Topic
Charitable trusts in India are legal entities established for public benefit, governed by the Indian Trusts Act, 1882, and subject to tax exemptions under Sections 11 and 12 of the Income-tax Act, 1961, with oversight by Charity Commissioners and the Income Tax Department.
ITAT Pune held PCIT lacked jurisdiction to cancel registration under Sec 12AB(4) for Sec 13(1)(c) violations as the specified violation concept is prospective from 1 Apr 2022, shielding trusts from retrospective cancellation and clarifying limits.
Bank deposits, including current-account balances, are deemed ‘another capital asset’ under Section 11(1A) of the Income-Tax Act. This allows charitable trusts to claim full exemption on capital-gain income reinvested in such deposits, expanding the range of tax-free investment options for trusts.
ITAT Delhi rules sale of milk by a gaushala trust is incidental to its charitable purpose under Section 2(15) proviso, affirming Section 12A registration. The ruling clarifies that receipts from milk sales do not disqualify trusts from tax exemptions if aligned with primary charitable objectives.
Bombay High Court upholds rejection of trust registration for using 'NGO - Management Trust' as it violates the Emblems and Names (Prevention of Improper Use) Act, 1950. The ruling clarifies that trust names must strictly comply with statutory restrictions, even if objects are charitable.
ITAT Bangalore ruled that the reasonableness of honorarium paid to trustees of a charitable trust must be determined on a case-by-case basis under Section 13(1)(c) of the Income Tax Act. The tribunal remanded the matter to the Assessing Officer, emphasizing that blanket disallowance of trustee remuneration is impermissible without evaluating the duties performed and evidence submitted.
The ITAT Delhi condoned a 706-day delay in filing an appeal against rejection of Section 12A registration for a charitable society, holding that lack of legal guidance constitutes sufficient cause and denying a hearing violated natural justice. This sets a critical precedent for charitable trusts facing bureaucratic delays in tax exemption processes, reinforcing that procedural fairness trumps technical non-compliance.
ITAT Chennai holds that belated filing of Form 10B audit reports by charitable trusts does not invalidate their Section 11 exemption claims if the audit report was available during processing. The ruling emphasizes procedural compliance over rigid timelines, ensuring trusts retain tax benefits despite administrative delays.
The Bombay High Court has ruled that the Commissioner of Income Tax cannot invoke Section 263 to revise an assessment order merely because he disagrees with the Assessing Officer's plausible interpretation of income utilization. The revisionary power is only valid if the original order suffers from a legal error, failure to inquire, or non-application of mind - not because the view was suboptimal or inconvenient to the revenue.
ITAT Delhi holds that charitable trusts not availing exemption under Section 11 of the Income Tax Act must be taxed at individual slab rates, not as Associations of Persons (AOPs) under Section 167A. The ruling clarifies that trusts without defined beneficiaries or members are not AOPs, impacting tax liability calculations for non-exempt charitable entities.
ITAT Mumbai rules that charitable trusts retain the vested right to utilise income accumulated under prior law, even if the sixth year falls after the 2022 amendment. The tribunal held that denying this right would amount to retrospective cancellation of a lawful entitlement, affecting trusts with long-term accumulation plans.
The Bombay High Court has ruled that the Charity Commissioner cannot compel deletion of the word 'National' from a trust’s name under the Maharashtra Public Trusts Act, as this falls exclusively under the Emblems Act, 1950. The decision reinforces that administrative bodies cannot overreach into emblem regulation and sets a precedent for trusts using nationally significant terms, even after decades of use.
ITAT Ahmedabad rules that charitable trusts can claim deductions under Sections 11 and 12 of the Income Tax Act even if Form 10B is filed after the due date, provided it is submitted with the return and the audit is completed. The ruling emphasizes substantive compliance over rigid procedural timelines, offering relief to trusts facing disallowances for minor delays.