Part I : Charitable Trusts and Institutions |
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Section A : Procedure for Registration of Charitable Trusts/Institutions |
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| 1. - Mandatory Registration by Charitable Trusts and Institutions for Availing of Exemption |
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| Conditions for availing of exemption under sections 11 and 12 |
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| Position prevailing upto 31-3-2021 |
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| Amendment by Taxation Laws (Amendment and Relaxation of Certain Provisions) Act, 2020 |
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| Conditions regarding registration as effective from 1-4-2021 [Clause (ac) of section 12A(1)] |
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| Conditions as regards registration as applicable between 1-6-2007 to 31-3-2021 [Section 12A(1)(aa)] |
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| Procedure for registration as applicable upto 31-5-2007 [Section 12A(1)(a)] |
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| Assessment year from which sections 11 and 12 shall become applicable |
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| Position where application is made under sub-clauses (i) and (iii) of clause (ac) of section 12A(1) |
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| Availability of exemption for prior years once registration granted under section 12AA [Provisos to section 12A(2)] |
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| Applicability of provisos to section 12A(2) |
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| Registration as a condition precedent for exemption under section 11 |
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| No condonation of delay after change in law |
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| 2. - Procedure for Registration under Section 12AB |
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| Action to be taken by Principal Commissioner or Commissioner on receipt of application under section 12A(1)(ac) |
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| Status of pending application |
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| Passing of order |
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| Cancellation of registration |
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| 3. - Procedure for Registration by Existing Trusts and Institutions |
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| Already registered existing trusts need to be re-registered compulsorily |
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| Grant of registration without any fresh enquiry |
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| Form for applying for fresh registration |
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| Manner of furnishing Form No. 10A |
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| Documents to be accompanied with Form No. 10A |
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| Order of registration and issuance of URN |
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| Default consequences |
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| Authority responsible to lay down relevant procedure |
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| Position of already registered trusts as on 1-4-2021 under new provision -- At a glance |
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| Position of existing non-registered trust as on 1-4-2021 |
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| FAQs on Form 10A |
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| 4. - Procedure for Provisional Registration by Newly Established Organisations |
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| New organisations first need to be provisionally registered |
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| Application for provisional registration |
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| Order granting provisional registration |
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| Effective date of provisional registration applied for under section 12A(1)(ac)(vi), during previous year 2021-22 |
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| Conversion of provisional registration into normal registration |
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| Time limit for applying for normal registration |
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| Action to be taken by Principal Commissioner or Commissioner on receipt of application |
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| Time limit for passing of order |
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| Illustration explaining procedure regarding provisional registration and conversion thereof in normal registration |
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| 5. - Procedure for Renewal of Registration Granted under Section 12AB |
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| Requirement as to renewal of registration |
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| Time limit for filing application for renewal |
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| Form and manner for furnishing application |
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| Enquiry to be made by Principal Commissioner or Commissioner before renewal of registration |
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| Passing of order granting renewal of registration |
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| Procedure for renewal of registration granted under section 12AB -- At a glance |
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| 6. - Registration Procedure Under Certain Other Circumstances |
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| Registration of trusts or institutions where registration became inoperative due to first proviso to section 11(7) |
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| Trust when becomes inoperative |
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| Application when to be filed for re-registration |
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| Manner of furnishing application |
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| Action to be taken by Principal Commissioner or Commissioner on receipt of application |
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| Order granting registration |
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| Exemption when becomes applicable |
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| Registration where objects of the trust modified |
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| Related statutory provision |
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| Filing of application for obtaining fresh registration |
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| Manner for furnishing application |
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| Action to be taken by Principal Commissioner or Commissioner on receipt of application |
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| Passing of order |
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| Applicability of exemption provision |
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| Example explaining procedure |
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| Registration in any other case |
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| 7. - Cancellation of Registration Granted under Section 12AB |
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| Cancellation of registration granted under section 12AB |
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| Order for cancellation of registration |
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| Effect of cancellation |
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| Appeal can be filed before Tribunal against order under section 12AB |
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| 8. - New Procedure for Registration and Re-registration -- In Nutshell |
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| Registration requirement as referred to in section 12A(1)(ac) |
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| Form and manner for making application for registration under section 12AB |
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| All Forms under new procedure |
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| Steps to file Form No. 10A and 10AB |
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| Documents to be attached with Form 10A and Form 10AB |
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| 9. - Faceless Registration Scheme |
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| Central Government empowered to make faceless registration scheme |
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| Direction for certain exceptions and modifications |
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| Laying down of notification before each house of parliament |
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| 10. - Registration Under Erstwhile Section 12AA as Applicable upto 31-3-2021 |
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| Procedure for registration amended by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 |
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| Procedure to be followed by Principal Commissioner or Commissioner on receipt of application for registration |
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| Opportunity of being heard -- Proviso to sub-section (1) |
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| Time limit for passing order refusing grant of registration |
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| Limitation period provided in sub-section (2) is mandatory |
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| Principal Commissioner or Commissioner empowered to cancel registration |
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| Date of granting of registration |
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| Justification of lodging of application |
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| Appeal can be filed before Tribunal against order under section 12AA |
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| 11. - Cancellation of Registration of Charitable Trusts Granted under Section 12AA |
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| Principal Commissioner or Commissioner empowered to cancel registration |
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| Applicability of sub-section (3) of section 12AA |
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| Onus to prove justification of cancellation of registration |
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| Assessing officer not empowered to cancel registration under section 12A |
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| Justification of cancellation of registration consequent upon search and seizure proceedings |
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| Power of Commissioner to cancel registration granted under section 12A i.e. prior to insertion of section 12AA |
