{"id":7927,"date":"2020-05-05T18:19:52","date_gmt":"2020-05-05T12:49:52","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=7927"},"modified":"2021-02-03T16:58:09","modified_gmt":"2021-02-03T11:28:09","slug":"application-of-income-conditional-precedent-as-to-section-11-exemption","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/","title":{"rendered":"Application of Income Conditional Precedent as to section 11 Exemption"},"content":{"rendered":"\n<p class=\"has-drop-cap\">On an essential note of taxation, any person earning income must pay taxes, which is generally known as <strong>Income<\/strong>&nbsp;<strong>Tax<\/strong>. Nevertheless, the Income Tax Act has provided incomes to be exempt from. Income of charitable trusts\/<a href=\"https:\/\/corpbiz.io\/ngo-registration\"><strong>NGO<\/strong><\/a> gets exempt, for which the reasoning behind has already deliberated in the previous Blogs.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#What_are_the_classifications_of_exemptions_allowable_to_charitable_trusts_and_other_similar_institutions_under_the_Income_Tax_Act\" >What are the classifications of exemptions allowable to\ncharitable trusts and other similar institutions, under the Income Tax Act?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#What_are_the_main_sections_that_grant_an_exemption_to_the_Income_of_trustsNGO\" >What are the main\nsections that grant an exemption to the Income of trusts\/NGO?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#What_is_Section_11_of_the_Income_Tax_Act_1961_all_about\" >What is Section 11\nof the Income Tax Act, 1961, all about?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#What_happens_to_the_Voluntary_Contributors_when_those_arent_believed_to_be_%E2%80%9CIncome%E2%80%9D_under_section_11\" >What happens to the\nVoluntary Contributors when those aren&#8217;t believed to be &#8220;Income&#8221;\nunder section 11?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#What_are_the_viewpoints_saying-_voluntary_contributions_can_get_treated_as_income\" >What are the\nviewpoints saying- voluntary contributions can get treated as income?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#Does_Section_114A_need_to_be_fulfilled_to_avail_Section_11_exemption\" >Does Section 11(4A)\nneed to be fulfilled to avail Section 11 exemption?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#What_does_Budget_2020_proposes_exemption_under_section_11_for_Trusts_or_institutions\" >What does Budget\n2020 proposes exemption under section 11 for Trusts or institutions?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/application-of-income-conditional-precedent-as-to-section-11-exemption\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_classifications_of_exemptions_allowable_to_charitable_trusts_and_other_similar_institutions_under_the_Income_Tax_Act\"><\/span>What are the classifications of exemptions allowable to\ncharitable trusts and other similar institutions, under the Income Tax Act?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>They can be categorized into three categories. The categories are:-<\/strong><\/em><\/p>\n\n\n\n<p><strong>Classification 1 &#8211; Blanket Exemptions: &#8211; <\/strong>The un-monitored and primary blanket tax exemptions are as follows:-&nbsp;<\/p>\n\n\n\n<ul><li>The\nEducational institutions\/hospitals entirely or substantially financed by\ncentral\/state Government [10(23C)(iiiab),(iiiac)]&nbsp;<\/li><li>The\nEducational institutions\/hospitals with aggregate annual income receipts below\nRs. l crore. [10(23C)(iiiad) and (iiiae)]&nbsp;<\/li><\/ul>\n\n\n\n<p><strong>Classification 2 &#8211; Exemptions with\nsome restrictions&nbsp;<\/strong><\/p>\n\n\n\n<ul><li>The\nCharitable Funds or institution withstanding throughout India\/States\n[10(23C)(iv)] 80&nbsp;<\/li><li>Public\nreligious and charitable trust or institution under section [10(23C)(v)]<\/li><\/ul>\n\n\n\n<p><strong>Classification 3- Exemptions with\nfull restrictions&nbsp;<\/strong><\/p>\n\n\n\n<ul><li>Public\nreligious, charitable trusts including any legal obligations [under Sections 11\nto 13]<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_main_sections_that_grant_an_exemption_to_the_Income_of_trustsNGO\"><\/span>What are the main\nsections that grant an exemption to the Income of trusts\/NGO?