Section 115TD — Case Laws & Commentary

CHAPTER XII-EB - SPECIAL PROVISIONS RELATING TO TAX ON ACCRETED INCOME OF CERTAIN TRUSTS AND INSTITUTIONS

Section 115TD — Tax on accreted income

Case Laws & Commentary - Income-tax Act, 1961 (as amended by the Finance Act, 2026) - bharattax.co Treatise

Provision: The charging section of Chapter XII-EB. It levies an additional income-tax — the “exit tax” — on a charitable or religious trust or institution (a “specified person”) at the maximum marginal rate on its “accreted income” when it converts into a non-eligible form, merges with a dissimilar/non-charitable entity, or fails on dissolution to pass its assets to another specified person within twelve months.

Operative window: Inserted by the Finance Act, 2016 with effect from 1 June 2016. Widened by the Finance Act, 2022 (w.e.f. 1 April 2023) to cover specified persons approved under section 10(23C) and to add the failure-to-reapply trigger in sub-section (3)(iii); further consequential changes by the Finance Act, 2023 (Act No. 8 of 2023). The chapter is live and of growing practical importance.

Present status under FA 2026: Unchanged. The Finance Act, 2026 makes no amendment to section 115TD (or to sections 115TE and 115TF). The chapter stands as amended up to the Finance Act, 2023/2025.

Reading note: Direct merits litigation on the section 115TD charge itself is, as yet, effectively absent — the levy is recent and most contests are fought one step earlier, at the cancellation of registration or approval that constitutes the deemed conversion. The Treatise records this candidly and catalogues the authorities that in fact decide whether and when the charge bites: the cancellation/approval jurisprudence (the trigger), the nature-of-the-levy authorities, and the governing administrative material.

A. SECTION COMMENTARY

A.1 The idea — a tax on the way out

A charitable trust or institution accumulates wealth over its lifetime largely out of income that the Act has exempted under sections 11 to 13 or under section 10(23C). The implicit bargain is that this corpus is dedicated in perpetuity to charitable or religious purposes — it is held for the public, not for the persons who manage it. Section 115TD enforces that bargain at the only moment when it can be broken: when the entity ceases to be a charitable body, or sheds its charitable character by merger, or dissolves without handing its assets on to another charitable body. At that exit point the Act asks, in effect, “what has the exemption built up that is now leaving the charitable stream?” — and taxes that accumulated net wealth once, at the maximum marginal rate, as “accreted income.” The levy is therefore best understood not as a tax on annual income but as a clawback of the benefit of past exemptions at the point of departure: an exit tax.

The structure deliberately follows the distribution-tax template of Chapter XII-D (dividend-distribution tax) and Chapter XII-E (income-distribution tax): an additional income-tax charged on the entity, “in addition to the income-tax chargeable in respect of the total income,” collected at a single point, declared final, and shielded from any offsetting deduction. What is distinctive is the base — not a distribution, but the entity's entire net worth measured at fair market value.

A.2 The three triggering events — sub-section (1)(a), (b) and (c)

The charge is attracted on any one of three events in a previous year. First, conversion (clause (a)): the specified person converts into “any form which is not eligible” for registration under section 12AA/12AB or approval under the relevant sub-clauses of section 10(23C). “Conversion” is not confined to a formal change of legal form; sub-section (3) deems it to occur in defined situations (discussed below). Second, merger (clause (b)): the specified person merges with an entity that is not a trust or institution having objects similar to it and is not itself registered/approved — in short, a merger that takes the corpus out of the charitable stream or into dissimilar objects. Third, non-transfer on dissolution (clause (c)): on dissolution, the specified person fails to transfer all its assets to another specified person within twelve months from the end of the month of dissolution. The twelve-month window is the charity-law principle of continued dedication (assets must pass to like charitable hands) given a hard statutory deadline.

On any of these events, the accreted income as on the “specified date” is charged to tax and the specified person is liable to additional income-tax at the maximum marginal rate. The “specified date” (Explanation (ii)) is the date of conversion, the date of merger, or the date of dissolution, as the case may be — the date on which the corpus is valued.

