Section 115BBC of the Income Tax Act
Income-tax Act, 2025: ss.332–355
Section 115BBC of the Income-tax Act, 1961 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 115BBC is Mullers Charitable Institutions 363 IT 230 (Kar.) 2. DIT(E) v. Sheth Mafatlal Gagalbhai Foundation Trust ( (163 Taxmann 19), cited in 54 of the 202 judgments on BharatTax that turn on this section.
Leading authorities on Section 115BBC
Capital expenditure incurred by a trust from its own funds is considered an application of income, entitling the trust to claim exemption under Section 11(1) of the Income-tax Act.
The exercise of a power must be referable to a jurisdiction that validates it, not one that would render it nugatory. Provisions concerning the machinery for assessment must be interpreted to make the tax charge effective.
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.
An order passed by the CIT under Section 12A of the Income Tax Act is quasi-judicial. Until October 1, 2004, there was no express provision in the Act for the CIT to cancel a registration certificate once granted.
A trust with education as an object, which qualifies as a charitable purpose under section 2(15), should be accepted as having a charitable purpose. The grant of registration under section 12A is applicable when a trust has education as an object.
An error in mentioning the specific sub-section of a law, or referencing a wrong section, does not invalidate an action if the authority otherwise possesses the power to take that action.
Authorities must consider both the objects and activities of a trust when deciding on registration under Section 12A, and registration cannot be refused solely because charitable activities haven't been conducted yet if the objects are charitable.
The withdrawal of approval for a deduction, such as under Section 35CCA, cannot be given retrospective effect, and any reassessment notice based on such a retrospective cancellation is invalid. An assessee should not suffer due to the department's mistakes, and withdrawal of approval can only be prospective.