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The two main sections that grant an exemption to the income of trusts are&nbsp;<strong>&#8216;Section 11&#8217; and &#8216;Section 12&#8217;<\/strong>&nbsp;<strong>of the IT Act, 1961<\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/_layouts\/15\/dit\/Pages\/viewer.aspx?grp=Act&amp;cname=CMSID&amp;cval=102120000000100000&amp;searchFilter=[%7B%22CrawledPropertyKey%22:1,%22Value%22:%22Act%22,%22SearchOperand%22:2%7D,%7B%22CrawledPropertyKey%22:0,%22Value%22:%22Income-tax%20Act,%201961%22,%22SearchOperand%22:2%7D,%7B%22CrawledPropertyKey%22:29,%22Value%22:%222019%22,%22SearchOperand%22:2%7D]&amp;k=&amp;IsDlg=0\"><strong>[1]<\/strong><\/a><\/sup>. Furthermore, apart from these two sections, Section 10(23C) also exempts the income of establishments operating in the field of &#8216;<strong>education or medical relief.&#8217;<\/strong>&nbsp;They should exist solely for &#8216;<strong>charitable purposes&#8217;<\/strong> and not for profit and even income of institutions like universities, colleges, etc. <\/li><li>As the majority of the charitable trusts run \u2018educational institutes and\/or hospitals,&#8217; this is a relevant section from their overview. In addition to these two sections, there is a significant section, <strong>Section 80G<\/strong>&nbsp;of the Act, which grants&#8217;&nbsp;<strong>tax exemption to the donor&#8217;<\/strong>&nbsp;in respect of the donation\/gifts given by him to a trust &#8216;recognized&#8217; under this particular section. It gets more comfortable for a Trust to get donations when it gets recognized under Section 80G of the Act.&nbsp;<\/li><li>In furtherance to these sections, Section&nbsp;<strong>35(1) (ii)<\/strong>&nbsp;allows the deduction of &#8216;<strong>expenditure on scientific research,&#8217;<\/strong>&nbsp;while section&nbsp;<strong>35AC<\/strong>&nbsp;allows &#8216;<strong>expenditure on eligible projects&#8217;<\/strong>&nbsp;or policies\/schemes. More or less, the charitable trusts or institutions use these two sections. Nevertheless, the system of these two sections is not similar to the exemptions for the charitable trust, as these two sections haven&#8217;t considered in this treatise yet.&nbsp; <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Section_11_of_the_Income_Tax_Act_1961_all_about\"><\/span>What is Section 11\nof the Income Tax Act, 1961, all about?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 11\nlays down all the specifications of statutory provisions for exempting &#8216;<strong>Income from property&#8217;<\/strong>&nbsp;held\nfor charitable\/religious purposes. Moreover, the schemes of this section are as\nfollows:-&nbsp;<\/p>\n\n\n\n<ul><li><strong>Section 11(1)<\/strong> defines the types of income that shall not get excluded in the\nTotal Income of the person for the preceding year. This income comprises income\nresultant from property held under trust entirely for charitable or religious\npurposes to the extent such income gets applied for these purposes in\nIndia.&nbsp; <\/li><li>In cases where\nincome is not involved but stored or set apart for application, the extent to\nwhich such Income not <strong>more\nthan 15%<\/strong> of the revenue from such property, is also held as\nexempt. This section also contains income in the form of voluntary\ncontributions forming &#8216;<strong>a\ncorpus of the trust&#8217;<\/strong>&nbsp;or institution to be exempt.&nbsp;<\/li><li><strong>Section 11(1 A)<\/strong>&nbsp;describes the treatment given to the capital receipts\narising out of the &#8216;<strong>transfer\nof capital assets.&#8217;&nbsp;<\/strong>The Transfer should be for the being\nproperty held under trust entirely for religious\/charitable purposes as per the\nAct.&nbsp;<\/li><li><strong>Section 11(1B)<\/strong>&nbsp;is a mandatory provision in terms of the income covered\nunder clause <strong>2 of\nsubsection 1<\/strong>.&nbsp;<\/li><li><strong>Section 11(2)<\/strong> describes the mode of accumulation or setting apart of income\nin case <strong>85% of the income<\/strong>&nbsp;is\nnot used for charitable purposes.&nbsp;<\/li><li><strong>Section 11(3)<\/strong>&nbsp;is determined to be another deeming provision. It\nspecifies that:-&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<ol><li>Income referred\nto in subsection (2) &#8216;<strong>applied\nfor another&#8217;<\/strong>&nbsp;than charitable purposes,&nbsp;<\/li><li>The income that\nceases to be collected\/accumulated or &#8216;<strong>set\napart&#8217;<\/strong>&nbsp;for the application;&nbsp;<\/li><li>The income which\nceases to persist as &#8216;<strong>invested\nor deposited&#8217;<\/strong>&nbsp;in the forms or modes specified in section\n11(5),&nbsp;<\/li><li>Income that is\npaid or attributed to any other trust or institution shall believe to be the\nincome of the person for the previous year.<\/li><\/ol>\n\n\n\n<ul><li><strong>Section 11 (3A)<\/strong>&nbsp;authorizes the assessing officer to&nbsp;<strong>overlook the default<\/strong>&nbsp;of\nthe assessee as mentioned above in receipt of Interest\/Income.