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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Delhi High Court held that non-granting of exemption claimed under section 11 and 12 of the Income Tax Act due to delay of 16 days in filing audited report in From 10B not justified since the due to inadvertence error on the part of the auditor / tax professional.
ITAT Mumbai held that delay in filing Form 10B does not invalidate a trust’s exemption claim if the form is submitted before assessment completion and the error is rectified.
ITAT Kolkata held exemption u/s 11 or 10(23C) cannot be denied at 143(1) stage for delayed Form 10B/10BB filing when reports were later furnished.
Understand the taxability, registration, and exemption provisions for charitable and religious trusts under Sections 11–13, including rules for income accumulation, audit, and cancellation.
The Court reiterated that mere drafting labels cannot convert a settlement clause into an arbitration agreement. Since Clause 8.28 only contemplated conciliation and allowed recourse to courts, it failed to reflect intent for binding adjudication by an independent arbitrator.
ITAT Pune ruled that the late filing of the Form 10B audit report is not fatal to the charitable trust exemption if filed before assessment completion. The court reversed the disallowance of application of income solely based on procedural delay.
Karnataka High Court held that issuance of reassessment notice under section 148 of the Income Tax Act after expiry of statutory period of limitation as prescribed under section 149 of the Income Tax Act is liable to be quashed. Accordingly, petition allowed.
Since the Form 10B was filed along with the return of income and within the due date of filing the return of income, the delay in filing the Form 10B could not be a ground for denial of the exemptions under Sections 11 and 12.
ITAT Kolkata ruled that a charitable trust’s exemption under Section 11/10(23C) cannot be denied for technical lapse of belatedly filing Form 10B/10BB. Audit report was available when return was processed.
ITAT Pune reaffirmed that 15% accumulation permitted under Section 11(1)(a) must be computed on gross receipts. Revenue’s argument restricting it to surplus was rejected, relying on consistent rulings of Supreme Court and High Courts.
