“Section 13(1)(c)(ii)”

Charging fees, even when having regard to the economic status of beneficiaries, is permissible for the sustenance of charitable activities, provided it is necessary for operation and running expenses and does not amount to carrying on trade or commerce. This applies even after the introduction of the proviso to Section 2(15) of the Income Tax Act, 1961.

Expenditure incurred by a charitable trust in an earlier year can be set off against income of the current year as application of income. Excess expenditure by a trust can be set off against its income.

Once an Assessing Officer forms a reason to believe that income has escaped assessment and issues a notice under section 148, they can assess or reassess income related to other issues not originally included in the reasons recorded.

The burden of proof lies on the Assessing Officer (AO) to establish that a trust or charitable institution is hit by the provisions of Section 13. General allegations or mere transactions with interested persons are insufficient unless concrete benefit is proven.

A charitable trust can claim depreciation on a capital asset even if its cost was treated as application of income for charitable purposes. Allowing depreciation does not constitute double allowance.

The proviso to section 2(15) should not be invoked to deny exemption to a sports organization if its activities are not predominantly in the nature of trade, commerce, or business.

Violating provisions of Section 13(1)(c)(ii) read with Section 13(2)(b) disentitles an assessee from claiming exemption, as the funds of the assessee were diverted and misutilized.

The income of a society for mutual benefits of its members is exempt from tax, as demonstrated in this case concerning a cooperative bank.