamdard National Foundation (India) High CourtHelps taxpayer
  The officer says we let our building to a related party below market rent. Is that by itself a breach of s.13(2)(b)?
  No, not by itself. The burden of showing that the rent was inadequate is on the Department, and the market rate is not the only yardstick. Where the rent charged was higher than the valuation the municipal corporation had adopted for house tax, and the officer's only material was enquiries from estate agents and figures picked off the internet, the Delhi High Court held that s.13(2)(b) was not attracted and the s.11 exemption stood.
• 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 (Exemptions) v Audyogik Shikshan Mandal High CourtHelps taxpayer
  Trust funds went to a trustee. Does the trust lose exemption on all its income or only that amount?
  Only that amount. Denial of exemption under s.11 is confined to the sum actually diverted in breach of s.13; s.13 withdraws the benefit in respect of the offending income or property, not for the trust as a whole.
• Greater Noida Industrial Development Authority v Union of India High CourtHelps taxpayer
  Our s.10(46) application has been rejected because we charge lease rent and fees. Does charging for what we do make us commercial and disentitle us?
  Not where the charge is for the regulatory and administrative functions the body is obliged to perform. The Delhi High Court held that a body satisfying clause (a) of s.10(46) does not lose the exemption under clause (b) merely because it charges and receives money as fee, reimbursement, rent or consideration for transfer of rights in property, provided those receipts are directly connected with and have a nexus to the functions it is mandated to perform. The rejection order was quashed and a notification directed.
• DIT (Exemption) v Charanjiv Charitable Trust High CourtHelps departmentSuperseded by amendment
  My trust paid an advance to a company in which the trustees are interested, under an agreement to buy land, and the deal was later cancelled. Is that a s.13(1)(c) violation even though no money went out in the year in question?
  Yes, on these facts. The Delhi High Court held that where trust funds remain with a s.13(3) person without interest or security, that is a direct use of the funds for the benefit of a prohibited person, and s.13(2)(a) makes clear that it is enough that the money continues to be lent during the previous year — no fresh advance in that year is needed. The agreements to sell were treated as a device to take the payments out of the word 'lent', and exemption under s.11 was denied for both years.
• 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.
• Institute of Chartered Accountants of India v DGIT (Exemptions) High CourtHelps taxpayerNo later treatment found
  My institution is a statutory regulator that charges fees for coaching and placement and ends up with a surplus — does that make it a trade or business under the proviso to section 2(15)?
  No. The Delhi High Court held that a body incorporated to regulate a profession, which imparts education and training as part of that statutory function, is not carrying on trade, commerce or business merely because it charges fees and generates a surplus. Coaching classes and campus placement interviews were held to be activities in furtherance of the Institute's main object, so they are neither business nor services rendered in relation to any trade, commerce or business. The orders refusing exemption were set aside and the Director General was directed to recognise the Institute under section 10(23C)(iv) for assessment years 2006-07 to 2011-12.
• DIT (Exemption) v Keshav Social & Charitable Foundation High CourtHelps taxpayer
  My trust could not produce all its donors. Can the Assessing Officer treat the donations as cash credits under section 68 and deny exemption under section 11?
  No, on these facts. The Delhi High Court dismissed the Revenue's appeal, holding that no substantial question of law arose. Section 68 had no application because the trust had itself disclosed the Rs.18,24,200 of donations as its income, and every receipt other than a corpus donation is income in a trust's hands. There was therefore full disclosure. The trust had filed a list of donors, and the failure to file a complete list or to produce the donors does not by itself support an inference that unaccounted money was being introduced as donations - particularly where more than 75% of the donations had admittedly been applied to charitable purposes and the trust was registered under section 12A.
• CIT v Rai Bahadur Bissesswarlal Motilal High CourtHelps taxpayer
  Is the list of defects in the Explanation to s.139(9) a closed list, so that the officer cannot call anything else a defect?
  No. The Calcutta High Court held that the defects specified in s.139(9) are illustrative and not exhaustive. The corollary is the one that helps the taxpayer: because the provision is a curative one, an omission such as the audit report of a trust not being filed with the return can be made good during the assessment proceedings, and the officer cannot then ignore the report or the return.
• Society for Human Transformation and Research v ITO (Exemptions) ITATHelps taxpayerNo later treatment found
  My trust gave interest-free or low-interest advances to entities connected with its trustees. The Assessing Officer has treated the interest not charged as a benefit to specified persons, disallowed it under s.40A(2)(a) and denied exemption on the whole income. Can he do that?
