Section 11 not apply in certain cases.
(1) Not anything contained in section 11 or section 12] shall function with the intention to exclude from the whole profits of the previous 12 months of the man or woman in receipt thereof—
(a) any a part of the profits from sethe assets held underneath a trust for personal spiritual purposes which does now not enure for the benefit of the general public;
(b) inside the case of a consider for charitable purposes or a charitable organisation created or hooked up after the commencement of this act, any income thereof if the trust or institution is created or set up for the benefit of any specific non secular community or caste;
(c) in the case of a consider for charitable or spiritual functions or a charitable or non secular organisation, any income thereof—
(i) if such agree with or organisation has been created or established after the graduation of this act and underneath the terms of the trust or the policies governing the institution, any part of such earnings enures, or
(ii) if any part of such profits or any assets of the trust or the organisation (every time created or installed) is for the duration of the previous yr used or carried out, directly or in a roundabout way for the gain of any person referred to in sub- Section (3) :
Supplied that within the case of a consider or institution created or mounted before the graduation of this act, the provisions of sub-clause (ii) shall not follow to any use or software, whether or not directly or indirectly, of any a part of such income or any assets of the agree with or institution for the gain of any individual stated in sub-section (3), if such use or software is by way of way of compliance with a obligatory time period of the agree with or a obligatory rule governing the organisation
Provided similarly that in the case of a consider for non secular functions or a spiritual group (on every occasion created or mounted) or a accept as true with for charitable functions or a charitable organisation created or established earlier than the commencement of this act, the provisions of sub-clause (ii) shall not follow to any use or application, whether or not immediately or indirectly, of any a part of such income or any assets of the accept as true with or group for the advantage of any character referred to in sub-section (3) in up to now as such use or application pertains to any duration before the 1st day of june, 1970;
(d) within the case of a agree with for charitable or spiritual purposes or a charitable or spiritual organisation, any income thereof, if for any period during the preceding year—
(i) any funds of the accept as true with or organisation are invested or deposited after the 28th day of february, 1983 in any other case than in someone or more of the paperwork or modes specified in sub-segment (five) of phase 11; or
(ii) any funds of the believe or institution invested or deposited earlier than the 1st day of march, 1983 otherwise than in any person or more of the bureaucracy or modes specified in sub-section (five) of phase 11 hold to remain so invested or deposited after the 30th day of november, 1983; or
(iii) any shares in a company, other than—
(A) shares in a public sector company ;
(B) shares prescribed as a form or mode of investment under clause (xii) of sub-section (5) of section 11, are held by the trust or institution after the 30th day of November, 1983:
The provided text outlines provisions related to the Income Tax Act, 1961, concerning certain cases where income or property of a trust or institution will not be excluded from taxation. Here are the key points:
Assets held by the trust or institution as part of its corpus as of June 1, 1973, and certain accretions to these assets, such as bonus shares, are exempt from taxation.
Assets, specifically debentures, acquired by the trust or institution before March 1, 1983, are also exempt from taxation.
Assets not held by the trust or institution in authorised forms after a specified period following their acquisition are subject to taxation.
Profits and gains from business activities of the trust or institution are exempt from taxation for relevant assessment years, provided they maintain separate books of accounts.
Provisions under clause (c) and (d) outline specific scenarios where income or property of the trust or institution is deemed to benefit certain individuals, leading to taxation. These scenarios include lending funds without adequate security or interest, providing land or property without charging adequate rent, excessive payments for services rendered, and inappropriate investments or divestments.
Persons referred to in these provisions include the author or founder of the trust, significant contributors, family members, trustees, managers, and relatives thereof, as well as any concerns in which they have substantial interests.
Exceptions are provided for investments in concerns where the aggregate funds of the trust or institution do not exceed a certain percentage of the capital, ensuring that income from such investments remains exempt from taxation.
These provisions aim to regulate the taxation of income and property derived from trusts and institutions, ensuring transparency and accountability in their operations.
(6) Despite anything contained in subsection (1) or subsection (2), but without affecting the provisions in subsection (2) of section 12, if a charitable or religious trust operates an educational institution, medical institution, or hospital, the exemption under section 11 or section 12 will not be denied for any income, except the income mentioned in subsection (2) of section 12, solely because the trust provided educational or medical facilities to individuals referred to in clauses (a), (b), (c), (cc), or (d) of subsection (3).
(7) Section 11 or section 12 will not exclude from the total income of the previous year of the recipient any anonymous donation referred to in section 115BBC, on which tax is payable according to the provisions of that section.
(8) Section 11 or section 12 will not exclude any income from the total income of the previous year of the recipient if the provisions of the first proviso to clause (15) of section 2 become applicable to such person in the said previous year.
(9) Subsection (2) of section 11 will not exclude any income from the total income of the previous year of a recipient if:
(i) the statement referred to in clause (a) of the said subsection regarding such income is not furnished by the due date specified under subsection (1) of section 139 for furnishing the return of income for the previous year; or
(ii) the return of income for the previous year is not furnished by such person by the due date specified under subsection (1) of section 139 for furnishing the return of income for the said previous year.
Explanation 1: For the purposes of sections 11, 12, 12A, and this section, the term “trust” encompasses any other legal obligation. In this context, the term “relative,” concerning an individual, includes:
(i) the individual’s spouse;
(ii) the individual’s brother or sister;
(iii) the brother or sister of the individual’s spouse;
(iv) any lineal ascendant or descendant of the individual;
(v) any lineal ascendant or descendant of the spouse of the individual;
(vi) the spouse of a person referred to in sub-clauses (ii), (iii), (iv), or (v);
(vii) any lineal descendant of a brother or sister of either the individual or the spouse of the individual.
Explanation 2: A trust or institution created for the benefit of Scheduled Castes, backward classes, Scheduled Tribes, or women and children is not considered a trust or institution created for the benefit of a religious community or caste as mentioned in clause (b) of subsection (1).
Explanation 3: For this section, a person is deemed to have a substantial interest in a concern if:
(i) in the case of a company, shares carrying not less than twenty percent of the voting power are beneficially owned by such person at any time during the previous year, or partly by such person and partly by one or more other persons referred to in subsection (3); or
(ii) in the case of any other concern, such person is entitled, or such person and one or more other persons referred to in subsection (3) are entitled in the aggregate, to not less than twenty percent of the profits of such concern at any time during the previous year.
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