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| Clarification regarding power to cancel registration obtained under section 12A as it stood before amendment by Finance (No. 2) Act, 1996 |
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| Applicability of section 21 of General Clauses Act |
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| Cancellation under section 12AA vis-a-vis applicability of section 115TD(3) |
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| Clarification as to cancellation of trust after insertion of section 115TD -- Circular No. 21/2016, dt. 27-5-2016 |
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| Constitutional validity of amendment in section 12AA(3) |
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| Cancellation of registration not justified where assessee not carrying on any commercial activities |
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| Cancellation of registration where assessee engaged in commercial activities |
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| No cancellation where conditions mentioned in sub-section (3) not satisfied |
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| Justification of withdrawal of registration in pursuance of amendment in proviso to section 2(15) |
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| No cancellation of registration merely on ground that Memorandum and Articles of Association allowed assessee to do business |
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| Cancellation of registration vis-a-vis alteration in object clause |
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| Acceptance of capitation fees |
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| Cancellation of registration on ground of alleged non-genuine donation |
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| Cancellation on ground of alleged misappropriation of funds by trustees |
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| Reasonable opportunity to be provided |
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| Cancellation of registration on rejection of application for exemption under section 10(23C)(vi) |
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| Cancellation of registration on ground of carrying on activities of commercial nature generating huge revenue |
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| Cancellation of registration on ground that business carried on not incidental to charitable objects |
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| Cancellation on ground of having mixed objects |
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| Justification of cancellation of registration on ground of running of institution on commercial basis and alleged violation of section 13(1)(c) |
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| Bribe and criminal misconduct by trust |
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| Notice for cancellation to be quashed if without any basis |
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| Cancellation by issuing notice under section 148 to reopen assessment |
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| Order of stay of recovery of demand arising due to cancellation of registration under section 12AA(3) |
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| Cancellation of registration on ground of application of surplus for non-charitable purposes |
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| Scope of power of cancellation under section 12AA(3) |
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| Cancellation on ground of violation of section 13 |
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| Cancellation of registration on ground of huge donation to another trust |
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| Re-registration on the basis of the very same trust deed |
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| Society where entered into a sham transaction |
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| Effective date of cancellation of registration |
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| Cancellation on ground of receipt of donation from accommodation entry provider |
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| Principal Commissioner or Commissioner empowered to cancel registration on some more grounds [Sub-section (4) of section 12AA] |
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| Reasons for and impact of insertion of sub-section (4) |
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| 12. - Issues Arising While Granting or Rejecting Registration Application |
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| Scope of enquiry while granting registration |
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| Justification of denial of registration on failure to furnish complete list of donors |
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| Application of income need not to be examined while granting registration under section 12AA |
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| Entitlement for registration |
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| Registration not to be denied in absence of proper infrastructure |
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| Trust having clause to engage into any other activities which it deems beneficial to minorities |
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| Assessee predominantly doing religious activities |
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| Satisfaction of registering authority as to genuineness of activities necessary |
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| Registration to be granted if trust existed as a genuine trust |
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| Impact of Commissioner's finding on genuineness of charitable activities |
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| No denial on basis of non-maintenance or non-filing of accounts |
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| Assessee being a company under section 25 of Companies Act [Corresponding to section 8 of Companies Act, 2013] |
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| Assessee doing business activity to earn profit |
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| Assessee trust not an independent organization but controlled by foreign organisation |
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| Registration of amended trust deed |
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| Copy of registration under Wakf board evidencing all details where provided |
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| Registration not to be granted where creation of trust is ultra vires on facts of case |
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| Trustees being members of same family |
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| Assessee carrying on staff welfare activities |
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| Assessee-society established and registered abroad |
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| Assessee where granting funds to one institution |
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| Registration should be granted immediately on settlement of dispute |
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| Impact of failure to take action on application for registration of charitable trust within six months |
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| Prescribed time limit in passing order under section 12AA to be strictly adhered to |
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| Registration not to be granted subject to imposition of certain conditions |
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| Trust taking colour of private trust |
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| Charitable cum religious trust |
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| Effect of grant of registration |
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| Justification of rejection of application for registration |
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| Impact of non-furnishing of certificate of registration |
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| Rejection of registration application not justified where one of the object not charitable |
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| No amount where spent for charitable activity |
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| Denial of registration on basis of words used 'commercial education' |
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| Denial on basis of charging of hefty fee from students |
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| Denial of registration on ground of unexplained cash deposit in bank account consequent to demonetization scheme |
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| Denial of registration on ground of imparting education to a particular religion only |
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| Rejection of registration where benefit confined to a section of public only |
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| Denial of registration on the ground of being meant for benefit of a particular community |
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| Registration not to be refused on ground of non-commencement of charitable activity |
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| No rejection on ground of shortcomings in the functioning of society |
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| Condonation of delay in filing application where assessee already enjoying exemption under section 10 |
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| Justification of denial of registration on the ground that founder-trustees committed heinous crimes |
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| Rejection of application without speaking order not justified |
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| Necessity of formal deed of trust |
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| Justification of rejection of application on basis of Accountant General's report regarding genuineness of accounts |
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| Assessee engaged in the category of activity of 'object of general public utility' |
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| Restoration of application for registration |
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| Separate registration required to Bar Council and advocates welfare fund |
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| Registration not to be rejected on the basis of presumptions and surmises |
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| Rejection on ground of no beneficiary clause in trust deed |
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| Opportunity to be given before rejecting application for registration |
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| Consequences of not passing of registration order within statutory period |
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| Activities of assessee-society if not fully explained |
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| Trust having restrictive composition |
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| Entitlement for registration where assessee was availing of exemption under section 10(26AAB) |