  Not on this record. Where the counterparties are themselves institutions registered under s.12A and s.80G and there is no material showing that any specified person derived a personal benefit, the transactions do not establish diversion of charitable funds for private benefit, and s.13(1)(c) is not attracted. Section 40A(2)(a) cannot be used at all: it disallows excessive or unreasonable expenditure paid to a related party in the course of business or profession, and does not authorise an addition for interest the trust failed to charge.
• Thailammal Charitable Trust v Exemption Ward, Salem ITATHelps taxpayerNo later treatment found
  The CIT (Exemptions) has revised my AY 2022-23 assessment under s.263 because the Assessing Officer did not check whether the expenditure funded by the loan had already been claimed as application. Was he obliged to check?
  No. For AY 2022-23, Explanation 4(ii) to s.11(1) simply postponed recognition of the application from the year of expenditure to the year of repayment, and imposed no further condition requiring the Assessing Officer to revisit the end use of the borrowing or to verify whether it had already been claimed. The further provisos imposing those conditions were inserted only by the Finance Act 2023 with effect from 1 April 2023, so the s.263 order, which read them into AY 2022-23, was quashed and the assessment restored.
• Humanitarian Hands v ITO (Exemptions) Ward-1, Bengaluru ITATCuts both waysNo later treatment found
  Our auditor filed Form 10BB when Form 10B was required for AY 2023-24, and CPC has taxed us under s.13(10). We filed the right form only in 2025 and the condonation application is still pending. What can the Tribunal do?
  The Tribunal remitted the matter to the Assessing Officer to pass an order in accordance with the outcome of the pending s.119(2)(b) condonation application before the CIT (Exemptions). It recorded that this was not a case of no audit report at all but of a report filed both belatedly and in the incorrect form, and that CBDT Circular No. 2/2024 did not rescue the trust because that circular only covered wrong-form reports furnished on or before 31 October 2023.
• 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.
• Gujarat Maritime Board v DCIT (Exemption), Ahmedabad ITATCuts both waysNo later treatment found
  The Assessing Officer says my statutory authority's port charges and lease rentals are trade or business, so the proviso to s.2(15) denies exemption. How is that tested after Ahmedabad Urban Development Authority?
  The size of the receipts and of the surplus is not the test. Applying the Supreme Court's framework in Ahmedabad Urban Development Authority, the Tribunal held that what matters is the statutory setting in which the receipts arise, the nature of the functions discharged, the manner in which the charges are fixed and regulated, and the destination of the surplus — and on that footing the Board continued to fall within 'advancement of any other object of general public utility' and remained entitled to exemption under ss.11 and 12.
• Saguna Rural Foundation v Exemption Ward 2(3), Mumbai ITATHelps taxpayerNo later treatment found
  CPC denied my s.11(2) accumulation because Form 10 was filed after the s.139(1) due date, and the CIT(A) said s.13(9) settles it. Can the Tribunal still help me?
  Yes. Following the jurisdictional High Court in CIT v Sakal Relief Fund, the Mumbai Tribunal held that filing Form No. 10 before completion of assessment satisfies s.11(2), so a s.143(1) denial founded only on the s.139(1) due date cannot stand. The matter was restored to the Assessing Officer for the limited purpose of checking that the stated purpose of accumulation matches the objects and is backed by a trustees' resolution, with an express direction not to deny exemption on merely technical grounds.
• CDO Jain Education Society v ACIT (CPC) ITATHelps taxpayerNo later treatment found
  My institution filed its audit report on time but in Form 10B when Form 10BB was the right form, and the CPC has denied the exemption and raised a demand on the gross receipts. Is filing the wrong audit form fatal?
  No. Where the accounts were in fact audited by a chartered accountant and an audit report was uploaded within time, the choice of the wrong form is a procedural lapse and not a failure of the substantive condition, and exemption cannot be denied on that ground alone. The Tribunal set aside the appellate order and directed the Assessing Officer to verify substantive compliance and, if satisfied, to condone the procedural lapse, allow the exemption and reduce the demand to nil.
• DCIT (Exemptions) v Society of the Servants of the Holy Spirit ITATHelps taxpayerNo later treatment found
  CPC has taxed our AY 2017-18 accumulation in AY 2023-24 saying the Finance Act 2022 took away the sixth year. We spent the money in FY 2022-23. Is the amendment good against an old accumulation?