A.3 “Accreted income” — the base, and what is carved out (sub-section (2))

Accreted income is the amount by which the aggregate fair market value of the total assets of the specified person, as on the specified date, exceeds its total liability, computed by the prescribed method of valuation. The prescribed method is Rule 17CB of the Income-tax Rules, 1962 (originally framed for a “trust or institution” and amended to read “specified person”), which lays down asset-class-wise valuation — quoted shares at market price, unquoted equity by a net-asset formula, immovable property by stamp-duty value, and so on — and defines what counts as a “liability.” Because the base is net worth and not income in the ordinary sense, valuation is the heart of any section 115TD dispute, and Rule 17CB is indispensable machinery.

Three carve-outs in the provisos to sub-section (2) keep the levy within its rationale of taxing only exemption-built wealth. First, assets directly acquired out of section 10(1) agricultural income are ignored (such income was never within the charge to begin with). Second, assets acquired before registration/approval became effective are ignored where the entity was not allowed the benefit of sections 11 and 12 or section 10(23C) in that pre-registration period — wealth that did not enjoy the exemption should not be clawed back; a further proviso adjusts the effective date where retrospective benefit was in fact allowed under the relevant first/second provisos. Third, in a dissolution case, assets (and related liabilities) that have already been transferred to another specified person within the twelve-month window are ignored — they have stayed in the charitable stream and are not “leaving.”

A.4 The deeming of conversion — sub-section (3), the real battleground

Sub-section (3) is where most of the law lives. It deems a specified person to have “converted” into a non-eligible form in three situations: (i) its registration or approval has been cancelled; (ii) it has modified its objects so that they no longer conform to the conditions of registration and it has either not applied for fresh registration/approval in that year, or applied and been rejected; or (iii) it fails to make a timely application for registration/approval (renewal) under the time-limited clauses of section 12A(1)(ac) or the first proviso to section 10(23C), the period expiring in that year. Limb (iii), inserted by the Finance Act, 2022, is the trap practitioners most fear: a missed renewal deadline — a purely procedural lapse — is deemed a conversion and can detonate the exit tax on the entire net worth of an entity whose charitable character has not in substance changed at all. Commentators have urged that the consequence is disproportionate to the default; that debate is live, but the statute is presently clear.

Because each limb of sub-section (3) is keyed to an act of the Revenue or a dated lapse, the validity and timing of that act or lapse become the decisive questions. If the cancellation is itself without jurisdiction, or cannot in law operate for the year claimed, there is no deemed conversion and no charge. This is why the registration-cancellation jurisprudence — catalogued in Cluster C-1 below — is, in practical terms, the case law of section 115TD.

A.5 Charge despite no income, collection, finality, and no deduction — sub-sections (4) to (7)

Sub-section (4) makes the charge bite even though the specified person has no taxable total income — the exit tax is independent of the ordinary computation. Sub-section (5) fixes who pays and when: the principal officer or trustee and the specified person must pay the tax to the Central Government within fourteen days from carefully defined dates keyed to each trigger — for a cancellation, the date the time to appeal under section 253 expires without appeal, or the date the appellate order confirming cancellation is received; for a modification-of-objects or failure-to-reapply case, the end of the previous year; for a rejection of fresh application, dates tied to the appeal against rejection; for a merger, the date of merger; and for non-transfer on dissolution, the date the twelve months expire. The deferral of the due date in cancellation cases until the appeal route is exhausted is a deliberate protection — the exit tax does not crystallise while the cancellation is still being contested. Sub-section (6) declares the tax the “final payment” on the accreted income, with no credit to anyone; sub-section (7) denies any deduction for the income so charged or the tax thereon. Together (6) and (7) seal the single-point, final character of the levy.

A.6 How the section is litigated — and where the authorities lie

For the practitioner the section presents four lines of defence and enquiry, and the case law maps onto them. (a) Was there a valid trigger? — i.e., is the cancellation/rejection that is said to constitute the conversion within jurisdiction and effective for the year claimed (Industrial Infrastructure Development Corporation; M.M. Patel Charitable Trust)? (b) Is the entity in truth ineligible? — the substantive standards of registration and approval that the deemed conversion presupposes (Ananda Social and Educational Trust; New Noble Educational Society; and, for misuse, Batanagar). (c) Is the levy of this character at all assailable? — the nature of an “additional income-tax” on the entity (Tata Tea; Godrej & Boyce). (d) Is the base correctly computed? — the Rule 17CB valuation and the sub-section (2) carve-outs. The Treatise records candidly that no decision has yet adjudicated the section 115TD charge on its merits; the authorities below are the ones that, in fact, determine the outcome of a section 115TD dispute, each with its precise relationship stated.

