Section 11(5) of the Income Tax Act

Income-tax Act, 2025: ss.332–355

Section 11(5) 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(5) is 1. Father Mullers Charitable Institutions 363 IT 230 (Kar.) 2. DIT(E) v. Sheth Mafatlal Gagalbhai Foundation Trust (249 ITR 533), cited in 108 of the 401 judgments on BharatTax that turn on this section.

Leading authorities on Section 11(5)

1. Father Mullers Charitable Institutions 363 IT 230 (Kar.) 2. DIT(E) v. Sheth Mafatlal Gagalbhai Foundation Trust
249 ITR 533 · 2001 · High Court
108
citing judgments

Income of a trust that is taxable at the maximum marginal rate should be taxed accordingly, while other income is eligible for exemption under Section 11 of the Income-tax Act.

Commissioner of Income-tax v. Nizam's Suppl. Religious Endowment Trust
127 ITR 378 · 1981 · High Court
87
citing judgments

Income of a charitable trust, other than from a business undertaking covered by Section 11(4), is determined based on its books of account. Payments of income tax and wealth tax by the trust are considered an application of income for charitable purposes under Section 11.

Trust (249 ITR 533) (Bom.) 3. CIT vs. Red Rose School (163 Taxman 19 (All.) 4. DIT(E) v. Alarippu (
172 ITR 698 · 1988 · High Court
61
citing judgments

Income received by a trust from sources like extra fees can be taxed at the maximum marginal rate, while other income remains eligible for exemption under Section 11 of the Income Tax Act.

Dy. CIT v. Zuari Estate Development and Investment Co. Ltd.
373 ITR 661 · 2015 · Supreme Court
61
citing judgments

Reopening of assessment beyond four years under Section 147 requires strict satisfaction of conditions precedent, including fresh tangible material, and cannot be based on a mere change of opinion from the original assessment. Further, debatable or interpretational issues cannot be adjusted during processing under Section 143(1).

ACIT v. A.L.N. Rao Charitable Trust
216 ITR 697 · 1995 · Supreme Court
58
citing judgments

The exemption for income accumulated under section 11(1)(a) (presently 15%) is absolute, and section 11(2) does not restrict its operation or require such accumulated income to be invested in specified securities. Investment requirements under section 11(2) apply only to accumulation beyond this absolute exemption limit.

Bureau of Indian Standards v. DGIT
358 ITR 78 · 2013 · High Court
58
citing judgments
Bombay in Bajaj Auto Finance Ltd. v. CIT
93 Taxmann.com 63 · 2018 · High Court
53
citing judgments

The Assessing Officer cannot make a prima facie adjustment to the total income under Section 143(1)(a) if the adjustment involves a debatable issue.

GSI India v. DGIT (Exemption)
360 ITR 138 · 2014 · High Court
51
citing judgments

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.

DIT (Exemption) v. Jasubhai Foundation
374 ITR 315 · 2015 · High Court
45
citing judgments

A charitable trust can claim exemption for specific income streams under Section 10, such as dividend income under Section 10(34), independently of the provisions of Section 11. Income exempted under Section 10 is not restricted or overridden by Section 11 for trusts.

Delhi Stock Exchange Association Limited v. CIT
41 ITR 495 · 1961 · Supreme Court
43
citing judgments

Entrance fees and one-time membership fees received by an association from new members are classified as revenue receipts for the purpose of income tax assessment.

