Section 11(1)(d) of the Income Tax Act
Income-tax Act, 2025: ss.332–355
Section 11(1)(d) falls under section 11 of the Income-tax Act, 1961, which corresponds to sections 332 to 355 of the Income-tax Act, 2025, the provisions on registered non-profit organisations.
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 11(1)(d) is Income Tax-III, Pune v. Rajasthan & Gujarati Charitable Foundation Poona (89 Taxmann.com 127), cited in 130 of the 272 judgments on BharatTax that turn on this section.
Leading authorities on Section 11(1)(d)
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'.
The true test to determine the character of a levy is the primary object and essential purpose intended to be achieved by it.
An institution carrying out charitable objects, such as education or advancement of general public utility, does not lose its Section 11 exemption merely by collecting fees for activities like campus placements or educational guidance, as this does not constitute carrying on a business.
Revision under Section 263 requires an assessment order to be both erroneous and prejudicial to the revenue. It is not permissible if the Assessing Officer adopted a legally permissible view, one of two possible views, or applied mind to the issues, despite the Commissioner's differing opinion or perceived inadequate enquiry.
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.
A one-time fee paid by members, with the understanding that it can only be used for capital purposes, is considered a corpus donation and is not taxable as income. This is especially true when separate fees are collected for services rendered.
Donations made for a specific purpose are considered capital in nature and cannot be applied for charitable or religious purposes, thus not being deemed income from property for the purposes of Section 11 of the Income Tax Act.
The Commissioner of Income Tax (Appeals) can make enhancements to an assessment during appellate proceedings, provided such enhancements do not amount to introducing an entirely new head of income.
Interest earned on investments made from the principal amount of a fund, even if the principal itself was not brought to tax, can be brought to tax.