B. STATUTORY POSITION (verbatim operative text)

Section 115TD, Income-tax Act, 1961 (Chapter XII-EB), as it stands on the statute book:

115TD. (1) Notwithstanding anything contained in this Act, where in any previous year, a specified person has—

(a) converted into any form which is not eligible for grant of registration under section 12AA or section 12AB, or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10;

(b) merged with any entity other than an entity which is a trust or institution having objects similar to it and registered under section 12AA or section 12AB or approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or

(c) failed to transfer upon dissolution all its assets to any other specified person within a period of twelve months from the end of the month in which the dissolution takes place,

then, in addition to the income-tax chargeable in respect of the total income of such specified person, the accreted income of the specified person as on the specified date shall be charged to tax and such specified person shall be liable to pay additional income-tax (herein referred to as tax on accreted income) at the maximum marginal rate on the accreted income.

(2) The accreted income for the purposes of sub-section (1) means the amount by which the aggregate fair market value of the total assets of the specified person, as on the specified date, exceeds the total liability of such specified person, computed in accordance with the method of valuation, as may be prescribed:

Provided that so much of the accreted income as is attributable to the following asset and liability, if any, related to such asset, shall be ignored for the purposes of sub-section (1), namely:—

(i) any asset which is established to have been directly acquired by the specified person out of its income of the nature referred to in clause (1) of section 10;

(ii) any asset acquired by the specified person during the period beginning from the date of its creation or establishment and ending on the date from which the registration under section 12AA or section 12AB or approval under clause (23C) of section 10 became effective, if the specified person has not been allowed any benefit of sections 11 and 12 or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 during the said period:

Provided further that where due to the provisions of the first proviso or the second proviso to sub-section (2) of section 12A or the eighth proviso to clause (23C) of section 10, the benefit of sections 11 and 12, or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 have been allowed to the specified person in respect of any previous year or years beginning prior to the date from which the registration under section 12AA or section 12AB or approval under clause (23C) of section 10 is effective, then, for the purposes of clause (ii) of the first proviso, the registration or approval shall be deemed to have become effective from the first day of the earliest previous year:

Provided also that while computing the accreted income in respect of a case referred to in clause (c) of sub-section (1), assets and liabilities, if any, related to such asset, which have been transferred to any other specified person within the period specified in the said clause, shall be ignored.

(3) For the purposes of sub-section (1), a specified person shall be deemed to have been converted into any form not eligible for registration under section 12AA or section 12AB or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 in a previous year, if,—

(i) the registration or approval granted to it under section 12AA, or section 12AB, or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, has been cancelled; or

(ii) it has adopted or undertaken modification of its objects which do not conform to the conditions of registration and it—

(a) has not applied for fresh registration under section 12AA, or section 12AB, or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 in the said previous year; or

(b) has filed application for fresh registration under section 12AA, or section 12AB, or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 but the said application has been rejected; or

(iii) it fails to make an application in accordance with the provisions of clause (i) or clause (ii) or clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or sub-clause (ii) or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A, within the period specified in the said clauses or sub-clauses, as the case may be, which expires in the said previous year.

(4) Notwithstanding that no income-tax is payable by a specified person on its total income computed in accordance with the provisions of this Act, the tax on the accreted income under sub-section (1) shall be payable by such specified person.

