all the provisions relating to Sec 10(23C) and Sec 11 are almost similar. But in case of Institutions registered u/s 10(23C) may enjoy some less requirements regarding accumulation of income i.e. there is no need to file a separate Form and no need to specify the purposes of accumulation.
By virtue of 139(4C) every educational institution referred to in sub-clause (iiiab) or sub-clause (iiiad) or sub-clause (vi) of Section 10(23C) whose total income, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form. Form No ITR 7 is applicable as applicable to Sec 12AA registered Trust.
There are some conditions to claim exemptions u/s 10(23C)(vi) – (Third proviso to Sec 10(23C)
Spend Minimum 85%:
- The Educational Institution shall spend its income wholly and exclusively to the objects for which it is established.
- The Institution shall apply at least 85% of the income every year. It is allowed to retain profit up to 15% of total income.
- In case the income applied falls short of 85%, then the institution shall apply the excess income for application in subsequent year(s) not exceeding 5 years.
For Example: Gross Income – Rs. 1,60,00,000/-
85% of Gross Income – Rs. 1,36,00,000/-
Actual Spent- Rs. 1,20,00,000/-
Balance Rs. 16,00,000/- can be spent with in 5 subsequent years.
- However, the accumulated amounts are required to be spent by the institution on its own. It can’t spent by way of donations to any trust registered u/s 12AA or any other institutions claiming exemption u/s 10(23C).
Section 11 of the Income tax act:
Incomes specified in this section are exempted incomes similar to that of incomes specified in Section 10. That means the incomes specified in this Section shall not form part of the total income of the person similar to that of agriculture income. However one major difference is that to get exemption under section 11, that income should be applied for charitable/religious purposes.
income of charitable organization will be calculated on general accounting principles and not based on the scheme of taxation in the Income Tax Act.
If exemption under explanation 11(1)-Deemed Application is claimed - Form 9A should be filed within the due date specified u/s 139(1).
•If exemption under section 11(2)- for Accumulation is claimed - Form 10 and Return of Income should be filed within the Due Date specified u/s 139(1).
•If there is any change in the Objects/activities during the year, assessee has to make an application for fresh registration within 30 days as per section 12A(1)(ab). This information needs to be provided in Schedule Part A General(2).
Exemption u/s 10(23C)(iv/v/vi/via
•If exemption claimed under section 11(2), amount of Accumulation should be filled in Schedule-I.
•If assessee is approved u/s 10(23C)(iv or v) and purpose of the trust is advancement of any other object of General Public utility, then the total receipts and Percentage of such activities should be mentioned in Schedule Part-A General(2). However if the percentage of receipts of such activities exceed 20% of total receipts of the trust/Institution then exemption u/s 10(23C)(iv or v) is not allowable
