Section 11(2) of the Income Tax Act

Income-tax Act, 2025: ss.332–355

Section 11(2) 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.

Read the 2025 provisions

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(2) is Escorts Ltd. v. UOI (199 ITR 43), cited in 267 of the 762 judgments on BharatTax that turn on this section.

Leading authorities on Section 11(2)

Escorts Ltd. v. UOI
199 ITR 43 · 1993 · Supreme Court
267
citing judgments

A statute should not be construed to permit double deduction for the same expenditure unless specifically provided by law.

CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal
211 ITR 293 · 1995 · High Court
204
citing judgments

A charitable trust can carry forward its excess expenditure from previous years and adjust it against the income of subsequent years, which qualifies as an application of income under Section 11. Additionally, voluntary contributions received for a specific purpose are treated as corpus funds and are not taxable.

CIT v. Maharana of Mewar Charitable Foundation
164 ITR 439 · 1987 · High Court
153
citing judgments

For charitable trusts, the set-off of excess expenditure from prior years against the income of a subsequent year is considered an application of income for charitable purposes. Similarly, the repayment of loans borrowed for legitimate charitable activities is also treated as an application of income.

CIT v. Market Committee, Pipli
330 ITR 16 · 2011 · High Court
113
citing judgments

A charitable trust can claim depreciation on assets when computing the income applied for charitable or religious purposes under Section 11 of the Income Tax Act, for assessment years prior to the introduction of Section 11(6). The restriction on claiming depreciation, as introduced by Section 11(6), is prospective from AY 2015-16.

CIT v. Nagpur Hotel Owners Association
247 ITR 201 · 2001 · Supreme Court
112
citing judgments

While there is no statutory time limit for filing Form 10 to claim exemption for income accumulation under Section 11(2), it must be furnished before the completion of assessment proceedings for the Assessing Officer to grant the exemption.

CIT v. Gujarat Maritime Board
295 ITR 561 · 2007 · Supreme Court
98
citing judgments

A statutory corporation undertaking activities that generate income qualifies as a charitable entity under Section 2(15) if its dominant object is general public utility and it is legally obligated to apply its income solely for that purpose, even if the activities appear to be in the nature of trade or business. Such an entity is entitled to registration under Section 12A and exemptions under Section 11.

Pradeep Kumar Biswas v. Indian Institute of Chemical Biology
5 SCC 111 · 2002 · Reported
93
citing judgments

The legal form or ostensible autonomy of an entity does not prevent it from being classified as 'State' or 'authority' under Article 12 if it functions as an instrumentality of the Government, thereby attracting constitutional accountability under Part III.

CIT v. Matriseva Trust
242 ITR 20 · 2000 · High Court
91
citing judgments

An excess of expenditure incurred by a charitable trust in previous years can be adjusted against the income of a subsequent year, and this adjustment is considered an application of income for charitable purposes under Section 11.

CIT v. Programme for Community Organisation
248 ITR 1 · 2001 · Supreme Court
90
citing judgments

The 15% exemption available to charitable trusts under Section 11(1)(a) is absolute and is not curtailed by the provisions of Section 11(2) regarding accumulation of income. Voluntary contributions received towards the corpus of a trust are excluded from the scope of income for Section 11(1)(a) exemption purposes.

Govindu Naicker Estate v. ADIT
248 ITR 368 · 2001 · High Court
89
citing judgments

A charitable trust may adjust expenditure incurred for religious or charitable purposes in an earlier year against the income of a subsequent year, which is considered an application of income for the subsequent year under Section 11. This principle is guided by commercial considerations and the benevolent intent of Section 11.

Judgments on Section 11(2)

Bengal Education Foundation, Kolkata vs. ITO, Ward-1(2), Exemption, Kolkata

In the result, the appeal of the assessee is allowed

ITA 199/KOL/2025[2017-18]Status: DisposedITAT Kolkata20 May 2025AY 2017-18

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarmai.T.A. No.199/Kol/2025 Assessment Year: 2017-18 Bengal Education Foundation…………….………………………..………….……Appellant 17/1, Rishi Bankim Chandra Road, Dum Dum, Kol-28. [Pan: Aactb1869Q] Vs. Ito, Ward-1(2), Exemption, Kolkata…..……....….….. ……………….........…..Respondent Appearances By: Shri Manish Tiwari, Fca, Appeared On Behalf Of The Appellant. Smt. Archana Gupta, Addl. Cit-Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : May 15, 2025 Date Of Pronouncing The Order : May 20, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 26.12.2024 Of The Commissioner Of Income Tax, Appeal Addl/Jcit(A)-2, Pune [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Is A Public Charitable Trust & Had Filed Its Return Of Income For The Assessment Year 2022-23 In Itr-7 On 02.11.2022 Under The Status Of Aop/Boi By Declaring Nil Income After Claiming Exemption U/S 11 Of The Act Amounting To Rs.1,15,12,715/-. The Said Return Of Income Was Processed By Cpc & Vide Intimation Order Dated 31.03.2023 A Demand Of Rs.50,28,260/- Had Been Raised After Denying The Assessee’S Claim Of Exemption U/S 11 Of The Act Made In The Return Of Income. Before Passing Of The Intimation Order U/S 143(1) Of The Act, The Cpc Had Sent Communication To The Assessee On 14.02.2023 Intimating The Proposed Adjustments.

Section 11Section 119(2)(b)Section 143(1)Section 250

Sri Poddar Madal Bhavani Samity, Kolkata vs. ITO, Ward 1(3), Exemption, Kolkata

The appeal of the assessee is dismissed

ITA 325/KOL/2025[2020-21]Status: DisposedITAT Kolkata14 May 2025AY 2020-21

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishrai.T.A. No.325/Kol/2025 Assessment Year: 2020-21 Sri Poddar Madal Bhavani Samity……………………………..….……….Appellant Ground Floor, Mission Court, 25, R. N. Mukherjee Street, Kol-1. [Pan: Aabts8573R] Vs. Ito, Ward-1(3), Exemption, Kolkata.....................……........……...…..…..Respondent Appearances By: Shri A. K. Tibrewal, Ar, Appeared On Behalf Of The Assessee. Shri Kallol Mistry, Jcit, Sr. Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : May 13, 2025 Date Of Pronouncing The Order : May 14, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against An Order Dated 19.12.2024 Of The Commissioner Of Income Tax, Appeal Addl/Jcit(A)-2 Guwahati [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Is A Public Charitable Trust Registered U/S 12A Of The Act. The Assessee Filed Its Return Of Income On 31.05.2021 By Declaring Nil Taxable Income After Claiming Application Of Income For Charitable Purposes & Accumulation U/S 11(2) Of The Act. The Cpc, Bengaluru Issued An Intimation U/S 143(1) Of The Act Dated 30.11.2021 By Disallowing The Assessee’S Claim Of Application Of Income Of Rs.13,10,039/- & Accumulation U/S 11 Of The Act At Rs.1,54,072/-. Consequently, The Entire Amount Was Treated As

Section 11Section 11(2)Section 12ASection 143(1)Section 154Section 250Section 44A