13. Section 11 not
to apply in certain cases.- (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) Omitted
(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 property51 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 corpora-tion) 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.
Explanation 1.—For the purposes of sections 11, 12,
12A 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.
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