  No, on this Tribunal's view. Where the accumulation was made in AY 2017-18 under a law that allowed utilisation within five years and also in the immediately following year, the Finance Act 2022 amendment to s.11(3) — though applicable from AY 2023-24 — cannot be read so as to take away the vested right accrued at the time of accumulation. The addition of Rs.29,04,39,083 made in the s.143(1) intimation was deleted and the Revenue's appeal dismissed.
• IMC Trust v ITO (Exemption) Ward 1(3), Mumbai ITATCuts both waysNo later treatment found
  My Form 10 described the purpose of accumulation in the words of the trust's objects. The Assessing Officer says that is not a 'specific purpose'. Is he right?
  On these facts the Tribunal agreed with him: a purpose stated as 'hold seminars/workshops/conferences/buyers sellers meets/etc. to promote trade and develop knowledge' was not specified with the required clarity and precision, and the trust had not demonstrated the specific purpose for which the accumulated funds were to be used. But the Tribunal did not tax the accumulation — following the Gujarat High Court in Bochasanwasi Shri Akshar Purushottam it restored the matter to the Assessing Officer to verify how the money was actually spent within the five years.
• School Managing Society Capt. Gurcharan Singh v DCIT/ITO (Exemptions) ITATHelps taxpayerNo later treatment found
  We missed the s.12AB re-registration, CPC has taxed our entire gross receipts, and we never claimed s.10(23C)(iiiad) in the return. Can we claim it now, in appeal?
  Yes, on these facts. The Amritsar Bench held that a school whose annual receipts are well below the prescribed limit is legally entitled to s.10(23C)(iiiad) even though the claim was made for the first time before the appellate authorities, because it is a question of law arising from material already on record. The sub-clause requires no registration and no approval, so the loss of s.11 for want of s.12AB registration does not touch it.
• Jhaverbhai Patel Research Centre v CIT (Exemptions) ITATHelps taxpayer
  Our Form 10AB went in 38 days after the Charity Commissioner's order instead of 30, and the CIT (Exemptions) rejected it on that ground and on how we had spent our money. Is there a way back?
  Yes, though what you get is a remand and not registration. The Mumbai Tribunal held that the delay should not be visited on the trust — the Charity Commissioner's order had reached it late, and measured from receipt the application was within thirty days — and that the authority must adopt a liberal and justice-oriented approach. It also rejected the second ground, holding that a scholarship paid in India, in rupees, to an Indian student who then studies abroad is not an application of income outside India. It did not itself pass an order condoning the delay: it set aside the CIT (Exemptions)'s order, restored the application to him to be decided on its merits, and allowed the appeal for statistical purposes.
• Infosys Green Forum v ITO (Exemptions) ITATHelps department
  We set up a section 8 company to hold a CSR asset that supplies its output back to the founder company. Will it get registration under s.12AB?
  On these facts, no. The Bangalore Tribunal accepted that running a solar power plant is preservation of the environment and so falls within s.2(15). But the plant's entire output went to the founder, at a rate below what the founder would otherwise have paid, with the founder keeping all the green benefits. There being no benefit to the public or to a section of the public, the dominant object was the founder's own, and registration under s.12AB and approval under s.80G were both refused.
• JITO Incubation and Innovation Foundation v CIT (Exemption), Mumbai ITATHelps taxpayerNo later treatment found
  The CIT(E) refused my Form 10AB because the memorandum says the objects may be carried out in India 'and elsewhere'. Is a possible application of funds outside India a ground to refuse registration?
  No. What the Commissioner has to satisfy himself about at the registration stage under s.12AB(1)(b) is the objects of the trust, the genuineness of its activities and compliance with other laws material to achieving its objects. Whether income has actually been applied within or outside India is a question that arises only when exemption under s.11 is claimed, and refusing registration on that ground is premature.
• Haji Pir Mohmad Yusuf Waqf v CIT (Exemption), Ahmedabad ITATHelps departmentNo later treatment found
  The CIT(E) has rejected my Form 10AB and cancelled my provisional registration on the ground that my objects benefit only one religious community. What is the Revenue's case and how does it succeed?
  It succeeds where the objects on their face are confined to one community and the trust files no evidence that it has not incurred expenditure on those objects. The Tribunal dismissed the appeal, finding no infirmity in an order which rejected the Form 10AB application under s.12A(1)(ac)(iii) and cancelled the provisional registration on the footing of a specified violation under clause (d) of the Explanation to s.12AB(4).