Judgments on Section 11(5)

ITO, WD-1(3), Kolkata vs. The Young Mens Chritian Assoication of Calcutta, Kolkata

In the result, Revenue’s appeal stands dismissed

ITA 1244/KOL/2016[2010-2011]Status: DisposedITAT Kolkata28 Feb 2018AY 2010-2011

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2010-11 Income Tax Officer (E) V/S. The Young Mens Ward-1(3), 6Th Floor, Chritian Association Of 10B, Middleton Row, Calcutta, 25, Jawarharlal Kolkata-71 Nehru Road, Kolkata-67 .. अपीलाथ" /Appellant ""यथ"/Respondent Shri S. Dasgupta, Addl. Cit-Dr अपीलाथ" क" ओर से/By Appellant Shri A.K. Tibrewal, Fca ""यथ" क" ओर से/By Respondent 24-01-2018 सुनवाई क" तार"ख/Date Of Hearing 28-02-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Revenue Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-25, Kolkata Dated 21.03.2016. Assessment Was Framed By Dcit(Ex)-I,, Kolkata U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Vide His Order Dated 25.03.2013 For Assessment Year 2010-11. The Revenue Has Raised Following Grounds:- “1. That On The Facts & Circumstances Of The Case The Ld. Cit(A) Has Erred In Allowing Set Off Of Brought Forward Deficits Of Income & Expenditure Accounts Of Earlier Years With The Surplus Of The Current Year Beyond The Scope & Ambit Of Section 11 Of The Income Tax Act, 1961. 2. That On The Facts & Circumstances Of The Case The Ld. Cit(A) Has Erred In Appreciating The Essence Of Section 11(2) Of The Income Tax Act, 1961 By Virtue Of Which Fifteen Per Cent Of The Surplus Can Be Set Apart Or Invested As Per Provisions Of Section 11(5), But No Set-Off Of Earlier Deficit Is Allowed To Be Set-Off From Future Surplus & The

Section 11Section 11(1)(a)Section 11(2)Section 11(5)Section 12ASection 143(3)

Suraj Devi Mohta Charitable Trust, Kolkata vs. DIT-Exemption, Kolkata

In the result, the appeal filed by the assessee, is allowed

ITA 2023/KOL/2014[]Status: DisposedITAT Kolkata25 Sept 2017

Bench: Shri A. T. Varkey, Jm &Dr. A.L.Saini, Am आयकरअपीलसं./Ita No.2023/Kol/2014 Suraj Devi Mohta Charitable Vs. D.I.T.(Exemption), Kolkata Trust 10B, Middleton Row, 6Th 7, Lyons Range, 2Nd Floor, Room Floor, Kolkata – 700 071. No.4C, Kolkata – 700 001. "थायीलेखासं./जीआइआरसं./Pan/Gir No. : Aaets3384 F (Appellant) .. (Respondent) Appellantby :Shri P. J. Bhide, Fca Respondent By :Shri G. Hangshing, Cit(Dr) सुनवाईकीतारीख/ Date Of Hearing : 06/09/2017 घोषणाकीतारीख/Date Of Pronouncement : 25/09/2017 आदेश / O R D E R Per Dr. Arjun Lal Saini, Am: The Captioned Appeal Filed By The Assessee, Is Directed Against An Order Passed By The Director Of Income Tax (Exemption), Kolkata Dated 06.08.2014. 2.This Appeal Is Time-Barred By 21 Days. The Assessee Moved An Application For Condonation Of Delay In Filing The Appeal. Having Heard The Petition Of Condonation Of Delay, We Find That There Was Sufficient Reason For Not Filing The Appeal Within The Time Limit, Before The Itat. Therefore, We Condone The Delay & Admit The Appeal For Hearing. 3. The Grounds Of Appeal Raised By The Assessee Are As Under: “1.That On The Facts & Circumstances Of The Case, The Ld. Director Of Income Tax(Exemption), Kolkata Erred In Rejecting The Application For Renewal Of Exemption U/S 80G(5)(Vi) Of The I.T. Act, 1961 On The Ground That The Loan Given To Mrs. Shrutimohta, Wife Of One Of The Trustees, Shri

For Appellant: Shri P. J. Bhide, FCAFor Respondent: Shri G. Hangshing, CIT(DR)
Section 11Section 11(5)Section 13Section 13(2)(a)Section 80G(5)(vi)