(5) The principal officer or the trustee of the specified person, as the case may be, and the specified person shall also be liable to pay the tax on accreted income to the credit of the Central Government within fourteen days from,—

(i) the date on which— (a) the period for filing appeal under section 253 against the order cancelling the registration expires and no appeal has been filed by the specified person; or (b) the order in any appeal, confirming the cancellation of the registration, is received by the specified person, in a case referred to in clause (i) of sub-section (3);

(ii) the end of the previous year in a case referred to in sub-clause (a) of clause (ii), clause (ii), or clause (iii), of sub-section (3);

(iii) the date on which— (a) the period for filing appeal under section 253 against the order rejecting the application expires and no appeal has been filed by the specified person; or (b) the order in any appeal, confirming the cancellation of the application, is received by the specified person, in a case referred to in sub-clause (b) of clause (ii) of sub-section (3);

(iv) the date of merger in a case referred to in clause (b) of sub-section (1);

(v) the date on which the period of twelve months referred to in clause (c) of sub-section (1) expires.

(6) The tax on the accreted income by the specified person shall be treated as the final payment of tax in respect of the said income and no further credit therefor shall be claimed by the specified person or by any other person in respect of the amount of tax so paid.

(7) No deduction under any other provision of this Act shall be allowed to the specified person or any other person in respect of the income which has been charged to tax under sub-section (1) or the tax thereon.

Explanation.—For the purposes of this section,— (i) “date of conversion” means— (a) the date of the order cancelling the registration under section 12AA or section 12AB, or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, in a case referred to in clause (i) of sub-section (3); or (b) the date of adoption or modification of any object, in a case referred to in clause (ii) of sub-section (3); or (c) the last date for making an application for registration under sub-clause (i) or sub-clause (ii) or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or for making an application for approval under clause (i) or clause (ii) or clause (iii) of the first proviso to clause (23C) of section 10, as the case may be, in a case referred to in clause (iii) of sub-section (3); (ii) “specified date” means— (a) the date of conversion in a case falling under clause (a) of sub-section (1); (b) the date of merger in a case falling under clause (b) of sub-section (1); and (c) the date of dissolution in a case falling under clause (c) of sub-section (1); (iia) “specified person” means— (a) any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or (b) a trust or institution registered under section 12AA or section 12AB; (iii) registration under section 12AA or section 12AB shall include any registration obtained under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996).

C. AUTHORITIES

Candour note: Chapter XII-EB is a recent levy (1 June 2016, widened 1 April 2023) and the additional income-tax under section 115TD has not yet been the subject of a reported decision adjudicating the charge on its merits. The authorities below are grouped by the work they do in a real section 115TD dispute — first, the cancellation/approval jurisprudence that constitutes (or defeats) the deemed conversion which is the trigger; second, the authorities fixing the nature of the additional income-tax on the entity; third, the governing administrative purpose and the prescribed valuation machinery. Each entry states its precise relationship to the section.

Cluster C-1 : The trigger — cancellation of registration/approval and its validity and timing (section 115TD(3))

Section 115TD(3) deems a conversion when registration or approval is cancelled, when objects are modified without (accepted) re-registration, or when a renewal application is not made in time. Whether the exit tax bites — and from what specified date — turns on whether that cancellation or lapse is valid and effective. These are the authorities that decide it.

Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd. v. CIT, (2018) 403 ITR 1 / 253 Taxman 480 / 301 CTR 153 / 163 DTR 49 (SC).

Principle: An express power to cancel a registration granted under section 12A was conferred on the Commissioner for the first time by the insertion of sub-section (3) in section 12AA by the Finance (No. 2) Act, 2004 with effect from 1 October 2004. Until that date the Commissioner had no power to cancel, withdraw or recall a registration once granted; a substantive power of cancellation cannot be read into the statute by implication, and the 2004 amendment is prospective, not retrospective.

Application to Chapter XII-EB: The whole of section 115TD(3)(i) is keyed to a cancellation of registration or approval; and the Explanation fixes the “date of conversion” as the date of the order cancelling the registration. A cancellation that is itself without jurisdiction or beyond power can therefore furnish no foundation for the accreted-income charge — no valid cancellation, no deemed conversion, no specified date, no charge. This Supreme Court authority is the source of the discipline that the validity and the precise date of the cancellation order are anterior questions to any levy under section 115TD.

Status: Supreme Court. Authority on the source and prospectivity of the power to cancel registration under section 12AA(3); decided before Chapter XII-EB fell for consideration, but directly governs the trigger in section 115TD(3)(i).

M.M. Patel Charitable Trust v. CIT (Exemptions) (ITAT Pune, ITA No. 1130/PUN/2024, order dated 21 February 2025).