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| No denial of registration on ground of generation of surplus |
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| Rejection of application in absence of dissolution clause in trust deed |
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| Registration cannot be denied for want of instrument of its creation |
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| Defects in trust deed |
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| Registration not be denied on ground that it applied after several years and no returns were filed |
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| Registration application not to be disposed of by the authority other than Commissioner |
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| Delay in transferring application from office of Chief CIT to CIT to be ignored |
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| Registration can be refused in case of non-filing of requisite information |
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| Registration under section 12AA vis-a-vis requirement of being notified under section 10(23C)(iiiad) |
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| No denial of registration on the ground of having registration twice with Registration of Societies |
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| Registration and alleged violation under section 13 |
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| Rejection on the ground that trust formed to carry out CSR activities |
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| Rejection of registration vis-a-vis pendency of appeal |
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| Making fresh application of registration, where earlier one rejected |
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| Registration not to be refused on basis of not providing for allocation of functions and duties of office bearers in MOA |
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| Rejection of registration not permissible where proper procedure is not adopted |
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| Society where established and registered abroad and not in India |
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| Application for registration where filed two times |
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| Ownership of land where doubted |
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| Requirement of registration under other laws |
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| Requirement of registration under Societies Act |
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| Denial of registration for being not registered under Bombay Public Trust |
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| Registration under section 43(1) of AP Charitable and Hindu Religious Institutions and Endowments Act, 1987 vis-a-vis under section 12AA |
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Section B : Exemption to Charitable Trusts and Institutions |
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| 13. - Exemption When Available to Charitable Trust/Institution under Section 11 |
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| Conditions precedent for availing of exemption in respect of charitable trusts |
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| Exemption to wholly religious or charitable trust under section 11(1)(a) |
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| Exemption to partial charitable or religious trust created prior to 1-4-1962 under section 11(1)(b) |
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| Partial trust wholly for charitable purpose |
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| Partial trust is different from a mixed trust |
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| Exemption in case of application of income outside India [Section 11(1)(c)] |
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| Exemption in respect of corpus donation [Section 11(1)(d)] |
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| Availability of exemption to foreign trust having charitable activities in India |
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| Subject to sections 60 to 63 in opening part of section 11 -- Significance of |
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| Revocable trust vis-a-vis exemption under section 11 |
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| Scheme of exemption under section 11 in tabular form |
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| Trust or institution registered under section 12AA or section 12AB cannot claim general exemption under section 10 |
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| Trust approved under section 10(23C) or notified under section 10(46) can claim benefit of only one section either section 10(23C) or section 10(46) or section 11 |
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| Application or accumulation |
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| Meaning of wholly for charitable and religious purposes for the purpose of sections 11(1)(a) and 11(1)(b) |
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| Wholly not akin to mainly but more akin to solely |
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| Partly setting apart for private use |
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| Judicial rulings regarding expression "in part" in section 11(1)(b) |
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| Division between two expression "wholly" and "in part" |
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| "Wholly" and "in part" in relation respectively to clauses (a) and (b) of section 11(1) -- Clarification as to significance of |
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| Exemption to trust having mixed activities i.e., partly charitable and partly religious |
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| Assessee failed to file notification under section 10(23C)(vi) or where application rejected |
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| Domain of operation of section 11 vis-a-vis of section 80G |
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| 14. - Charitable Purpose -- Meaning and Scope |
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| Charitable purpose necessary for exemption under section 11 |
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| I. RELIEF TO POOR |
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| II. EDUCATION AND YOGA |
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| Meaning of education in context of section 2(15) |
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| Private coaching institute, whether education |
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| Creation of facility for education |
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| Providing of hostel facility |
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| Providing of catering service |
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| Income of educational institution from letting out of properties |
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| Financial assistance to students |
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| Institution providing technical education |
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| Treatment of caution money |
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| Holding of seminars/conferences against fees towards fulfilment of object of education |
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| Dissemination of knowledge and training in specialized subjects |
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| Instances where purpose held to be not an education |
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| Propaganda through newspaper |
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| Scholarship to students studying in school of arts |
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| Visiting museum |
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| Regional computer centre owned by government |
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| Activities in the nature of safety training programme, etc. |
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| Educational society run on commercial lines |
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| Conducting classes in event management without granting any degree or diploma |
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| Translation and printing of bible |
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| Yoga as charitable purpose |
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| III. MEDICAL RELIEF |
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| IV. PRESERVATION OF ENVIRONMENT, MONUMENTS, ETC. AS CHARITABLE PURPOSE |
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| 15. - Any Other Object of General Public Utility in Section 2(15) |
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| I. MEANING AND SCOPE OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY |
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| Any other object of general public utility |
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| Scope of the object of general public utility |
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| Advancement to be for benefit to section of public and not whole mankind |
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| Element of private gain vitiates object of general public utility |
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| Income earned from activity incidental to main purpose |
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| Provisos to section 2(15) restricted scope of term "advancement of any other object of general public utility" |
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| Position of restriction on advancement of any other object of general public utility at different point of time |
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| No exemption to trust or institution in respect of that previous year in which first proviso becomes applicable |
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| Clarification regarding definition of charitable purpose by CBDT vide Circular No. 11/2008 dt. 19-12-2008 |
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| Amendment in section 2(15) by Finance Act, 2008 and reasons regarding |
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| Proviso to section 2(15) not applicable in respect of first three limbs of section 2(15) |
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| Applicability of proviso to fourth limb of section 2(15) |
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| Proviso not applicable in case of association run on mutuality principle |
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| Determination of 'advancement of any other object of general public utility' would depend upon facts of the case |
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| Impact of insertion of provisos in section 2(15) defining charitable purpose vis-a-vis exemption under section 11(4A) |