<\/li><li><strong>Section 11(4)<\/strong>&nbsp;clarifies that property held under trust includes a&nbsp;\u2018<strong>business undertaking\u2019<\/strong> so\nheld by the institutions. It also empowers assessing officer to regulate and\ndetermine the income of such &#8216;business undertaking&#8217; as per the IT Act. In cases\nwhere the income determined by the AO is &#8216;<strong>more than the Income&#8217;<\/strong>&nbsp;as shown by the\ntrust, then the excess shall get considered to get applied to purposes other\nthan charitable or religious purposes.&nbsp;<\/li><li><strong>Section 11(5)<\/strong> lays down the forms and methods in detail for investing or depositing the accumulated income. <strong>Section 11(5) (xii)<\/strong>&nbsp;refers to any &#8216;other type&#8217; or mode of&nbsp;<strong>investment or deposit<\/strong>&nbsp;as may get approved. Therefore, leaving a route open for the Government to comprise any further ways of investment as deemed fit. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_happens_to_the_Voluntary_Contributors_when_those_arent_believed_to_be_%E2%80%9CIncome%E2%80%9D_under_section_11\"><\/span>What happens to the\nVoluntary Contributors when those aren&#8217;t believed to be &#8220;Income&#8221;\nunder section 11?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>According to the\ncase&nbsp;<strong>&#8220;ManasSewaSamiti<\/strong>&nbsp;<strong>v.<\/strong>&nbsp;<strong>Additional Commissioner of\nIncome-tax,&#8221;&nbsp;<\/strong>it deliberates that section 11(1)\ndiscusses the exemptions accessible to charitable organizations. Therefore,\nwhen we ponder upon income under section 11(1), we consider the &#8216;<strong>incomes which are eligible for\nexemptions&#8217;<\/strong>&nbsp;subject to the provisions of sections 11, 12\n&amp; 13 of the Act.<\/li><li>Section 11(1)(d)\ndebars&nbsp;<strong>voluntary\ncontributions received towards<\/strong> the corpus from the scope of\nincome under section 11(1) of the Act. The <strong>marginalization of voluntary donations<\/strong>&nbsp;to\nthe corpus creates an implied openness towards other voluntary contributions.\nThough section 11 does not speak of &#8216;voluntary contribution&#8217; other than\ntowards&nbsp;<strong>corpus<\/strong>.&nbsp;<\/li><li>It is&nbsp;<strong>section 12(1),<\/strong>&nbsp;which\ndelivers that \u2018voluntary contributions\u2019 would be believed to be income derived\nfrom <strong>property for<\/strong>&nbsp;section\n11. By the name speaks clearly, &#8216;Voluntary contributions&#8217; do not fall in the\ngroup of &#8216;i<strong>ncome<\/strong>,&#8217;\nlike other incomes. Consequently, those incomes have been believed as income by\n<strong>section 12(1)<\/strong>&nbsp;of\nthe Act.&nbsp;<\/li><li>However, for\nsection 11(1), income means the &#8216;<strong>real\nincome,&#8217;<\/strong>&nbsp;which has been established by the assessee. It\nshall be calculated not in agreement with the provision of the Act but unity\nwith the standard rule of accountancy. It should be in a commercial sense\nwithout mentioning to the head of the incomes stated under section 14.<\/li><li>Further, it got\nclarified that where the trust establishes income from &#8216;<strong>house property,&#8217;<\/strong>&nbsp;&#8216;<strong>interest from securities,&#8217;<\/strong>&nbsp;&#8216;<strong>capital gains,&#8217;&nbsp;<\/strong>and&nbsp;<strong>other<\/strong>&nbsp;sources, the\nword income should get understood in its commercial sense, which is known as\n&#8216;book of income.&#8217; Nevertheless, the principles of &#8216;<strong>commercially determining income<\/strong>&#8216;\nare not relevant as the voluntary contributions are apprehensive since they get\ndeemed incomes. Therefore, voluntary contributions have to get understood in\nthe head of section 12(1), alongside case laws which are accessible for our\nreference.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_viewpoints_saying-_voluntary_contributions_can_get_treated_as_income\"><\/span>What are the\nviewpoints saying- voluntary contributions can get treated as income?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Following\nthe&nbsp;<strong>section 12(1),<\/strong>&nbsp;any voluntary contributions (for section\n11) gained by a trust created solely for charitable or religious purposes are\nbelieved to be income introducing from property held under trust wholly for\ncharitable or religious purposes.<\/li><\/ul>\n\n\n\n<ul><li>On the other hand, &#8216;<strong>voluntary contribution&#8217;&nbsp;<\/strong>received with a detailed direction, intending to form part of the &#8216;<strong>corpus<\/strong>&#8216; of the trust\/NGO or institution, shall not be incorporated in income for section 11. In short and crisp, voluntary contributions other than those headed for &#8216;<strong>corpus specific direction&#8217;<\/strong> gets considered as income.