Section 13(1)(d) of the Income Tax Act

When a charitable trust violates investment provisions under Sections 11(5) or 13(1)(d), or applies income for prohibited purposes under Section 13(1)(c), the denial of exemption under Section 11 and taxation under Section 164(2) applies only to the extent of such violation or diversion, not to the entire income of the trust.

Violation of investment mandates under Section 13(1)(d) of the Income Tax Act, 1961, for a charitable trust results in the complete denial of exemption under Section 11 of the Act.

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.

Income earned from investments or deposits made in violation of Section 13(1)(d) of the Income Tax Act is taxable, but only to the extent of the income so earned, not the entire corpus. Circular No. 387, dated 06.07.1994, supports this interpretation and binds the revenue authorities.

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.

When an exemption is denied under Section 13(1)(c) or (d), the denial of exemption applies only to the portion of income that violates these provisions, not the entire income.

An interest-free loan provided by one charitable society to another, both registered under Section 12AA and possessing similar objectives, does not contravene Section 13(1)(d) read with Section 11(5) of the Income Tax Act, as such loans are not classified as investments or deposits.

For a donation to be eligible for exemption under Section 11, it must be voluntary and of a capital nature, intended for the corpus of the trust, rather than income derived from its application for charitable purposes. Contributions made expressly to the capital or corpus of a trust are not considered income for the purposes of Section 11.