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| Incidental surplus without profit motive where not regarded as commercial activity |
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| Department to prove that assessee was engaged in trade or commercial activity |
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| Certain activities not regarded as trade, commerce or business so as to attract proviso to section 2(15) |
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| Trust rendering selfless services not covered by first proviso to section 2(15) |
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| Society providing accommodation lodge |
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| Advancement of music and other fine arts |
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| Activity of Bureau of Indian Standards |
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| Promotion of vegetarianism and distribution of prasad, etc. |
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| Receipt of trust not exceeding limit specified in second proviso, same was eligible for exemption |
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| Special development authority to control the land usage, preparation of Master plan, environmental issues on account of petroleum, chemical and petrochemical investment region |
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| Trust having object of education and development of natural talents of the people more particularly the women |
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| Activities of Development Authority |
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| Purchase and sale of milk and ghee, etc., by trust having primary object of providing shelter to cows |
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| Activities ancillary to education |
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| II. INSTANCES OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY OR OTHERWISE |
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| Provision of employment |
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| Erection and maintenance of memorial halls for use by public |
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| Repair and maintenance of Samadhi, holding Mela (fair) |
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| Authoritative weighment of bullion and jewellery |
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| Gaushalas and Pinjarapoles -- Establishment and maintenance |
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| Promotion of trade, commerce and industry |
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| Running and publishing of newspaper |
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| Road transport service |
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| Holding of trade fair |
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| Promotion of hire purchase business |
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| Specialised information in respect of circulation of newspapers and periodicals |
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| Ensuring quality services of competent lawyers |
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| Encouragement and management games and sports |
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| Stock exchange for facilitating business transaction |
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| Promotion of unity and brotherhood amongst members of a community |
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| Development of all aspects of life not vague |
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| Dharmshala maintenance and feeding of animals |
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| Development of interest in artistic activities |
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| Housing colony for workmen |
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| Training for popularising horsemanship |
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| Protection of interest of those engaged in certain trade |
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| Benefit to scheduled tribes |
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| Monetary help for marriages, etc. |
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| Development of fine arts |
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| Diffusion of political knowledge |
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| Raising of political level |
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| Library, maintenance of |
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| Mutual benefit fund |
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| Financing agriculturists |
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| Training of horses for polo, etc. |
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| Warehousing corporation constituted under government statute |
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| State Road Transport Corporation |
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| Research stations |
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| Promotion of cottage and village industries |
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| Activities of development and maintenance of ports |
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| Welfare of locality |
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| Promotion of artistic principles, literature, fine arts, etc. |
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| Advancement of scheduled castes and tribes |
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| Welfare of police force |
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| Research establishment in Ayurvedic medicines |
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| Monetary help for marriage of poor girls and sacred threads ceremony for boys of its community |
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| Women Training Institute |
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| Activity of providing placement services to ex-army personnel |
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| Development of cities and towns vis-a-vis general public utility |
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| Distribution of free food in rain basera, prasad in function |
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| Imparting training in correctional administration to officials of prison/police/ judicial department |
191
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| Imparting of knowledge and education of commercial laws and tax laws |
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| Running of medical centre |
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| Benefit of anesthetists |
192
| >> |
| Providing assistance for funeral |
192
| >> |
| Assistance to orphanages |
192
| >> |
| Welfare of animals |
192
| >> |
| Activities relating to meditation, preaching and propagation of philosophy, etc. |
192
| >> |
| Activity of performing useful social purpose by improving infrastructure in cities, towns and villages |
192
| >> |
| Institution established by the Reserve Bank of India for the improvement of the performance of the banks |
193
| >> |
| Activity of preparing Prasad and offering to Balaji and thereafter to devotees |
193
| >> |
| Agricultural Produce Market Committee |
193
| >> |
| Income of agricultural produce market committee now exempt under section 10(26AAB) |
194
| >> |
| Instances of not general public utility |
194
| >> |
| No exemption, if objects of assessee trust not of general public utility |
194
| >> |
| Commercial association for benefit of members only |
195
| >> |
| Scientific breeding of horses for race club |
195
| >> |
| Material condition of a community, Improvement of |
195
| >> |
| Support to unemployed |
195
| >> |
| Encouragement of entertainment |
196
| >> |
| Racing activity involving betting |
196
| >> |
| Residential colony for workmen in general |
196
| >> |
| Trade Unions |
196
| >> |
| Trust for benefit of family members |
196
| >> |
| Good relations between employees and employers |
196
| >> |
| Social, cultural and similar purposes |
197
| >> |
| Expounding of teaching of an individual |
197
| >> |
| Provision for employment -- Contemplating the carrying on of business |
197
| >> |
| Maintenance of settlor's daughter |
197
| >> |
| Organising a Kissan (farmers) rally |
197
| >> |
| Printing and publication of newspaper on commercial line |
197
| >> |
| Production of television and radio programmes for the purpose of telecasting and broadcasting |
197
| >> |
| Activity of trust working as agent for banks and receiving remuneration therefor |
198
| >> |
| Collection of contribution to provide pension to beneficiaries itself |
198
| >> |
| Trading of the certified seeds with profit motive |
198
| >> |
| Running a Working Women's Hostel |
198
| >> |
| 16. - Property Held Under Trust or Under Legal Obligation -- Significance |
199
| >> |
| Exemption to property held under legal obligation |
199
| >> |
| Meaning and scope of 'property held in trust' |
199
| >> |
| Meaning and relevance of legal obligation |
200
| >> |
| Property in the context of section 11 includes 'agricultural property' as well |
201
| >> |
| Meaning of the word 'derived' in the expression 'income derived from property held under trust' |
201
| >> |
| Property and not income should be held under trust |
201
| >> |
| Exemption available only if property held in trust |
202
| >> |
| Property, how can be held under trust |
203
| >> |
| Not always necessary that property must stand in trustees' names |
203
| >> |
| Business, when can be held under trust |
204
| >> |
| Instances of property validly held in trust |
205
| >> |
| Property dedicated to deity |
205
| >> |
| Chamber of commerce building |
205
| >> |
| Raising of funds and accepting donations, charities, etc. |
205
| >> |
| Property acquired out of trust's income |
205
| >> |
| Accumulated interest on amount held under trust |
205
| >> |
| Gifts, if acceptance not prohibited by the deed and if not impinging on charitable objects |
206
| >> |
| Business |
206
| >> |
| Partnership interest in business |
206
| >> |
| Instances of property not held in trust |
207
| >> |
| Fees -- Not income from property held under trust |
207
| >> |
| Bhent |
207
| >> |
| Charge created on part of income from property |
207
| >> |
| Rules of association not compelling application of assets to particular purpose |
207
| >> |
| Stock Exchange |
207
| >> |
| Income-tax refund |
208
| >> |
| Society registered under Societies Registration Act, 1860 |
208
| >> |
| Hindu Math |
209
| >> |
| Legal obligation in case of stock exchange |
209
| >> |
| Property held under legal obligation for spending income on charitable purpose -- Creation of separate trust not necessary |
210
| >> |
| Muslim Wakf |
210
| >> |
| 17. - Accumulation or Setting Apart of 15 Percent Income |
211
| >> |
| Meaning of accumulation of income |
211
| >> |
| Reckoning of voluntary contributions referred to in section 12 |
211
| >> |
| Permissible limit of accumulation |
211
| >> |
| Reckoning of the amount which can be accumulated |
212
| >> |
| Income which can be accumulated to be computed on basis of gross income |
214
| >> |