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-21.png\" alt=\"voluntary contributions can get treated as income\" class=\"wp-image-7929\" width=\"503\" height=\"496\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-21.png 672w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-21-300x296.png 300w\" sizes=\"(max-width: 503px) 100vw, 503px\" \/><\/figure><\/div>\n\n\n\n<ul><li>According\nto the case &#8220;<strong>Padmaraje R. Kadambande v. C.I.T. [1992] 195 ITR 877<\/strong>,&#8221;\nit says that the addition of&nbsp;<strong>section 2(24)(iia)<\/strong>&nbsp;along with&nbsp;<strong>section\n12(1)<\/strong>&nbsp;has shaped a &#8216;<strong>statutory assumption&#8217;<\/strong>&nbsp;which considers\nvoluntary contribution as an income. Therefore, it can say that the donations\nestablished from several donors, deprived of carrying any specific direction,\ni.e., &#8216;<strong>not being corpus donations,&#8217;<\/strong>&nbsp;would fall under &#8216;Voluntary\nContributions&#8217; and believed to be income.<\/li><\/ul>\n\n\n\n<ul><li>According to the case &#8220;<strong>The Madras High Court in&nbsp;<em>C.I.T.<\/em>&nbsp;v. A.M.M. Arunachalam Educational Society 243 ITR 229<\/strong>&#8221; it says that the assessee, which had the object of running in the succession of an educational institution and a School, was qualified for exemption under <strong>section 10(22) (now Section 10(23C).<\/strong>&nbsp;It got deliberated on the ground that a society that runs a school could be preserved as an &#8216;<strong>educational institution&#8217; by<\/strong>&nbsp;itself, ensuing the verdict in &#8220;<strong>Aditanar Educational Institution vs. Addl.CIT<\/strong>&nbsp;224 ITR 310 (S.C.)&#8221;.<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/medical-relief-under-income-tax\/\">Medical Relief under Income Tax: An Updated Overview\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Does_Section_114A_need_to_be_fulfilled_to_avail_Section_11_exemption\"><\/span>Does Section 11(4A)\nneed to be fulfilled to avail Section 11 exemption?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Yes,<\/strong>&nbsp;Section 11(4A) needs to get\nfulfilled to avail sections 11 exemption as per the Income Tax Act. The\nreasoning could get made by exhibiting&nbsp;<strong>few case laws chronologically<\/strong>;\ndepicting the whole picture of surfacing Section 11(4A) took place along with\ndifferent court trials. The cases are as follows:-<\/p>\n\n\n\n<ul><li>According to the case &#8220;<strong>C.I.T. Vs. St. Thomas Cathedral Church (Kerala High Court)&#8221;,<\/strong>&nbsp;it raises the relevant issues addressing whether      the income derived out of &#8216;<strong>Kuri business (Chit Funds)<\/strong>&#8216; directed by      the Charitable Trust is qualified for an exemption or not. Therefore, due to the application of sub-section (4A), it announces&nbsp;<strong>Section 11 of      the Income Tax Act<\/strong>&nbsp;to be with effect from 01-04-<strong>1984<\/strong>.<\/li><li>In the second phase of such deliberations, a trial bench court in &#8220;<strong>Commissioner of Income Tax Vs. Dharmodayam Co. (1997) 225 ITR 686&#8243;&nbsp;<\/strong>believed a few specific measures on it. It says that if the &#8220;<strong>Kuri business (Chit Funds)&#8217;&nbsp;<\/strong>is held in trust, and then the income from that place would not be administered by sub-section (4A). The Hon&#8217;ble Supreme Court pronounced it in &#8220;C.I.T. V. Dharmodayam Co. (1977) 109 ITR 527 (S.C.)&#8221;.<\/li><\/ul>\n\n\n\n<ul><li>The court has pointed out that the assessee is permitted to claim Exemption under Section 11(1) of the IT Act concerning its income from such &#8216;Kuri businesses.&#8217; It gets quoted that decision of this very court in &#8220;<strong>(1997) 225 ITR 686&#8243;&nbsp;<\/strong>was set notwithstanding by the hon&#8217;ble Supreme Court in the judgment in &#8220;<strong>Commissioner of Income Tax V.      Dharmodayam Co. and another (2001) 248 ITR 816&#8243;<\/strong>. But then again,      sub-section 11 (4A) has introduced certain circumstances in the matter of submission of sub-sections (1), (2) (3) &amp; (3A) of Section 11 of the IT      Act.<\/li><li><strong>Final Assumption<\/strong>: &#8211; The Supreme Court perceived that the Tribunal and High courts had not practically functioned to those conditions and not given due deliberations to those aspects. For that reason,<strong>&nbsp;it must<\/strong>&nbsp;decide if an assessee is permitted to get the benefit of the exemption under Section 11. The Tribunal needs to regulate<strong>&nbsp;if it satisfies the obligation of Section 11 (4A).