• CMR Engineering Educational Society v DCIT ITATHelps taxpayerNo later treatment found
  After a search the PCIT (Central) has cancelled my society's registration under s.12AB(4) for a 'specified violation', relying on loose sheets and statements. Does he have to prove one of the listed violations, or is a general finding of misuse enough?
  He has to prove one of the listed violations. Section 12AB(4) as amended by the Finance Act 2022 is not a general power to withdraw registration: cancellation can follow only on the occurrence of one or more of the 'specified violations' defined in the Explanation to that sub-section, and the onus of establishing that occurrence lies on the Department. Suspicion, however strong, will not do.
• MAA Sharda Kothari Foundation v CIT (Exemption), Ahmedabad ITATHelps taxpayerNo later treatment found
  The CIT(E) rejected my Form 10AB as premature because the trust had not yet started activities or received donations. Can he do that?
  No — not on that ground alone. Section 12A(1)(ac)(iii) fixes only the outer date by which a provisionally registered trust must apply for regular registration; it contains no bar on applying earlier, and rejecting an application as premature because activities had not commenced by the date of filing is not in accordance with the legislative intent of that clause read with s.12AB(1)(b).
• Bhagwandas Zalani Family Charitable Trust v CIT (Exemption), Bhopal ITATHelps taxpayerNo later treatment found
  My trust filed Form 10BD for the whole financial year although its s.80G provisional approval began mid-year, so Forms 10BE were generated for pre-approval donations too. The CIT (Exemption) has refused final registration and approval on that ground. Is that a valid reason?
  Not on its own. The Indore Bench held that a wrong filing of information in Form 10BD does not mean the trust's activities are not genuine, and that the requirement was new from 1 April 2021 with sub-rule (3)(i) of Rule 18AB in terms speaking of all donations of the same nature paid during the financial year, so a trust could honestly have read it as covering the whole year. Because the trust filed fresh evidence — declarations from donors that they had never been given the Forms 10BE and had claimed no deduction — the matter was remanded for fresh consideration.
• BK Educational and Welfare Society v ITO (Exemptions) ITATHelps taxpayer
  The Assessing Officer has added our cash donations under s.68 as unexplained credits. Is s.68 the right provision at all for a charitable trust's donations?
  Not where the donor is identified and confirms, and not under s.68 for the amount he cannot prove either. The Pune Tribunal deleted the addition for the donation whose donor had confirmed it on oath and stated his source, holding the burden had shifted to the Revenue. For the donation the trust could not prove, it did not sustain the s.68 addition; it treated the sum as an anonymous donation and applied s.115BBC, so that only the excess over the Rs 1 lakh limb of the threshold — Rs 10,000 out of Rs 1,10,000 — was taxable.
• Shree Maheshwari Vidyalaya v ITO ITATHelps taxpayerNo later treatment found
  The CPC adjusted your return under s.143(1)(a) without warning. Can it do that?
  No. An adjustment under s.143(1)(a) requires a prior show cause notice. Made without one, a Rs 4.20 crore disallowance was deleted — and on the facts the audit report had in any event been filed on time.
• ACIT v Shri Dadasaheb Gawai Charitable Trust ITATHelps taxpayer
  The Assessing Officer has taxed all our donations under s.115BBC because some donors did not turn up when summoned. What does the section actually require us to keep?
  A record of the identity of the donor showing name and address, and such other particulars as may be prescribed. The Nagpur Tribunal held that a trust which maintains names, addresses, PAN and Aadhaar details of its donors has discharged its burden, and that s.115BBC cannot be invoked merely because the Assessing Officer doubts the donors. Where summonses went unanswered or came back unserved, it was for the Assessing Officer to ask the trust to produce those donors before treating the whole of the donations as anonymous.
• South India Club v ITO ITATCuts both ways
  CPC denied my trust's section 11 exemption in a section 143(1) intimation for a late Form 10B, and a regular assessment has since been completed and separately appealed. What happens to my appeal against the intimation, and to the demand in it?
  It becomes infructuous. The Delhi Bench of the Tribunal held that when the return has been taken up in regular assessment the intimation loses its individuality and merges with the regular assessment, so the appeal against the intimation no longer serves any purpose. The first appellate authority was right to say so. But he was wrong to go further and record findings on the section 11 claim on merits when he knew an appeal against the regular assessment on the same issue was pending; the Tribunal said in terms that he should have stopped. The exemption question itself was not decided here.