| Blanket exemption in respect of accumulation upto 15 per cent of receipt |
215
| >> |
| Income accumulated upto 15% not required to be invested in specified modes |
215
| >> |
| Agricultural income vis-a-vis total income |
215
| >> |
| Taxability where accumulation is in excess of 15 per cent |
215
| >> |
| Income which can be accumulated |
216
| >> |
| Accumulation to be permitted if it is for pursuing objects of trust |
217
| >> |
| Accumulation can be for plurality of purposes |
217
| >> |
| Justification of denial of exemption on ground of non mentioning of specific purpose of accumulation |
217
| >> |
| Accumulation of deemed income not permissible |
218
| >> |
| Exemption where issue pending in appeal |
218
| >> |
| Plannings vis-a-vis accumulation of income |
218
| >> |
| 18. - Requirement as to Application of Income |
220
| >> |
| Meaning and scope of term "applied" in context of section 11(1)(a) |
220
| >> |
| Corpus donation to any other trust not to be treated as application of income |
221
| >> |
| Money utilised out of corpus funds or out of loan or borrowings not to be treated as application of income |
221
| >> |
| Such income' which is required to be applied -- Meaning of |
223
| >> |
| Application whether necessarily to be made only after the trust has earned profits |
223
| >> |
| No exemption in absence of application of income |
223
| >> |
| Application of income being more than 85% -- Denial of |
224
| >> |
| Application need not necessarily result in revenue expenditure |
224
| >> |
| Computation of income for the purpose of application under section 11(1)(a) |
225
| >> |
| Consequences where application is less than 85 per cent [Earlier 75 per cent] but unspent amount below taxable limit |
226
| >> |
| Denial of exemption on the ground of non-application of income even where no available surplus existed in trusts hands |
226
| >> |
| Burden to prove regarding application of income |
227
| >> |
| Allowability of expenditure where registration under section 12A granted subsequent to passing of assessment order |
227
| >> |
| Application not confined to cash payment alone |
228
| >> |
| Expenditure incurred out of accumulated income of earlier years |
228
| >> |
| Charitable trust deriving both agricultural and non-agricultural income -- Determination of income applied |
229
| >> |
| Repayment of debt incurred for the purpose of trust or loan-advanced by educational trust to students for higher studies amounts to application of income |
230
| >> |
| Some judicial comments on Circular No. 100 |
231
| >> |
| No double deduction on account of depreciation |
232
| >> |
| Applicability of amendment |
232
| >> |
| Consequences of non-specification in section 11(1)(a) of the point of time when income has to be applied |
233
| >> |
| Application out of composite fund |
234
| >> |
| Advances to sister concern in which trustees are directors |
235
| >> |
| Consequences of income applied for charitable purpose in India but incurred out of India |
235
| >> |
| Education grant given to Indian students for studying abroad |
236
| >> |
| Foreign travelling expenses to promote trade and industry in India |
237
| >> |
| Expenditure on earning income outside India |
237
| >> |
| Construction of building on a leasehold land being gifted to assessee society formed to carry out educational activities |
238
| >> |
| Transfer to educational institution by debit entry only |
238
| >> |
| Expenditure in immediately succeeding year may be treated as application of accumulated income |
239
| >> |
| Effect of amount advanced to concerned institute, not claimed as expenditure by assessee-trust |
239
| >> |
| Accepting immovable property in satisfaction of outstanding amounts |
239
| >> |
| Application of income vis-a-vis addition under section 68 |
240
| >> |
| Tax deduction at source not to be taken into consideration |
240
| >> |
| Effect of change in form of investment amount to application of income |
241
| >> |
| Accretion to amount set apart for charity also income for application |
241
| >> |
| Utilization of income vis-a-vis nature of income |
241
| >> |
| Expenditure for purchase of foreign currency disbursed in India to Indian team members for participation in international competition |
241
| >> |
| Deposit of surplus fund in FDR |
241
| >> |
| Advance for capital works |
242
| >> |
| Investment in immovable property |
242
| >> |
| Scholarship paid to incumbent for pursuing engineering course |
243
| >> |
| Expenditure incurred for international conference or training |
243
| >> |
| Assessee not concerned about application of money by transferee institution |
243
| >> |
| Utilisation of fund for other similar project |
243
| >> |
| Question whether amount applied for charitable purpose, is question of fact |
244
| >> |
| Making donation ultra vires to object clause |
244
| >> |
| Planning vis-a-vis application of income |
244
| >> |
| 19. - Expenditure Regarded as Application of Income |
246
| >> |
| Administrative expenses |
246
| >> |
| Capital expenditure |
247
| >> |
| Reserves created for specific purposes |
248
| >> |
| Loans, loan scholarships and repayment of debt |
249
| >> |
| Amendment by Finance Act, 2021 to clarify application of income out of loan and borrowings -- Effective from assessment year 2022-23 |
251
| >> |
| Payment of income-tax and wealth-tax |
251
| >> |
| Payment of advance tax |
252
| >> |
| Taxes paid under VDIS |
252
| >> |
| Expenditure incurred on construction of boundary wall of holy Darbar |
252
| >> |
| Legal expenses |
253
| >> |
| Writing off of loan to weaker section advanced during earlier years |
253
| >> |
| Write-off of donations and fixed assets |
253
| >> |
| Contribution to Marketing Board |
253
| >> |
| Contribution to Board for utilization towards charitable purpose |
253
| >> |
| Expenditure incurred on medical help by trust having objects to establish hospital |
254
| >> |
| 20. - No Set Off of Excess Expenditure in Earlier Year Against Income of Subsequent Year |
255
| >> |
| No set off of excess expenditure in earlier year against income of subsequent year permissible effective from assessment year 2022-23 |
255
| >> |
| Position prior to insertion of Explanation 5 |
255
| >> |
| Cases where such set off allowed |
255
| >> |
| Cases where excess expenditure of earlier years not allowed to be carried forward |
258
| >> |
| Decision of Apex Court in Subros Educational Society's case |
259
| >> |
| 21. - Option Available Under Explanation 1(2) to Section 11 |
260
| >> |
| Deemed application under Explanation 1(2) to section 11(1) |
260
| >> |
| Effect of exercise of option available under Explanation 1(2) |
260
| >> |
| Form and time limit for exercising option under Explanation 1(2) to section 11(1) |
261
| >> |
| Effect of non-receipt of income |
261
| >> |
| Return where filed under section 139(4) |
262
| >> |
| Consequences of non-application in the extended period [Section 11(1B)] |
262
| >> |
| Mode of exercising option under Explanation 1(2) to section 11(1) |
262
| >> |
| Option exercised by assessee in clear terms to certain extent cannot be said to be vague or otherwise |
263
| >> |
| Bona fide mistake in not indicating correct amount while exercising the option under clause (2) of Explanation to section 11(1) |
263
| >> |
| Treatment of interest accrued but not received on FD |
263
| >> |
| Application for exercise of option under clause (2) of the Explanation 1 to section 11(1) |
263
| >> |
| 22. - Treatment of Capital Gains of Charitable Trust |
265
| >> |
| Treatment of transfer of capital asset held for charitable or religious purposes |
265
| >> |
| Application of capital gains of charitable trust |
266
| >> |
| Need of transfer of capital asset |
267
| >> |
| Circular No. 52, dt. 30-12-1970 |
267
| >> |
| Circular No. 2-P (LXX-5), dt. 15-5-1963 |
267
| >> |
| Full net consideration is either to be re-invested or applied |
269
| >> |
| Scheme of section 11(1A) relating to taxability of capital gains |
269
| >> |
| Investment in fixed deposit with bank to be regarded as utilisation for acquisition of another capital asset |
270
| >> |
| Validity of six months qualifying period in case of fixed deposits with banks to constitute a capital asset |
270
| >> |
| Capital gains deemed to have been applied for charitable purposes under section 11(1A) |
271
| >> |
| Capital asset being property held under trust wholly for charitable or religious purpose -- Whole of net consideration on its transfer utilized for acquiring a new asset to be so held |
271
| >> |
| Only a part of the net consideration, received from transfer of a capital asset income from which was wholly applied for charitable purposes, utilised for acquiring new capital asset |
271
| >> |
| Capital asset held only in part for charitable purposes and whole of net consideration received in transfer thereof utilized for acquiring new asset |
272
| >> |
| Capital asset held only in part for charitable purposes and only a part of the net consideration utilized in acquiring the new capital asset |
273
| >> |
| Time limit for reinvestment of capital gains |
274
| >> |
| Application of advance money received for transfer of capital asset |
274
| >> |
| Provision relating to reinvestment and application of income not mutually exclusive |
274
| >> |
| Treatment of capital gains arising from property placed under mortgage |
275
| >> |
| Period for which new capital asset must be held for exemption |
276
| >> |
| New capital asset for purposes of section 11(1A) |
276
| >> |
| Fixed deposit, whether capital asset |
276
| >> |
| Investment in units of UTI issued after the close of accounting year |
277
| >> |
| Deposit in public sector company |
277
| >> |
| Mortgage is capital asset |
277
| >> |
| Interest bearing deposits in another trust |
278
| >> |
| Computation of capital gains by trust or institution |
278
| >> |
| Cost of acquisition of capital asset |
278
| >> |
| Nature of asset and tax rate |
278
| >> |
| Nature of exemption under section 11(1A) |
278
| >> |
| Application of sale consideration of transferred asset |
279
| >> |
| Sale proceeds of land where invested in another land |
279
| >> |
| 23. - Accumulation or Setting Apart of Income under Section 11(2) |
280
| >> |
| Scheme of setting apart or accumulation of income as per section 11(2) |
280
| >> |
| Manner of furnishing Form No. 10 |
280
| >> |
| Consequences of non-furnishing of Form No. 10 within prescribed time |
281
| >> |
| Conditions precedent for accumulation of income under section 11(2) |
281
| >> |
| Illustration |
282
| >> |
| Operation of section 11(1) not restricted by section 11(2) |
282
| >> |
| Section 11(2)(a) distinguished from section 11(1)(a) |
283
| >> |
| Forms and modes of deposit are conditions precedent for benefit under section 11(2) |
284
| >> |
| Burden to prove regarding usage of income accumulated |
284
| >> |
| Period to be excluded while computing limitation period |
284
| >> |
| Conditions regarding accumulation of income |
284
| >> |
| Accumulation by statutory body created under local Act |
285
| >> |
| Significance of the expression money so accumulated in section 11(2)(b) |
285
| >> |
| Investment must come out from current year's income |
286
| >> |
| Listing of objects for the purposes of section 11(2) to be specific |
286
| >> |
| Objectives stated in Form 10 alleged to be non-specific |
291
| >> |
| Multiplicity of purposes -- Impact of |
