“Section 2(5)(a)(iii)”
The decision most relied on for Section 2(5)(a)(iii) is PCIT v. Wipro Ltd. (140 Taxmann.com 223), cited in 192 judgments on BharatTax.
Leading authorities on Section 2(5)(a)(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 Legislature abolished terminal depreciation under section 32(1)(iii) and the taxing of balancing charge under section 41(2), replacing these provisions with the requirement to reduce sale proceeds of depreciable assets from the block of assets.
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.
An intention to benefit a section of the public, as distinguished from a special individual, is sufficient for a trust to be considered for charitable registration and exemptions. This applies even if the beneficiaries belong to a specific caste, community, or professional group, allowing the trust to qualify as serving a general public utility under Section 2(15).
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.
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.
An institution or fund is deemed to be one to which section 80G applies even if it incurs expenditure of a religious nature not exceeding five per cent. of its total income, overriding Explanation 3 to section 80G(5)(ii).
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.
