TaxTMI 
TaxTMI 
Section 11 not to apply in certain cases
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....of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in 28[sub-section (3), such part of income as referred to in sub-clauses (i) and (ii)]: Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution : Provided further that in the case of a trust for religious pur­poses or a religious institution (whenever created or estab­lished) or a trust for charitable purposes or a charitable institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution ....
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....-Where the trust or institution has any other income in addition to profits and gains of business, the provisions of clause (iii) of this proviso shall not apply unless the trust or institution maintains separate books of account in respect of such business.] 31[(iv) any asset referred to in sub-clauses (i), (ia) and (ii) of clause (b) of the third proviso to clause (23C) of section 10 or any accretion to the shares, forming part of the corpus mentioned in the said sub-clauses (i) and (ia) and voluntary contributions referred to in sub-clause (iv) of clause (b) of the said proviso.] 10[Explanation.-For the purposes of sub-clause (ii) of clause (c), in determining whether any part of the income or any property of any trust or institution is during the previous year used or applied, directly or indirectly, for the benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before the 1st day of July, 1972, no regard shall be had to the amendments made to this section by section 7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act, 1972.] (2) Without prejudice to the generality of the provisions of clause (c) ....
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....ial interest. (3) The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely :- (a) the author of the trust or the founder of the institution; 32[(b) any person whose total contribution to the trust or institution, during the relevant previous year exceeds one lakh rupees, or, in aggregate up to the end of the relevant previous year exceeds ten lakh rupees, as the case may be;] (c) where such author, founder or person is a Hindu undivided family, a member of the family; 15[(cc) any trustee of the trust or manager (by whatever name called) of the institution;] (d) any relative of any such author, founder, 33[****] 16[member, trustee or manager] as aforesaid; (e) any concern in which any of the persons referred to in clauses (a), 34[****] (c) 17[, (cc)] and (d) has a substantial interest. (4) Notwithstanding anything contained in clause (c) of sub-section (1) 18[but without prejudice to the provisions contained in clause (d) of that sub-section], in a case where the aggregate of the funds of the trust or institution invested in a concern in which any person referred to in sub-section (3) has a substantial interest, does not ex....
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....f the previous year of a person in receipt thereof, if- (i) the statement referred to in clause (a) of the said sub-section in respect of such income is not furnished on or before the due date specified under sub-section (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 on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the said previous year.] 30[(10) Where the provisions of sub-section (8) are applicable to any trust or institution or it violates the conditions specified under clause (b) or clause (ba) of sub-section (1) of section 12A, its income chargeable to tax shall be computed after allowing deduction for the expenditure (other than capital expenditure) incurred in India, for the objects of the trust or institution, subject to fulfilment of the following conditions, namely:- (a) such expenditure is not from the corpus standing to the credit of the trust or institution as on the end of the financial year immediately preceding the previous year relevant to the assessment year for which income is bei....
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....on or partly by such person and partly by one or more of the other persons referred to in sub-section (3); (ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub-section (3) are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.] ***************** NOTES:- 1. Reintroduced vide Section 5 of the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1-4-1989. Earlier, Omitted vide Section 7 of the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01-04-1989 before it was read as, "13. Section 11 not to apply in certain cases. - (1) Nothing contained in section 11 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof - (a) any part of the income from the property held under a trust for private religious purposes which does not enure for the benefit of the public; (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or instituti....
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....ion is, or continues to be, made available for the use of any person referred to in sub-section (3), for any period during the previous year without charging adequate rent or other compensation; (c) if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services; (d) if the services of the trust or institution are made available to any person referred to in sub-section (3) during the previous year without adequate remuneration or other compensation; (e) if any share, security or other property is purchased by or on behalf of the trust or institution from any person referred to in sub-section (3) during the previous year for consideration which is more than adequate; (f) if any share, security or other property is sold by or on behalf of the trust or institution to any person referred to in sub-section (3) during the previous year for consideration which is less than adequate; (g) if a substantial portion of ....
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....th or without a further right to participate in profits) carrying not less than twenty per cent. of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub-section (3); (ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub-section (3) are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent. of the profits of such concern." And was Substituted vide Section 6 of the Finance Act, 1970 w.e.f. 01-04-1971 before it was read as, "13. Section 11 not to apply in certain cases. Nothing contained in section 11 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) any part of the income from the property held under a trust for private religious purposes which does not ensure for the benefit of the public; (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof, ....
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....ished for the benefit of a religious community or caste within the meaning of sub-clause (i) of clause (b) of this section." And was Amended vide Section 5 of the Finance Act, 1966 w.e.f. 01-04-1966 And was Amended vide Section 5 of the Finance Act, 1963 w.e.f. 01-04-1962 2. Inserted vide Section 7 of the Finance Act, 1972 w.e.f. 01-04-1973 3. Omitted vide Section 7 of the Finance Act, 1983 w.e.f. 01-04-1984 before it was read as, "(bb) in the case of a charitable trust or institution for the relief of the poor, education or medical relief, which carries on any business, any income derived from such business, unless the business is carried on in the course of the actual carrying out of a primary purpose of the trust or institution;" Earlier, Inserted vide Section 5 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 01-04-1977 4. Substituted vide Section 7 of the Finance Act, 1983 w.e.f. 01-04-1983 before it was read as, "(d) subject to the provisions of clause (bb), in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof assessable for any assessment year commencing....
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.... Section 7 of the Finance Act, 1972 w.e.f. 01-04-1973 before it was read as, "or member" 17. Inserted vide Section 7 of the Finance Act, 1972 w.e.f. 01-04-1973 18. Inserted vide Section 7 of the Finance Act, 1983 w.e.f. 01-04-1983 19. Inserted vide Section 7 of the Finance Act, 1972 w.e.f. 01-04-1973 20. Substituted vide Section 6 of the Finance (No. 2) Act, 1971 w.e.f. 01-04-1971 before it was read as, "moneys" 21. Inserted vide Section 8 of the Finance (No. 2) Act, 1991 w.e.f. 01-04-1983 Earlier, Inserted vide Section 5 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 01-04-1977 And was Omitted vide Section 7 of the Finance Act, 1983 w.e.f. 01-04-1983 before it was read as, "(5) The forms and modes of investing or depositing funds referred to in clause (d) of sub-section (1) shall be- (a) subject to the provisions of clause (b), in a case where such funds represent the original corpus of the trust or institution or any contributions made to the trust or institution with a specific direction that they shall form part of the corpus of the trust or institution,- (i) investment in savings certificates as defined in ....