291
| >> |
| Enquiry regarding accomplishment of objects of trust |
291
| >> |
| Entry where made under wrong head |
292
| >> |
| Setting apart to be conscious act |
292
| >> |
| Option exercised by assessee in clear terms to certain extent not to be said to be vague or otherwise |
292
| >> |
| Starting point for setting off period of 10 years or 5 years as the case may be |
292
| >> |
| Extension of time for accumulation |
293
| >> |
| Income accumulated but not invested or deposited as specified in section 11(5) |
293
| >> |
| Income accumulated out of deemed income under section 11(3) |
293
| >> |
| Requirement as to filing Form No. 10 electronically |
293
| >> |
| Applicability of section 11(2) |
294
| >> |
| Condonation of delay by exercising power under section 119(2)(b) |
294
| >> |
| Filing of Form No. 10 at the time of reassessment |
294
| >> |
| Non-filing of audit report in Form 10CCB |
295
| >> |
| Exemption not to be denied where assessee inadvertently stated period of ten years |
295
| >> |
| Notice period in Form No. 10 |
295
| >> |
| Form No. 10 whether filed, is a question of fact |
296
| >> |
| Form No. 10 |
296
| >> |
| Specimen resolution for setting apart or accumulation of income under section 11(2) |
298
| >> |
| CASE STUDY |
298
| >> |
| Accumulation of Income Towards all Objects of Trust -- Validity |
298
| >> |
| 24. - Permissibility of Inter Trust Donation |
301
| >> |
| Donation to other charitable trust from accumulated fund no more treated as application of income |
301
| >> |
| Donation to another charitable trust out of current years income is still treated as application of income |
301
| >> |
| Donation to other trust to be treated as income of donor trust |
302
| >> |
| Relaxation provided in sub-section (3A) is not available in respect of inter trust donation |
302
| >> |
| Inter-trust donations where trust or institution is being dissolved |
302
| >> |
| Consequences of contribution to another trust by resolution and book entries and not in cash |
302
| >> |
| Donation to another trust out of accumulation of 15 per cent as permitted in section 11(1)(a) |
303
| >> |
| Corpus donation to any other trust not to be treated as application of income |
304
| >> |
| Upto assessment year 2002-03 donation to other charitable trust was treated as application of income |
304
| >> |
| 25. - Treatment of Corpus Donation in Hands of Charitable Trusts and Institutions |
307
| >> |
| Meaning of "corpus donation" |
307
| >> |
| Corpus donation whether to be treated as income |
307
| >> |
| Corpus donation to any other trust not to be treated as application of income |
308
| >> |
| Corpus donation needs to be invested in specified modes of investment |
308
| >> |
| Money utilised out of corpus funds not to be treated as application of income |
308
| >> |
| Nature of corpus donation |
309
| >> |
| Corpus donation being capital receipt exempt even in hands of unregistered trust |
311
| >> |
| Significance of specific direction to treat voluntary contribution as corpus donation |
312
| >> |
| Necessity of obtaining written letter from donor giving specific direction |
315
| >> |
| Donation given by executor in any manner he liked where Will empowers for the same |
315
| >> |
| Role of rubber stamp on donation receipt |
316
| >> |
| Interest earned on contributions already made with specific direction as to forming part of corpus of trust |
316
| >> |
| Consequences where no specific direction given by donor |
316
| >> |
| List of cases where voluntary contributions held to be forming part of the corpus |
317
| >> |
| Creation of specified fund by educational institutions |
317
| >> |
| Requirement to apply corpus donation towards charitable purposes |
317
| >> |
| Treatment of corpus donation to other trust |
318
| >> |
| Conversion of loan into corpus donations |
319
| >> |
| Corpus donation in the form of shares |
319
| >> |
| Contribution whether corpus donation -- Question of fact |
319
| >> |
| CASE STUDY |
320
| >> |
| Taxability of Voluntary Contributions with Specific Direction Towards Corpus Fund |
320
| >> |
| 26. - Consequences of Non-Compliance of Specific Provision |
322
| >> |
| Consequences of failure to apply income as per option exercised in Explanation 1(2) to section 11(1) [Section 11(1B)] |
322
| >> |
| Option available under Explanation 1(2) to section 11(1) |
322
| >> |
| Consequences of non-application as per option exercised [Section 11(1B)] |
322
| >> |
| Application of income set apart under section 11(2) to other than specified purposes [Section 11(3)(a)] |
323
| >> |
| Amount set apart under section 11(2) ceasing to be invested in specified securities [Section 11(3)(b)] |
323
| >> |
| Non-utilisation of the income set apart under section 11(2) for specified purpose [Section 11(3)(c)] |
323
| >> |
| Amount set apart credited or paid to another trust [Section 11(3)(d)] |
324
| >> |
| Section 11(3)(d) cannot be invoked without referring section 11(2) |
324
| >> |
| Year of taxability of non-utilized income |
324
| >> |
| Section 11(3) is attracted only to the 85% of the income and not to permitted accumulation of 15% of income |
325
| >> |
| Impact of merger with another trust |
326
| >> |
| Modification of purpose specified for setting apart under section 11(2) |
326
| >> |
| Assessing officer's power in respect of inter-trust donations |
327
| >> |
| CONVEYANCING ASPECTS |
328
| >> |
| Notice under section 11(1B) in case of failure to apply income as per option exercised under Explanation 1(2) to section 11(1) |
328
| >> |
| Requirement of issuance of notice while invoking deeming provision of section 11(1B) |
328
| >> |
| Contents of notice |
328
| >> |
| Action to be taken by the trustees on receipt of the notice |
328
| >> |
| Notice under section 11(3) to assess income in case of violation of conditions prescribed under section 11(2) |
329
| >> |
| Requirement of issuance of notice while invoking section 11(3) |
329
| >> |
| Contents of notice under section 11(3) |
329
| >> |
| Action to be taken by the trustees on receipt of the notice |
329
| >> |
| 27. - Treatment of Business Income |
330
| >> |
| Business when held in trust |
330
| >> |
| Purposes and scope of section 11(4) |
330
| >> |
| Section 11(4) not attracted in the absence of manipulation of accounts |
331
| >> |
| Scope of business activity |
331
| >> |
| Exemption not to be denied where differential amount between income returned and income assessed is not on account of any non-disclosure of income |
332
| >> |
| Conditions for exemption to business income as provided under section 11(4A) |
332
| >> |
| Historical background of sub-section (4A) of section 11 |
332
| >> |
| Combined effect of sub-sections (4) and (4A) of section 11 |
333
| >> |
| Amendment in section 2(15) vis-a-vis exemption under section 11(4A) |
334
| >> |
| Basic ingredients of a business qualifying for exemption |
334
| >> |
| Exemption not to be denied merely on the ground that charitable trust is running business |
336
| >> |
| Income applied for charitable and educational purposes |
337
| >> |
| Availability of exemption in respect of entrance fee and subscription fee |
337
| >> |
| Claim on principle of mutuality vis-a-vis bar under section 11(4A) |
337
| >> |
| Scope of the word 'incidental' in the context of dominant purpose of trust |
337
| >> |
| Instances of business held to be incidental to the main object of the trust or otherwise |
339
| >> |
| Business settled in trust |
339
| >> |
| Chambers of commerce or trade associations |
340
| >> |
| Trust constituted with the object of carrying on business |
341
| >> |
| Discretionary power to establish trust or fund for exclusive benefit of its members |
341
| >> |
| Letting of Dharmshalas, auditoriums, memorial halls, mandapam, etc. |
341
| >> |
| Alleged commercial exploitation of property |
343
| >> |
| Income from holding of programmes for raising funds |
343
| >> |
| Income from selling new year or festival cards |
343
| >> |
| Income derived from tailoring activities |
343
| >> |
| Corporation set up for civil supplies |
344
| >> |
| Profit by sale of books which was not assessee's predominant object |
344
| >> |
| Trust having object of publishing religious books distribute some other books also |
344
| >> |
| Carrying on newspaper business |
345
| >> |
| Publishing of magazines by educational institution |
345
| >> |
| Profit earned from organising exhibitions and fairs regularly |
346
| >> |
| Income from Dawakhana |
346
| >> |
| Trust engaged in developing and promoting gymnastic games and sportsmanship also planned for colonies for members |
346
| >> |
| Trust established for carrying out scientific research but involved in lease transaction |
346
| >> |
| Surplus from holding seminars and conference over and above sponsorship fee and advertisement income |
347
| >> |
| Availability of exemption in respect of entrance fee and subscription fee |
347
| >> |
| Business of preparing vegetarian food items and selling them |
347
| >> |
| Construction of immovable property where main object is town planning |
348
| >> |
| Assessee engaged in purchase and sale of agri-horticultural products |
348
| >> |
| Running of canteen in hospital |
349
| >> |
| Income from letting out or sub-letting of properties |
349
| >> |
| Running of finishing school and collecting fee |
350
| >> |
| Surplus from transportation activities of college |
350
| >> |
| Providing hostel and transport facility by an educational institution |
351
| >> |
| Pharmacy collection by society running hospital and dispensary |
351
| >> |
| Condition precedent for applicability of section 11(4A) |
352
| >> |
| Apparently business looking activity may not be business activity in certain circumstances |
355
| >> |
| Difference between carrying on activity resulting in profit and carrying on business |
355
| >> |
| Effect of subsequent profit earning activity |
356
| >> |
| Activity being carried on business principles not equivalent to carrying on business |
356
| >> |
| Applicability of section 11(4A) if income of educational institution used to purchase land and construct building |
356
| >> |
| Generation of incidental surpluses from leasing out the land to industrialists |
357
| >> |
| Publication of newspapers on commercial line |
357
| >> |
| Bar provided in section 11(4A) whether applicable where business itself is held in trust for charitable purposes |
358
| >> |
| Income from carrying on super market business commercially |
358
| >> |
| Applicability of disability clause in section 11(4A) in case of income other than business income |
359
| >> |
| Assessment of business held in trust |
359
| >> |
| Requirement as to maintenance of separate books |
359
| >> |
| CONVEYANCING ASPECTS |
361
| >> |
| Notice under section 11(4), when issuable? |
361
| >> |
| Form and contents of the notice |
361
| >> |
| Action to be taken by assessee on receipts of notice |
361
| >> |
| Specimen letter for replying to notice under section 11(4) |
362
| >> |
| 28. - Modes Prescribed for Investment by Charitable Trusts and Institutions |
363
| >> |
| Forms and modes of investment prescribed under section 11(5) |
363
| >> |
| Other modes of investment as specified by rule 17C |
364
| >> |
| Mutual funds referred in section 10(23D) |
366
| >> |
| Charitable trust not to lose exemption, if funds remain invested for three years in public sector companies on their disinvestment |