Principle: The concept of “specified violation” in section 12AB(4), and the power thereunder to cancel a registration, were introduced only with effect from 1 April 2022; they cannot be invoked to cancel a registration retrospectively for earlier years (there, AYs 2019-20 to 2021-22). A cancellation purporting to operate before the provision existed is without authority of law and is liable to be quashed, and the registration restored.

Application to Chapter XII-EB: Directly material to the date and the validity of the conversion under section 115TD. Because the “date of conversion” (and hence the specified date on which the accreted income is frozen and the fourteen-day clock in section 115TD(5) starts) is the date of the cancellation order, a cancellation that is invalid — or that cannot in law take effect for the year claimed — cannot fix a specified date or sustain the exit tax. The decision shows the first line of defence to a section 115TD demand: attack the cancellation that is said to constitute the conversion.

Status: ITAT Pune; cancellation quashed, registration restored. Tribunal-level decision on the reach of section 12AB(4); cited for its bearing on the timing and validity of the section 115TD(3)(i) trigger, not as a decision construing section 115TD.

CIT (Exemptions) v. Batanagar Education and Research Trust, (2021) 436 ITR 501 / 282 Taxman 1 / 321 CTR 633 / 204 DTR 217 (SC).

Principle: A trust which receives bogus donations by cheque and returns the money in cash to the donors, classifying the receipts as capital, misuses the status conferred on it by section 12AA; an entity which misuses that status is not entitled to retain and enjoy it, and the cancellation of its registration under section 12AA (and approval under section 80G) is justified. The Supreme Court reversed the High Court and restored the order of the Tribunal upholding cancellation.

Application to Chapter XII-EB: The paradigm of a section 115TD(3)(i) trigger. Once registration is cancelled on the ground of misuse and that cancellation attains finality, the specified person is deemed to have been converted into a form not eligible for registration, and the accreted-income charge fastens as on the date of the cancellation order. Batanagar illustrates the kind of conduct that both ends the registration and sets the exit tax running.

Status: Supreme Court. Decision on cancellation of registration under section 12AA; cited for the event that constitutes the conversion in section 115TD(3)(i), not as a decision construing section 115TD itself.

Ananda Social and Educational Trust v. CIT, (2020) 426 ITR 340 / 272 Taxman 7 / 313 CTR 369 / 187 DTR 169 (SC).

Principle: Section 12AA concerns the registration of a trust and not an assessment of what it has actually done; the word “activities” in the provision includes “proposed activities.” A newly registered trust that has not yet commenced operations may be registered, the Commissioner being bound to satisfy himself that the objects are genuinely charitable and that the proposed activities are genuine and in line with those objects.

Application to Chapter XII-EB: Defines the gateway whose loss triggers section 115TD. Because the registration enquiry is object-and-genuineness based, the later cancellation that activates the exit tax must rest on a failure of those same criteria. The decision frames what it means for a body to be “eligible for registration,” the benchmark against which a section 115TD(3) deemed conversion is measured.

Status: Supreme Court. Authority on the scope of the registration enquiry under section 12AA; cited on principle for the eligibility benchmark underlying Chapter XII-EB, not as a section 115TD decision.

New Noble Educational Society v. Chief CIT, (2022) 448 ITR 594 / 329 CTR 137 / 219 DTR 89 / 143 taxmann.com 276 (SC).

Principle: For exemption under section 10(23C)(vi) an educational institution must exist “solely” for education and not for purposes of profit; “solely” means exclusively, and an institution whose objects include purposes unrelated to education does not qualify. The Court also held that, where registration or approval is obligatory under State or local law, the institution seeking approval must comply with those laws.

Application to Chapter XII-EB: Section 115TD was extended by the Finance Act, 2022 to specified persons approved under sub-clauses (iv), (v), (vi) and (via) of section 10(23C); cancellation of such approval is a section 115TD(3)(i) trigger and its loss a clause (a) conversion. New Noble fixes the substantive standard — “solely” for education and compliance with allied laws — whose breach can cost the approval and thereby set the accreted-income charge running. It also illuminates the “any other law” limb of the specified-violation regime that feeds section 115TD(3).

