Approval Under Section 80G Rejection of Approval Under Section 80G Where Society Diverted from its Objects—Justification of

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The Tax Publishers Income Tax--Approval Under Section 80G Rejection of Approval Under Section 80G Where Society Diverted from its Objects--Justification of CA. Nisha Bhandari Deduction under Section 80G is allowed for any amount paid as donation to certain approved funds, trusts or charitable institutions Thus approval is one of the condition precedent for any institution to be eligible for donation qualifying for deduction under Section 80G. The present write-up discusses some issues relevant to grant of approval for the purpose of Section 80G. 1. Deduction under Section 80G available to approved institutions only Under Section 80G deduction is available in respect of donation to any institution or fund established in India for a charitable purpose provided these institutions and funds fulfil the conditions prescribed in sub-section (5) of Section 80G. These conditions are as under -- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of Sections 11 and 12 or clause (23AA) or clause (23C) of Section 10. It is provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of Section 11 shall not apply in relation to such income, if - (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to the person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer of application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) the institution or fund maintains regular accounts of its receipts and expenditure; (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860, or under any law corresponding to that Act in force in any part of India or under Section 25 of the Companies Act, 1956, or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law or is an institution financed wholly or in part by the Government or a local authority; SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Approval Under Section 80G

Rejection of Approval Under Section 80G Where Society Diverted from its Objects--Justification of

CA. Nisha Bhandari

Deduction under Section 80G is allowed for any amount paid as donation to certain approved funds, trusts or charitable institutions Thus approval is one of the condition precedent for any institution to be eligible for donation qualifying for deduction under Section 80G. The present write-up discusses some issues relevant to grant of approval for the purpose of Section 80G.

1. Deduction under Section 80G available to approved institutions only

Under Section 80G deduction is available in respect of donation to any institution or fund established in India for a charitable purpose provided these institutions and funds fulfil the conditions prescribed in sub-section (5) of Section 80G.

These conditions are as under --

(i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of Sections 11 and 12 or clause (23AA) or clause (23C) of Section 10.

It is provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of Section 11 shall not apply in relation to such income, if -

(a) the institution or fund maintains separate books of account in respect of such business;

(b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and

(c) the institution or fund issues to the person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;

(ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer of application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose;

(iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste;

(iv) the institution or fund maintains regular accounts of its receipts and expenditure;

(v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860, or under any law corresponding to that Act in force in any part of India or under Section 25 of the Companies Act, 1956, or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law or is an institution financed wholly or in part by the Government or a local authority;