Income received from a charitable/religious trust will be tax-exempt under Section 11, provided that the activity being performed is incidental to the attainment of objectives set by the trust/institution, and separate books of account are maintained by the particular trust/institution pertaining to the business. In this article, we look at some of the major exemptions provided under Section 11 of the Income Tax Act.
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The Tribunal ruled that exemption under Sections 11 and 12 cannot be denied by aggregating separate shareholdings to invoke Section 13(2)(e). It held that no office bearer individually held substantial interest, making the addition unsustainable.
ITAT Pune held that time limit of six months for filing an application u/s. 80G(5) of the Income Tax Act applies only to trusts which have not started charitable activities and not to trust which has already started charitable activities before obtaining Provisional registration. Accordingly, application held to be valid and maintainable.
The ITAT held that Section 43B applies even if interest is capitalised to work-in-progress instead of claimed as revenue expenditure. The Assessing Officer was justified in reducing WIP for unpaid interest to a Scheduled Bank.
The High Court dismissed Revenue appeals after holding that the assessee’s activities were charitable in nature, making it eligible for exemption under Section 11. The ruling followed the Supreme Court’s precedent and settled multiple connected tax issues.
ITAT Hyderabad held only ₹1.24 crore accumulation from A.Y. 1994-95 survives for possible Section 11(3) taxation; earlier years’ accumulations were non-existent, and matter restored to CIT(A) for limited verification.
ITAT Lucknow held that exemption under Section 10(23C)(iiiad) cannot be denied merely due to incorrect section selection in the ITR. The matter was remanded to the AO to examine eligibility on merits after proper hearing.
The Court quashed assessment and appellate orders for denying exemption on technical grounds. It emphasised that appellate proceedings are a continuation of assessment and must rectify errors.
The Tribunal held that scholarship granted in Indian Rupees to an Indian student for study abroad is not expenditure outside India and restored the 12AB registration application.
The Tribunal held that actuarially valued provisions mandated by law constitute application of income under Section 11 and cannot be disallowed merely due to absence of cash outflow.
The Tribunal set aside denial of exemption where authorities taxed interest and other receipts without examining eligibility under Section 11. The issue was remanded for fresh adjudication.
