“Section 11(5)(iii)”
The decision most relied on for Section 11(5)(iii) is PCIT v. Wipro Ltd. (140 Taxmann.com 223), cited in 192 judgments on BharatTax.
Leading authorities on Section 11(5)(iii)
Exemption provisions under Chapter III, such as Section 10B(8), must be interpreted strictly, and any claim for such exemptions must be made in the return of income. The principles governing Chapter III (incomes not forming part of total income) differ from those for Chapter VIA (deductions in computing total income).
A trust's objects, even if based on religious tenets, can qualify as charitable for tax exemptions if its benefits are not exclusively restricted to a particular religious community or caste.
For funds to be considered part of a charitable activity, the predominant object of the institution must be charitable, not profit-making. Any surplus generated must be redeployed in charitable activities.
Receipts derived from services rendered by an association to its members, which fall outside the scope of its primary mutual purpose, can be charged to income tax. Such services might otherwise be considered business income, but taxability depends on whether the assessee is brought within the specific terms of the relevant tax provision.
An order passed by the CIT under Section 12A of the Income Tax Act is quasi-judicial. Until October 1, 2004, there was no express provision in the Act for the CIT to cancel a registration certificate once granted.
Section 13(1)(b) of the Income Tax Act is applicable at the stage of granting exemption, not during the process of granting registration under section 12A/12AB, provided the trust's objects are charitable in character for the general public at large and not solely for the benefit of a particular religious community.
The Commissioner of Income-tax (Exemptions) cannot invoke Section 13(1)(b) at the stage of granting registration under Section 12AB, especially when the assessee has a valid registration. Section 13(1)(b) is only attracted after the assessee has crossed the hurdle of being eligible for exemption under Section 11 by obtaining registration.
Section 13(1)(b) cannot be invoked at the stage of registration under Section 12A; it is attracted only at the time of assessment for exemption under Section 11.
