Section 13 of Income Tax Act "Section 11 not to apply in certain cases"
13. (1) Nothing contained in section 11 or section 12
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
institution is created or established for the benefit of any
particular religious community or caste;
(bb) [***]
(c) in the case of a trust for charitable or religious
purposes or a charitable or religious institution, any
income thereof-
(i) if such trust or institution has been created or
established after the commencement of this Act and under the
terms of the trust or the rules governing the institution,
any part of such income enures, or
(ii) if any part of such income or any property 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 sub-section (3) :
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 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
June, 1970;
(d) in the case of a trust for charitable or religious
purposes or a charitable or religious institution, any
income thereof, if for any period during the previous year-
(i) any funds of the trust or institution are invested or
deposited after the 28th day of February, 1983 otherwise
than in any one or more of the forms or modes specified in
sub-section (5) of section 11; or
(ii) any funds of the trust or institution invested or
deposited before the 1st day of March, 1983 otherwise than
in any one or more of the forms or modes specified in
sub-section (5) of section 11 continue 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:
Provided that nothing in this clause shall apply in
relation to-
(i) any assets held by the trust or institution where such
assets form part of the corpus of the trust or institution
as on the 1st day of June, 1973;
(ia) any accretion to the shares, forming part of the corpus
mentioned in clause (i), by way of bonus shares allotted to
the trust or institution;
(ii) any assets (being debentures issued by, or on behalf
of, any company or corporation) acquired by the trust or
institution before the 1st day of March, 1983;
(iia) any asset, not being an investment or deposit in any
of the forms or modes specified in sub-section (5) of
section 11, where such asset is not held by the trust or
institution, otherwise than in any of the forms or modes
specified in sub-section (5) of section 11, after the expiry
of one year from the end of the previous year in which such
asset is acquired or the 31st day of March, 1993, whichever
is later;
(iii) any funds representing the profits and gains of
business, being profits and gains of any previous year
relevant to the assessment year commencing on the 1st day of
April, 1984 or any subsequent assessment year.
Explanation.-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.
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) and clause (d) of sub-section (1), the income or
the property of the trust or institution or any part of such
income or property shall, for the purposes of that clause,
be deemed to have been used or applied for the benefit of a
person referred to in sub-section (3),-
(a) if any part of the income or property of the trust or
institution is, or continues to be, lent to any person
referred to in sub-section (3) for any period during the
previous year without either adequate security or adequate
interest or both;
(b) if any land, building or other property of the trust or
institution 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 any income or property of the trust or institution is
diverted during the previous year in favour of any person
referred to in sub-section (3):
Provided that this clause shall not apply where the income,
or the value of the property or, as the case may be, the
aggregate of the income and the value of the property, so
diverted does not exceed one thousand rupees;
(h) if any funds of the trust or institution are, or
continue to remain, invested for any period during the
previous year (not being a period before the 1st day of
January, 1971), in any concern in which any person referred
to in sub-section (3) has a substantial 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;
(b) any person who has made a substantial contribution to
the trust or institution, that is to say, any person whose
total contribution up to the end of the relevant previous
year exceeds fifty thousand rupees;
(c) where such author, founder or person is a Hindu
undivided family, a member of the family;
(cc) any trustee of the trust or manager (by whatever name
called) of the institution;
(d) any relative of any such author, founder, person,
member, trustee or manager as aforesaid;
(e) any concern in which any of the persons referred
to in clauses (a), (b), (c), (cc) and (d) has a substantial
interest.
(4) Notwithstanding anything contained in clause (c) of
sub-section (1) 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 exceed
five per cent of the capital of that concern, the exemption
under section 11 or section 12 shall not be denied in
relation to any income other than the income arising to the
trust or the institution from such investment, by reason
only that the funds of the trust or the institution have
been invested in a concern in which such person has a
substantial interest.
(5) Notwithstanding anything contained in clause (d) of
sub-section (1), where any assets (being debentures issued
by, or on behalf of, any company or corporation) are
acquired by the trust or institution after the 28th day of
February, 1983 but before the 25th day of July, 1991, the
exemption under section 11 or section 12 shall not be denied
in relation to any income other than the income arising to
the trust or the institution from such assets, by reason
only that the funds of the trust or the institution have
been invested in such assets if such funds do not continue
to remain so invested in such assets after the 31st day of
March, 1992.
(6) Notwithstanding anything contained in sub-section (1) or
sub-section (2), but without prejudice to the provisions
contained in sub-section (2) of section 12, in the case of a
charitable or religious trust running an educational
institution or a medical institution or a hospital, the
exemption under section 11 or section 12 shall not be denied
in relation to any income, other than the income referred to
in sub-section (2) of section 12, by reason only that such
trust has provided educational or medical facilities to
persons referred to in clause (a) or clause (b) or clause
(c) or clause (cc) or clause (d) of sub-section (3).
(7) Nothing contained in section 11 or section 12 shall
operate so as to exclude from the total income of the
previous year of the person in receipt thereof, any
anonymous donation referred to in section 115BBC on which
tax is payable in accordance with the provisions of that
section.
(8) Nothing contained in section 11 or section 12 shall
operate so as to exclude any income from the total income of
the previous year of the person in receipt thereof if the
provisions of the first proviso to clause (15) of section 2
become applicable in the case of such person in the said
previous year.
(9) Nothing contained in sub-section (2) of section 11 shall
operate so as to exclude any income from the total income of
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.
Explanation 1.-For the purposes of sections 11, 12, 12A
62a[, 12AA, 12AB] and this section, "trust" includes any
other legal obligation and for the purposes of this section
"relative", in relation to an individual, means-
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) any lineal ascendant or descendant of the individual;
(v) any lineal ascendant or descendant of the spouse of the
individual;
(vi) spouse of a person referred to in sub-clause (ii),
sub-clause (iii), sub-clause (iv) or sub-clause (v);
(vii) any lineal descendant of a brother or sister of either
the individual or of the spouse of the individual.
Explanation 2.-A trust or institution created or established
for the benefit of Scheduled Castes, backward classes,
Scheduled Tribes or women and children shall not be deemed
to be a trust or institution created or established for the
benefit of a religious community or caste within the meaning
of clause (b) of sub-section (1).
Explanation 3.-For the purposes of this section, a person
shall be deemed to have a substantial interest in a
concern,-
(i) in a case where the concern is a company, if its shares
(not being shares entitled to a fixed rate of dividend
whether with 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.
What is Income of trusts or institutions from contributions? Section 12 of Income Tax Act 1961
What is Conditions for applicability of sections 11 and 12? Section 12A of Income Tax Act 1961
What is Procedure for registration? Section 12AA of Income Tax Act 1961
Section 12AB of Income Tax Act - Procedure for fresh registration
What is Section 11 not to apply in certain cases? Section 13 of Income Tax Act 1961
What is Salaries? What are Deductions from salaries? Section 15 and 16 of Income Tax Act 1961
What is Salary, perquisite and profits in lieu of salary? Section 17 of Income Tax Act 1961