366
| >> |
| Time limit for making application for the investment in specified securities |
367
| >> |
| Investment in acquisition and construction of properties |
367
| >> |
| Conversion of one asset into another or change in shape |
367
| >> |
| Subscription to chit held to be investment made under section 11(5) |
368
| >> |
| Trust authorising deposit with any person or company |
368
| >> |
| Consequences of non-deposit in specified securities of only a part of the income |
368
| >> |
| Consequences of non-compliance of requirement of section 11(5) due to reasons beyond control |
368
| >> |
| Consequences of investment of unspent income in form other than specified under section 11(5) |
369
| >> |
| Receipt of interest on deposit in Schedule Bank as per section 11(5) not activity of trade, commerce |
370
| >> |
| Deposit in other concerns |
370
| >> |
| Interest-free advances to another society |
371
| >> |
| Deposit in current account |
371
| >> |
| Interest earned on fixed deposit |
371
| >> |
| Investment of surplus funds in immovable property |
371
| >> |
| Investment in gold bullion |
372
| >> |
| Acquisition of assets where dependent upon adjudication of the probate |
372
| >> |
| No violation of section 11(5) where entire income applied for charitable purposes |
372
| >> |
| Reshuffling of specified investment |
373
| >> |
| Investment of small amount in shares and securities of non-specified companies |
373
| >> |
| Impact of violation of section 11(5) |
373
| >> |
| Planning for investing in otherwise than forms and modes specified in section 11(5) |
373
| >> |
| CASE STUDY |
375
| >> |
| Trust Holding Unspent Income in any Form -- Consequences |
375
| >> |
| 29. - Miscellaneous Issues as to Exemption under Section 11 |
377
| >> |
| Exemption where certificate granted under section 12A misplaced |
377
| >> |
| Exemption to be allowed if assessee complied with all relevant conditions |
377
| >> |
| No denial of exemption where certain charges received from members against ancillary activities |
377
| >> |
| Exemption not to be denied on mere technical irregularities |
377
| >> |
| Assessee where wrongly applied mutuality principle |
378
| >> |
| Exemption cannot be denied merely on the ground of withdrawal of exemption under another section |
378
| >> |
| Exemption not to be denied where main object fulfilled |
379
| >> |
| Proof of charitable activity |
379
| >> |
| Object of trust already registered not to be revisited |
380
| >> |
| Impact of violation of condition in deed |
380
| >> |
| Withdrawal of exemption |
380
| >> |
| Necessity to have legal obligation to spend money exclusively and essentially for charitable purpose in order to avail of exemption under section 11 |
380
| >> |
| Effect of rectification of trust deed |
381
| >> |
| Loans to members of community being in furtherance of objects of trust |
382
| >> |
| Justification to grant exemption under section 11 merely on the basis of object clause of memorandum |
383
| >> |
| Exemption not to be denied if charitable activities carried out in India |
383
| >> |
| Justification of exemption where the association was declared unlawful a day prior to period covered under relevant previous year |
383
| >> |
| Availability of exemption if benefit limited only to a section of public |
384
| >> |
| Exemption where benefit extended to specified person |
384
| >> |
| Exemption to association of persons of professionals and businessman involved in activity of promoting general cause and interest of its members |
384
| >> |
| No exemption in case of profit motive |
384
| >> |
| No exemption in absence of charitable purpose |
385
| >> |
| Exemption not to be denied where money applied for fulfilment of objects of institution |
385
| >> |
| Exemption to be allowed where necessary percentage of beds reserved for needy and poor people |
386
| >> |
| Exemption not to be disallowed if factual position is same |
386
| >> |
| Exemption not to be denied merely on basis of earning interest on its surplus fund |
386
| >> |
| Generation of surplus year after year by educational society |
386
| >> |
| Exemption not to be denied where registration under section 12A was in force |
387
| >> |
| Specific part of income held in charity vis-a-vis specific part of corpus held in charity |
387
| >> |
| Denial of exemption where appeal of revenue challenging the restoration of registration pending before Court |
387
| >> |
| Objects of trust registered under section 12A can be revisited |
388
| >> |
| Allowability as regards portion of income taken away by TDS |
388
| >> |
| Impact of mistake in name of assessee in registration certificate |
388
| >> |
| 30. - Audit of Charitable Trusts |
389
| >> |
| Audit of trust -- A condition precedent for exemption |
389
| >> |
| Exemption not to be denied merely on account of delay in furnishing auditor's report |
389
| >> |
| Appellate authority has power to accept audit report |
389
| >> |
| Impact of audit under related State Trusts Act |
390
| >> |
| Maintenance of books of accounts |
390
| >> |
| Form of audit report |
391
| >> |
| Points worth noting |
393
| >> |
| As to the scope of the auditor's role |
393
| >> |
| As to identity of persons covered under section 13(3) |
393
| >> |
| Check list for routine items |
394
| >> |
| Check list for special items |
395
| >> |
Section C : Forfeiture of Exemption |
396
| >> |
| 31. - Forfeiture of Exemption -- Overview of Section 13 |
396
| >> |
| Provision containing forfeiture of exemption |
396
| >> |
| Bar to exemption as provided under section 13 |
396
| >> |
| Only income of the trust and not corpus can be taxed when bar applied |
397
| >> |
| Exemption not to be denied on account of minor irregularities in maintaining records |
397
| >> |
| Trust for private religious purposes [Section 13(1)(a)] |
397
| >> |
| Benefit of particular religious community |
398
| >> |
| Benefit to interested persons [Section 13(1)(c)] |
398
| >> |
| Investment of trust funds in other than specified media [Section 13(1)(d)] |
398
| >> |
| Bar due to deemed user by interested persons [Section 13(2)] |
398
| >> |
| Interested persons for the purpose of sections 13(1)(c) and 13(2) [Sec. 13(3)] |
398
| >> |
| Relaxation provided in forfeiture provision [Section 13(4)] |
398
| >> |
| Exemption when not forfeited under section 13(1)(d) [Section 13(5)] |
399
| >> |
| Exemption not to be denied even if educational or medical facilities provided to specified persons [Section 13(6)] |
399
| >> |
| Amount received as anonymous donation not be exempt under section 11 or 12 [Section 13(7)] |
399
| >> |
| No exemption if provision of first proviso to section 13 become applicable [Section 13(8)] |
399
| >> |
| No exemption in respect of accumulation of income under section 11(2) where Form 10 and return of income not furnished before due date specified under section 139(1) [Section 13(9)] |
399
| >> |
| Meaning of 'trust' and 'relative' [Explanation 1 to section 13] |
400
| >> |
| Trust or institution created or established for the benefit of Scheduled Castes, Backward Classes, Scheduled Tribes or women and children |
400
| >> |
| Person deemed to have a substantial interest in a concern |
400
| >> |
| 32. - Bar in Respect of Trust for Benefit of Specific Religious Community [Section 13(1)(b)] |
401
| >> |
| Exemption not available to trust created for benefit of specific religious community |
401
| >> |
| Applicability of bar to organisation created on or after 1-4-1962 |
401
| >> |
| Section of community -- Meaning of |
402
| >> |
| Bar under section 13(1)(b) operates only against trust for charitable purposes |
403
| >> |
| Exception to the bar of section 13(1)(b) -- Explanation 2 |
404
| >> |
| Applicability of bar under section 13(1)(a)/(b) |
404
| >> |
| Trust created to promote interest of linguistic group not subject to bar of section 13(1)(b) |
405
| >> |
| Portion of trust property let out to firm, at meagre amount of rent, in which one of trustees was partner |
405
| >> |
| Order rejecting application for registration by invoking section 13(1)(b) must be a speaking order |
405
| >> |
| Trust created for establishing institutions for educational, social and economical advancement of Muslims, attract bar under section 13(1)(b) |
406
| >> |
| Trust created for benefit of a particular specified community be regarded as section of community |
407
| >> |
| Benefit available to Hindu Society |
407
| >> |
| Trust providing Dharamshala for persons from samaj and outsiders |
407
| >> |
| Arranging marriage of girls of particular community is charitable |
408
| >> |
| Trust awarding scholarship to students giving preference to students of particular community |
408
| >> |
| Trust created inter alia to promote Jainism |
408
| >> |
| Trust created exclusively for benefit of particular religious community and carrying on only religious activities would not be eligible for exemption |
409
| >> |
| Trust having both religious and charitable objects |
409
| >> |
| Trust created for benefit of Christian Community as well as for other public at large |
410
| >> |
| Display and distribution of religious books free of cost |
410
| >> |
| 33. - Benefit to Interested Persons Causing Bar to Exemption [Section 13(1)(c)] |
411
| >> |
| Scheme of section 13(1)(c) |
411
| >> |
| Interested persons referred to in section 13(3) |
412
| >> |
| Bar from exemption to trust providing benefit to interested persons |
412
| >> |
| Scope of applicability of bar to exemption under section 13(1)(c) |
414
| >> |
| Government cannot be an interested person under section 13(3) |
418
| >> |
| Only application and use attracts section 13(1)(c) |
418
| >> |
| Section 13(1)(c) applies to cash and not to shares |
418
| >> |
| Benefit passed to trust which was substantial contributor |
419
| >> |
| Construction cost of building allegedly used by managing trustee for personal benefit |
419
| >> |
| Benefit to relative of secretary of society |
419
| >> |
| Alleged payment to founder members |
419
| >> |
| Abnormal salary to prohibited persons |
420
| >> |
| Diversion of funds for benefit of group concern |
422
| >> |
| Undue benefit where provided to associate concern |
422
| >> |
| Lending of money by educational society to educational institute sponsored by it |
423
| >> |
| Property purchased in name of Chairman or managing trustee |
423
| >> |
| Scholarship to specified person |
423
| >> |
| Donations to trust having similar objects |
424
| >> |
| Payment of lease rent |
424
| >> |
| Applicability of bar under section 13(1) or 13(2) |
424
| >> |
| Money lent to prohibited person |
425
| >> |
| Money siphoned off out of society to benefit of managing trustee |
425
| >> |
| Income of trust available for use by founders of trust |
426
| >> |
| No bar attracts where no personal benefit provided to founder trustee |
426
| >> |
| Unaccounted donation passed on to some of the trustees |
426
| >> |
| Interest free loan to treasurer |
427
| >> |
| Interest free loan to other society |
427
| >> |
| Receipt of donation from another registered public charitable trust and subsequent donation made to the very same donor trust |
427
| >> |
| Transfer of funds for the benefit of trustee |
427
| >> |
| Transfer of fund to trust having similar objects |
428
| >> |
| Advance to non-trustee |
428
| >> |
| Temporary loan to trustee |
428
| >> |
