Assessment
Some Charitable or Religious Trust Dont Require to File Form 10 Even if Fund Utilization is Less Than 85 % .
This posting is because of a question posed by a premium account subscriber , Mr Arjun Nedungadi who asked Whether temple having registration u/s 10(23C) and having gross receipts over Rs.1 crore needs to efile Form 10 giving notice of accumulation of income spent below 85% .I answered in short that he need not file Form 10 because the the temple trust , as per the question , was registred for exemption u/s 10(23C) of the Income Tax Act . So , here is the detailed answer – why is that so ?
Two Exemptions Provisions for Charitable /Religious Trusts
Income Tax Act has two sets of provisions under which a charitable trust or religious trust can claim exemption . [Fact is that apart from charitable trust or religious trust , there are a number of types of other entities which are tax free under section 10(23C) , but this post is restrcted to trusts only ]. Thease provisions are :
- Sec. 10(23C)(iv) and Sec, 10(23C)(v)
- Section 11 to 13
So , when you set up a charitable trust . you can decide upon the provisions under which you would like to register the trust for claiming exemption of income .
Condition of Filing Form 10 Not Under Section 10(23C)
Trusts which are registered u/s 12AA will have to abide by all the conditions given under section 11 and 13 . One of the condition given under section 11 is that if the fund received during the year could not be employed for the object of the trust during the year , then the assessee will intimate the A.O in a prescribed form 10 as per Rule 17 of the Income Tax Rule. Now filing of form 10 is made compulsorily online .
But this considtion is not present in section 10(23C) of the Income Tax Act. Therefore , charitable trust or religious trust that has got approval and claiming exemption u/s 10(23C)(iv) or sec. 10(23C)(v) are not required to file the Form 10 , because Rule 17 does not apply to section 10(23C) of the Income Tax Act.
Allahabad High Court in CIT & Another Vs. Society Of Advanced Management Studies (2013) 352 ITR 269(All) wherein it has been held that Exemption u/s 10(23C)(vi) of the Act can be claimed by an assessee without applying for registration u/s 12A of the Act as it is not required to fulfil the conditions mentioned u/s 11 of the Act while claiming exemption u/s 10(23C) (vi) of the Act. Excerpt of the order :
5. In our considered opinion, exemption under section 10(23C)(vi) of the Act can be claimed by an assessee without applying for registration under section 12A of the Act as it is not required to fulfil the conditions mentioned under section 11 of the Act while claiming the exemption under section 10(23C)(vi) of the Act. Further, in the order passed by the Commissioner of Income-tax, there is no whisper that the assessee has not fulfilled any of the conditions of section 11 of the Act for claiming it to be a charitable institution. He had solely relied on the order of the Chief Commissioner of Income-tax passed under section 10(23C)(vi) of the Act while denying the exemption under the aforesaid sub-section. We are, therefore, of the considered opinion that the Tribunal had rightly restored the registration on the ground that in the assessment years 2004-05 and 2006-07 the benefit of exemption/deduction under section 11 of the Act was allowed to the respondent-assessee.
In case before Punjab & Haryana High Court in CIT Vs. Mahasabha Gurukul Vidyapeeth Haryana (2010) 326 ITR 25 (Pun), it was held that Exemption under s. 11 was allowable to the assessee society running an educational institution which was registered under s. 12A, once it is held that all requisite conditions for exemption under s. 11 have been met, even if conditions under s. 10(23C)(vi) have not been complied with, there will be no bar to seek exemption under s. 11.
Both the aforesaid decision lays down that the conditions laid down in provision u/s 10(23C) and section 11 are independent conditions and do not affect the claim of exemption under respective exemption. Thus , neither Rule 17 or filing of Form 10 is not required in case of charitable trust or religious trust claiming exemption u/s 10(23C)(iv) or (v) of the Income Tax Act