• Versova Kokni Sunni Jamat Trust v CPC ITATHelps taxpayerJudgment not reachable
  We have no 12A registration. Is a corpus donation given for buying property taxable in our hands?
  No. A voluntary contribution made with a specific direction that it form part of the corpus is a capital receipt, and that character does not depend on the trust holding registration under s.12A or s.12AA. The addition of Rs 8,99,811 was deleted.
• Gram Sewa and Viklang Shayta Sanstha v DCIT ITATHelps taxpayerNo later treatment found
  The trust's Form 10B did not go with the return and the exemption has been refused. Does filing it in answer to the s.139(9) notice save the claim?
  Yes. The Tribunal held that the authorities were not justified in refusing the exemption under s.11 where the assessee had filed the audit report in answer to the defect notice under s.139(9) and before the assessment proceedings were completed. A highly technical view of the timing defeats the purpose of the requirement where substantive compliance has been made.
• Educational Institute of American Hotel and Motel Association v CIT Advance RulingHelps taxpayerSuperseded by amendment
  A foreign non-profit runs hospitality courses in India through a branch and charges licence fees and course fees to Indian institutes. Is that income exempt as an educational institution, and does a surplus destroy the exemption?
  Yes, on the law as it then stood. The Authority ruled that the Educational Institute of American Hotel and Motel Association, a US non-profit working in India under a memorandum of understanding with the National Council of Hotel Management and Catering Technology, was entitled to exemption under s.10(22) on income from conducting courses and certification programmes, providing educational and training materials, conducting seminars and workshops, and training in-house faculty. Its objects barred any distribution of earnings to members or directors even on dissolution, and the activities under its licence agreements and memoranda were purely educational or ancillary to education. Because the first question was answered in the applicant's favour, the question on s.11 became academic. Section 10(22) has since been omitted from the Act.
• CBDT Circular No. 2/2024 — audit report filed in the wrong form CBDT Circulars & InstructionsHelps taxpayerNo later treatment found
  For AY 2023-24 my trust filed Form 10B when Form 10BB was the right form. Is there a CBDT relaxation, and what exactly does it cover?
  Yes, but it is narrow. By Circular No. 2/2024 dated 5 March 2024 the CBDT allowed trusts and institutions that had furnished an audit report on or before 31 October 2023 in Form No. 10B where Form No. 10BB was applicable, and vice versa, to furnish the audit report in the applicable form for AY 2023-24 on or before 31 March 2024. It covers only AY 2023-24, only a wrong-form filing that was itself made by 31 October 2023, and the window it gave has closed.
• Statutory position — s.164: the maximum marginal rate where beneficiaries' shares are indeterminate, and every proviso that takes a trust out of it, in sequence CBDT Circulars & InstructionsCuts both ways
  Our discretionary trust has been charged at the maximum marginal rate under section 164 because the beneficiaries' shares are not fixed. What exactly takes a trust out of that rate, and does it help that the trust was created by my father's will?
  Section 164(1) charges the relevant income at the maximum marginal rate where income for which a section 160(1)(iii) or (iv) representative is liable is not specifically receivable on behalf of any one person, or where the individual shares of the persons for whose benefit it is receivable are indeterminate or unknown. The FIRST PROVISO takes a case out of that rate — not into exemption, but into tax 'as if it were the total income of an association of persons' — in four situations, and only four: (i) none of the beneficiaries has any other income chargeable under the Act exceeding the maximum amount not chargeable to tax in the case of an association of persons, and none is a beneficiary under any other trust; (ii) the relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; (iii) the relevant income is receivable under a trust created before 1 March 1970 by a non-testamentary instrument which the Assessing Officer is satisfied was created bona fide exclusively for the benefit of the settlor's relatives, or, where the settlor is a Hindu undivided family, of the members of that family, in circumstances where they were mainly dependent on the settlor for support and maintenance; or (iv) the relevant income is receivable by trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in that business or profession. The SECOND PROVISO then cuts all four down where there is business income: where the income of a section 160(1)(iv) trustee consists of, or includes, profits and gains of business, the first proviso applies only if those profits and gains are receivable under a trust declared by a person by will exclusively for the benefit of a relative dependent on him for support and maintenance, and that trust is the only trust so declared by him.

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.