“Section 11(3)(iii)”
The decision most relied on for Section 11(3)(iii) is PCIT v. Wipro Ltd. (140 Taxmann.com 223), cited in 192 judgments on BharatTax.
Leading authorities on Section 11(3)(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).
The Supreme Court approves the mixed fund theory, holding that no interest disallowance is warranted under section 36(1)(iii) if investments or advances are made from the assessee's own non-interest bearing funds, even when mixed funds are available. This presumption applies when non-interest bearing funds are sufficient to meet the investments.
The claim of depreciation under Section 32 of the Income Tax Act for assets used by charitable trusts is permissible, affirming the Bombay High Court's view that such a claim does not amount to a 'double benefit'.
Income arising from mutual activities carried out by clubs or associations solely among their members is not assessable for income tax, as it does not constitute income from a trade or business due to the principle of mutuality.
Interest paid on a loan taken against the security of a fixed deposit cannot be set off against or reduced from the interest income earned on that fixed deposit. The Income-tax Act does not permit such netting.
A non-compete fee, being a capital expenditure, is not allowable as a deduction from income and does not qualify for depreciation under Section 32(1)(ii) of the Income-tax Act, 1961.
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.
