Section 12A of the Income Tax Act

Income-tax Act, 2025: ss.332–355

Section 12A 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.

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 12A is CIT v. Institute of Banking Personnel Selection (264 ITR 110), cited in 398 of the 6,064 judgments on BharatTax that turn on this section.

Leading authorities on Section 12A

CIT v. Institute of Banking Personnel Selection
264 ITR 110 · 2003 · High Court
398
citing judgments

Depreciation is allowable on assets for which the cost has been fully allowed as an application of income under Section 11 in previous years, when computing the income of a charitable trust. Charitable trusts are also entitled to carry forward their deficit.

ACIT v. Ahmedabad Urban Development Authority
143 Taxmann.com 278 · 2022 · Supreme Court
390
citing judgments

If activities for the advancement of general public utility are carried on as a business, income from such activities is not exempt under Section 11, even if the profits are utilized for the main charitable object. The argument that profits from general public utility activities can be ploughed back to charity to maintain exemption is not a good law.

Addl. CIT v. Surat Art Silk Cloth Manufacturers Association
121 ITR 1 · 1980 · Supreme Court
328
citing judgments

A charitable institution, whose predominant object is general public utility, can engage in non-charitable activities yielding incidental profits, provided these profits are deployed to achieve the dominant charitable object. A subsidiary object, if ancillary to the primary charitable purpose, does not negate the institution's charitable character.

Sole Trustee, Loka Shikshana Trust v. CIT
101 ITR 234 · 1975 · Supreme Court
323
citing judgments

This case defines 'education' under Section 2(15) of the Income Tax Act as systematic instruction, schooling, or training given to the young for preparation for the work of life. It clarifies that 'education' in this context has a narrow meaning, not extending to every acquisition of further knowledge.

Exide Industries Ltd. v. Union of India
292 ITR 470 · 2007 · High Court
320
citing judgments

The Calcutta High Court held that restricting deduction for leave encashment via Section 43B(f) was arbitrary and contrary to Supreme Court decisions. However, this judgment was later stayed by the Supreme Court.

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.

1. AIR 1951 SC 467: HARLA v. THE STATE OF RAJASTHAN. 2
2 SCC 453 · 1997 · Reported
222
citing judgments

When an appeal or revision is filed against an order passed by a subordinate forum, and a superior forum modifies, reverses, or affirms that decision, the order of the subordinate forum merges into the superior forum's decision, which then becomes the sole operative and enforceable order.

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. Gujarat Oil & Allied Industries
201 ITR 325 · 1993 · High Court
195
citing judgments

The requirement to file an audit report along with the income tax return, as specified in provisions like Section 80J(6A) or 80-IA(7), is directory and not mandatory. Substantial compliance is achieved if the audit report is submitted at any time before the assessment is framed or completed, and benefits should not be denied merely due to a delay in furnishing it.

CIT v. Society of the Sisters of St. Anne
146 ITR 28 · 1984 · High Court
195
citing judgments

Depreciation claimed by a charitable trust on its assets is an allowable application of income for computing exemption under Section 11, and this does not constitute a double deduction.

Judgments on Section 12A

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)