Charitable trust exemption depends on valid registration, while taxable income must still be computed on commercial principles.

Exemption under section 11 depends on compliance with the statutory registration requirement under sections 12A and 12AA, and the absence of valid registration for the relevant year meant the exemption claim could not be accepted. Later registration did not affect the position for that assessment year. Where exemption is unavailable, taxable income must still be computed on commercial principles by examining the income and expenditure account and supporting material, rather than by taxing gross receipts alone. The denial of exemption was upheld, but the quantum of income required fresh verification on that basis, resulting in partial relief only on computation.

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Issues: (i) Whether exemption under section 11 could be denied for want of registration under sections 12A and 12AA; (ii) whether, if exemption was not available, the income should be recomputed on commercial principles by examining the income and expenditure account.

Issue (i): Whether exemption under section 11 could be denied for want of registration under sections 12A and 12AA.

Analysis: The assessee was not registered under the statutory registration regime during the relevant assessment year. The scheme of sections 11 and 12 applies only where the trust or institution satisfies the prescribed condition of registration. The earlier rejection of registration and the absence of any valid registration for the year under appeal meant that the claim for exemption could not be accepted. The later grant of registration did not alter the position for the year under consideration, and the cited authorities were held distinguishable on facts or inapplicable.

Conclusion: The denial of exemption under section 11 for want of registration was upheld and was against the assessee.

Issue (ii): Whether, if exemption was not available, the income should be recomputed on commercial principles by examining the income and expenditure account.

Analysis: Where exemption under section 11 is unavailable, the proper course is to determine the taxable income on commercial principles after examining the relevant accounts and supporting material. The matter required factual verification of the profit and loss or income and expenditure statement rather than a straight levy on gross receipts. For that limited purpose, the assessment required fresh examination by the Assessing Officer.

Conclusion: The issue was remanded for fresh computation of taxable income on commercial principles and was in favour of the assessee to that extent.

Final Conclusion: The exemption claim was rejected, but the quantum of taxable income was sent back for fresh determination on commercial principles, resulting in only partial relief to the assessee.

Ratio Decidendi: Entitlement to exemption for a charitable or religious trust depends on satisfaction of the statutory registration condition, and where exemption is denied, taxable income must still be computed on the basis of actual commercial results rather than merely on gross receipts.

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