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 held that late filing of Form 10B is a procedural lapse and cannot defeat exemption under Section 11. If the audit report is available before assessment or rectification, exemption must be allowed.
The case examined rejection of registration without affording a proper opportunity of being heard. The Tribunal ruled that deciding against the trust without confronting it on objections violates principles of natural justice. Key takeaway: procedural fairness is mandatory in section 12A proceedings.
The Tribunal ruled that registration cannot be cancelled for non-maintenance of separate books when that allegation was never put to the assessee. Authorities must specify the exact clause of specified violation relied upon.
The Tribunal held that exemption under section 11 cannot be denied once the delay in filing Form 10B stands condoned. The Assessing Officer was directed to verify and allow the exemption in accordance with law.
The Tribunal held that running coaching classes for substantial fees does not qualify as charitable education. In the absence of evidence of free or subsidized services, exemption under section 11 was rightly denied.
The Tribunal ruled that non-filing of Form 10B is a curable defect and cannot justify denial of exemption during processing. Section 143(1) cannot be used to decide debatable exemption issues.
The issue was whether a decree against an HUF can be executed against the Karta’s personal assets. The Bombay High Court held that a Karta has unlimited personal liability for unsatisfied HUF debts, permitting execution beyond HUF assets.
The Tribunal held that solar power generation under a CSR structure is not charitable when the dominant benefit accrues to a single corporate entity. The environmental activity must primarily benefit the public to qualify for Section 12AB registration.
The High Court held that exemption under Section 11 cannot be denied merely because Form 10 was filed belatedly. The key takeaway is that substantive tax benefits for charitable trusts prevail over procedural lapses.
The dispute concerned denial of exemption due to belated filing of Form-10B. ITAT held the delay was not fatal and directed fresh consideration in light of the CBDT circular.