Status: Supreme Court. Authority on section 10(23C) approval; cited for the standard governing the approvals whose cancellation triggers section 115TD, not as a section 115TD decision.

Cluster C-2 : The nature of the levy — an additional income-tax on the entity, charged once and final

Section 115TD is an “additional income-tax” on the specified person, in addition to the tax on total income, declared final and shielded from deduction. Its constitutional and conceptual footing is the dividend-distribution-tax jurisprudence, from which the legislature borrowed the design.

Union of India v. Tata Tea Co. Ltd., (2017) 398 ITR 260 / 297 CTR 465 (SC).

Principle: An additional income-tax levied on a body in respect of an event — there, the additional tax on distributed profits under section 115-O — is a tax on income within Entry 82 of List I and is within the legislative competence of Parliament; the levy is on the entity, in addition to and distinct from the tax on its total income, and the measure of the charge does not change its character as a tax on income.

Application to Chapter XII-EB: Section 115TD shares this architecture: it is an additional income-tax charged on the specified person, “in addition to the income-tax chargeable in respect of the total income,” measured by the accreted income (assets over liabilities). Tata Tea supplies the constitutional and conceptual footing for treating the accreted-income levy as a valid additional income-tax on the entity — the same reasoning the legislature borrowed from the dividend-distribution tax. Cited on principle for the nature of the charge.

Status: Supreme Court. Authority on the nature and competence of an additional income-tax (DDT context); cited by analogy for the character of the section 115TD levy, not a section 115TD decision.

Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT, (2017) 394 ITR 449 / 295 CTR 121 (SC).

Principle: The additional income-tax on distributed profits is a distinct charge imposed on the company in addition to the income-tax on its total income; the corresponding exemption in the recipient's hands is the counterpart of that single-point levy. The scheme — tax once at the entity, exempt thereafter — is a coherent legislative choice and does not offend the charging scheme of the Act.

Application to Chapter XII-EB: Mirrors the structure of section 115TD: a one-time charge at the entity gate, declared by sub-section (6) to be the “final payment of tax” on the accreted income, with no further credit to anyone and (sub-section (7)) no deduction. Godrej & Boyce explains why such an “in addition to” charge, treated as final, is internally consistent. Cited on principle for the finality-and-no-credit design of the accreted-income tax.

Status: Supreme Court. Authority on the additional-tax-plus-exemption design (DDT context); cited by analogy for the finality mechanism in section 115TD(6)-(7), not a section 115TD decision.

Cluster C-3 : Governing administrative purpose and prescribed valuation machinery

Memorandum to the Finance Bill, 2016 and Finance Bill, 2022, and the Explanatory Notes / CBDT instructions on Chapter XII-EB; Rule 17CB, Income-tax Rules, 1962 (Notification No. 32/2017 dated 21 April 2017).

Principle: Chapter XII-EB (sections 115TD-115TF) was inserted by the Finance Act, 2016 with effect from 1 June 2016 to levy an “exit tax” ensuring that the benefit conferred over the years by exemption is not misused by a trust or institution converting into a non-charitable form, merging with a dissimilar or non-charitable entity, or failing on dissolution to transfer its assets to another charitable body. The Finance Act, 2022 extended the chapter to specified persons approved under section 10(23C) and added the failure-to-reapply trigger in section 115TD(3)(iii). Rule 17CB prescribes the method of valuation of the aggregate fair market value of total assets and the total liability for the purpose of section 115TD(2), originally framed for a “trust or institution” and amended to read “specified person.”

Application to Chapter XII-EB: The governing administrative and subordinate-legislation material. The Memoranda state the object — plugging the gap that let exemption-built corpus escape untaxed on exit — and Rule 17CB supplies the indispensable machinery for quantifying “accreted income,” without which sub-section (2) cannot be worked. Cited as the authoritative statement of purpose and the prescribed valuation method.

Status: Legislative Memoranda and subordinate legislation (Rule 17CB). Not case law; included as the governing administrative explanation and valuation machinery for Chapter XII-EB.

Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced verbatim from the Income-tax Act, 1961. Citations stated as reported; tribunal and stay-stage orders are flagged as such. This material is for professional reference and is not legal advice.