<\/strong>&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_Budget_2020_proposes_exemption_under_section_11_for_Trusts_or_institutions\"><\/span>What does Budget\n2020 proposes exemption under section 11 for Trusts or institutions?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Any simultaneous registration for exemption under\nsection 11, and requesting approval for Section 10(23C) exemption is now not\npermissible as per the Budget 2020. Trust\/institution which are listed by\nsection 12AA \/ 12AB and gets the approval under section 10(23C), or reported\nunder section 10(46) after amendment, then the registration under section 12AA\n\/ 12AB shall become out of action from the date of such announcement.<\/li><li>It\ngives a choice to the establishment to get its registration u\/s. 12AA \/ 12AB\nfunctioning by making requests for that. Nevertheless, in such circumstances,\nhe will&nbsp;<strong>not be permitted to get the benefi<\/strong>t of section 10(23C)\napproval \/ 10(46) report.&nbsp;<\/li><li>The\nprocess for making registration operative over again gets specified in the\namended provisions. The nitty-gritty of the above amendment of section 11 has\nstated below. The section 11 of the Income Tax Act (in sub-section (7)) with\neffect from the 1st of June, 2020,\u2013<\/li><\/ul>\n\n\n\n<ol><li>It has provided that\n&#8220;registration shall become not working from the date on which the\ntrust\/institution got approved under clause (23C) of section 10. It can inform\nor notify by clause (46) of the said section or the date on which this\nparticular clause has come into force.<\/li><li>It has provided that the trust or\ninstitution, whose registration has become out of action under the first\nprovision, may apply to get its registration functioning under section 12AB. It\nshould be subject to the condition that the approval under clause &#8216;(23C) of\nsection 10&#8217; or announcement under clause (46) of the said section to such trust\nor institution shall cease to have any effect since the date on which that\nregistration becomes operative. From then on, it shall not be permitted to\nexemption under the respective relevant clauses.&#8221;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The learnings included in the above article are entirely for informational purposes after deliberating due care. Above and beyond, it does not convey any professional advice or formal preferences. With this, we at <a href=\"https:\/\/corpbiz.io\"><strong>Corpbiz<\/strong><\/a> have legal consultants to help you with the process of registering to assure your income tax exemptions for your charitable deliberations, ensuring the successful and timely fulfillment of your work.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/section-2-15-of-the-income-tax-act-and-its-impact\/\">Guide on Section 2(15) of the Income Tax Act and its Impact \u2013 Get the Complete Outlook!\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On an essential note of taxation, any person earning income must pay taxes, which is generally known as Income&nbsp;Tax. Nevertheless, the Income Tax Act has provided incomes to be exempt from. Income of charitable trusts\/NGO gets exempt, for which the reasoning behind has already deliberated in the previous Blogs.&nbsp; What are the classifications of exemptions [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":7956,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[3,324],"tags":[544],"acf":{"service_id":"10"},"authorName":"Archita Bhattacharjee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/WhatsApp-Image-2020-03-18-at-11.26.19-AM-1.jpeg","authorDescription":"Archita Bhattacharjee is working as Legal Analyst (Team Lead, Research &amp; Development) at Corpbiz and has proving experience about 2 years as Corporate Legal Researcher in law firms as well as Rajya Sabha and authors in diverse publications. She has refined her skills by representing India in Paris, France and the University of Leiden over implications of International Humanitarian and Criminal Law being certified member of many Legal Centers.","postViews":7305,"readingTime":8,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/7927"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=7927"}],"version-history":[{"count":31,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/7927\/revisions"}],"predecessor-version":[{"id":25460,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/7927\/revisions\/25460"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/7956"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=7927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=7927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=7927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}