“Section 12(1)(ac)”
The decision most relied on for Section 12(1)(ac) is Ananda Social and Educational Trust v. CIT (426 ITR 340), cited in 116 judgments on BharatTax.
Leading authorities on Section 12(1)(ac)
For registration under Section 12AA, the Commissioner (Exemptions) must examine the objects of the trust and the genuineness of its proposed activities, even if the trust has not yet commenced actual charitable activities or incurred expenditure.
Membership fees and subscription amounts received by a trust or society from its members are not considered 'voluntary contributions' under Section 12 of the Income-tax Act, as they are not gratuitous payments or gifts but are made with consideration.
Section 13(1)(b) of the Income-tax Act applies to composite trusts that engage in both religious and charitable activities, meaning such trusts may be excluded from exemption under Section 11.
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.
The Commissioner of Income Tax (CIT) has no power to cancel registration granted under Section 12A of the Income Tax Act retrospectively, especially when there is no express provision in the Act for such cancellation and the order is quasi-judicial in nature.
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.
A charitable trust established for the benefit of a specific community is disqualified from exemption under section 11 if it extends benefits to other communities, as this violates the provisions of section 13(1)(b).
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.