| Advertisement expenses paid to a son of the secretary of the assessee-society |
428
| >> |
| Exemption under section 13(1)(c) can be denied, where defending of criminal charges against interested persons were connected with affairs of the trust |
429
| >> |
| Cash assistance to managing trustee to regain his health |
429
| >> |
| Payment of reasonable rent to the president of trust |
430
| >> |
| Professional fee paid to trustees |
430
| >> |
| Payment to related party |
430
| >> |
| Scholarship to specified person |
431
| >> |
| Car and telephone expenses of trustees |
431
| >> |
| Utilization fees paid to trustees |
431
| >> |
| Use of bus by trustees family business |
431
| >> |
| Expenditure on foreign trip by interested person in respect of business |
431
| >> |
| Expenses on foreign travel of spouse of managing director |
432
| >> |
| No violation of section 13(1)(c) where money kept with trustee for safe custody |
432
| >> |
| CBDT circular clarifying the meaning of 'substantial contribution' in the context of section 13(1)(c) |
432
| >> |
| Bar under section 13(1)(c) attracted only where material on record available for applicability thereof |
433
| >> |
| No bar attracts where car mistakenly registered in name of trustee |
434
| >> |
| Scope of planning through relaxation provided in section 13(4) |
435
| >> |
| Case where loan and interest both are adequately secured |
436
| >> |
| Case where rectification relates back to the date of original registration |
436
| >> |
| Bar not attracted where development expenditure incurred on land gifted by trustees to trust by HIBA (oral gift) |
436
| >> |
| Applicability of bar to exemption under section 13 where employees of assessee-society making over their earnings back to assessee-society |
437
| >> |
| Funds provided by Institute of Chartered Accountants of India (ICAI) to ICAI Accounting Research Foundation |
438
| >> |
| Payment of rent and royalty to another educational institution |
438
| >> |
| Payment of rent to the trustees or their HUF |
439
| >> |
| Contract given to managing trustee on competitive basis |
439
| >> |
| Managing trustee where returned amount with interest |
439
| >> |
| Alleged use of building or car for benefit of trustee |
439
| >> |
| Purchase of windmill from companies in which trustees are directors |
440
| >> |
| Bar not attracted under section 13(1)(c) in case of recovery of estate duty from compensation amount received with liability on acquisition of land |
440
| >> |
| REAL LIFE QUERIES |
440
| >> |
| Charitable Trust -- Bar to Exemption by Virtue of Section 13(1)(c) -- Honorarium and LIC Premium Paid by Trust to Trustee for Encashing His Name and Fame |
440
| >> |
| Charitable Trust -- Scope of Bar under Section 13(1)(c) |
441
| >> |
| 34. - Investment of Trust Funds in Other Than Specified Media As Barring Exemption [Section 13(1)(d)] |
442
| >> |
| Section 13(1)(d) barring exemption where funds invested in other than specified media |
442
| >> |
| Starting point of applicability of section 13(1)(d) : Clarificatory Circular No. 596, dt. 15-3-1991 |
443
| >> |
| Investments and deposits contemplated under section 13(1)(d) |
443
| >> |
| Funds of the trust invested or deposited in media other than prescribed in section 11(5) |
443
| >> |
| Shares of companies other than government companies |
443
| >> |
| Exceptions to applicability of section 13(1)(d) |
444
| >> |
| Assets forming part of corpus [Clause (i) of the proviso] |
444
| >> |
| Bonus shares allotted to the trust [Clause (ia) of the proviso] |
444
| >> |
| Debentures acquired by trust [Clause (ii) of the proviso] |
445
| >> |
| Conversion of asset into section 11(5) asset before 1-4-1993 [Clause (iia) of the proviso] |
446
| >> |
| Profits and gains of business [Clause (iii) of the proviso] |
447
| >> |
| Section 13(1)(d) attracts only where cut off date falls within the relevant previous year |
447
| >> |
| Effect of retrospective insertion of clause (ia) in proviso to clause (iii) of section 13(1)(d) by the Finance Act, 1992 |
448
| >> |
| Relationship of 'funds' in section 13(1)(d)(i) and in section 13(2)(h) |
448
| >> |
| Meaning and scope of the word 'fund', in relation to section 13(1)(d)(i) |
449
| >> |
| Fund means cash in hand or bank |
449
| >> |
| Promissory notes not funds |
449
| >> |
| Investment or deposit of funds under section 13(1)(d)(i) implies a definite positive act by assessee himself |
450
| >> |
| Significance of word 'investment' for purpose of section 13(1)(d) |
451
| >> |
| Disinvestment of shares acquired |
452
| >> |
| Share and bonds received on death of inmates |
453
| >> |
| Advance to sister concern without charging interest |
453
| >> |
| Deposits with Patsanstha |
453
| >> |
| Contribution to chit scheme |
453
| >> |
| Amount advanced for purchase of cement |
454
| >> |
| Assets forming part of the corpus of trust as on 1-6-1973 not to be changed to any other form or mode |
454
| >> |
| Exemption not to be denied for violating provisions of section 11(5) where assessee trust has withdrawn deposits immediately after knowing the fact of violation |
454
| >> |
| Denial of exemption to the extent of contravention only |
454
| >> |
| Interest free loan by assessee society to another society |
455
| >> |
| Justification of denial of exemption for violation of provisions of section 13 |
456
| >> |
| Shares purchased not with an intention of investment but for obtaining loan |
456
| >> |
| Shares held in non-specified form on account of disputes against family members |
457
| >> |
| Loan extended to State Government |
457
| >> |
| Huge cash found with chairman of assessee-trust during search and seizure operation |
457
| >> |
| Consequences of violation of section 13(1)(d) |
457
| >> |
| Interest income where excluded from total income by special order of CBDT |
458
| >> |
| Recognition under section 80G in case of violation of section 13(1)(d) |
459
| >> |
| Shares donated to trust with intention of investment |
459
| >> |
| Voluntary donations |
459
| >> |
| Admissibility of writ petition |
459
| >> |
| Availability of exemption if trust holding cash in hand |
459
| >> |
| Position of investments by trust in view of provisions of section 13 read with section 11(5), in nutshell |
460
| >> |
| 35. - Bar Due to Deemed User of Trusts Income by Interested Persons [Section 13(2)] |
461
| >> |
| Section 13(2) providing bar due to deemed user of trust's income by interested persons |
461
| >> |
| Scheme of section 13(2) |
462
| >> |
| Meaning of 'interested person' |
463
| >> |
| Scope of lending money to interested persons : Section 13(2)(a) |
463
| >> |
| Section 13(2)(a) not applicable to corpus donations |
463
| >> |
| Adequate security -- Connotation |
464
| >> |
| Adequacy of rate of interest |
464
| >> |
| Loan to firm on personal security of partner |
464
| >> |
| Money advanced to firm from amount received by way of rent, interest, etc. |
465
| >> |
| Amount remaining with partnership for being paid to partner on retirement |
465
| >> |
| Amount promised but not lent |
465
| >> |
| Loan given without adequate security but not returned |
465
| >> |
| Loan not investment |
465
| >> |
| Lending by trust attracts section 13(2)(a) and not section 13(2)(h) |
466
| >> |
| Fixed deposit receipts in a company as donation towards corpus of trust |
466
| >> |
| Deposit adequately secured and interest on deposit received by assessee-trust regularly |
466
| >> |
| Amount advanced to one of the founder members |
467
| >> |
| Alleged advances made by the trustee without adequate security in alleged violation of section 13(2)(a) |
467
| >> |
| Land acquired in name of trustee |
467
| >> |
| User of property by interested person [Section 13(2)(b)] |
467
| >> |
| Salary, allowances, etc., to interested persons |
469
| >> |
| Amount spent by assessee society on maintenance of nuns employed by it |
471
| >> |
| Benefit extended to interested person |
471
| >> |
| Services of trust and use of its fund made available to interested person |
471
| >> |
| Purchase of share or property by trust from interested person |
472
| >> |
| Sale of shares, securities, etc., to interested persons at concessional rate |
472
| >> |
| Diversion of income or property in favour of interested persons |
472
| >> |
| Advance refunded to specified person |
473
| >> |
| Investment of funds with interested persons [Section 13(2)(h)] |
473
| >> |
| Applicability of section 13(2)(h) |
474
| >> |
| 'Funds' within the meaning of section 13(2)(h) |
475
| >> |
| Purchase of shares is investment |
476
| >> |
| Funds lent but not invested |
476
| >> |
| Aggregate shareholding of interested persons |
477
| >> |
| Inability of firm to pay to retiring partners |
477
| >> |
| Donation from partner of firm |
477
| >> |
| Shares received by donation |
477
| >> |
| Where donation utilized for the benefit of children of trustee |
478
| >> |
| Contribution of capital to firm, partners of which were closely related with author of trust, attracts section 13(2)(h) |
478
| >> |
| Non-withdrawal of profits from firm beyond end of previous year, not amounting to continuance of investment, section 13(2)(h) not attracted |
479
| >> |
| Funds invested to buy shares of founder's associated company |
479
| >> |
| REAL LIFE QUERY |
480
| >> |
| Charitable Trust -- Forfeiture of Exemption by Invoking Section 13(2)(g) -- Rent Paid to Relative of Trustees in Lieu of Use of His Building |
480
| >> |
| CASE STUDY |
480
| >> |
| Charging Nominal Rent -- Whether Exemption could be Denied |
480
| >> |
| 36. - Interested Persons in Section 13(1)(c) [Section 13(3)] |
483
| >> |
| Interested persons for the purpose of section 13(3) |
483
| >> |
| Meaning of relative [Explanation 1 to section 13] |
483
| >> |
| Auditor is empowered to accept list of relatives |
483
| >> |
| Meaning of a person having substantial interest in a concern |
484
| >> |
| Substantial contributor |
484
| >> |
| Amount advanced to founder of the institution |
484
| >> |
| Employees of the author of trust do not fall within persons specified under section 13(3) |
485
| >> |
| Donation of shares to trust subject to certain conditions |
486
| >> |
| Loan advanced to manager of trust |
486
| >> |
| Amount given as advance to chairperson to purchase land |
486
| >> |
| Cash medical help to managing trustee |
486
| >> |
| Donations, etc., invested and deposited in concerns of member of assessee-society |
487
| >> |
| Remuneration paid to an employee |
487
| >> |
| Payment of salary, etc., to relatives, trustees, etc. |
487
| >> |
| Benefit to children of trustees |
487
| >> |
| Misappropriation of fund for benefit of interested person |
487
| >> |
| Denial of exemption on account of misutilisation of funds by office bearers |
488
| >> |
| Investment with interested persons being smaller [Section 13(4)] |
488
| >> |
| Cases in which exemption not to be denied |
489
| >> |
| Exemption not to be denied even if educational or medical facilities provided by trust to interested person |
490
| >> |
| CONVEYANCING ASPECTS |
490
| >> |
| Notice for forfeiture of exemption under section 13 conveyancing |
490
| >> |
| Form and contents of notice |
490
| >> |
| Action to be taken by the assessee on receipt of notice |
490
| >> |
| Specimen reply to notice |
491
| >> |
| REAL LIFE QUERY |
492
| >> |
| Charitable Trust -- Forfeiture of Exemption on Account of Investment with Interested Persons -- Availability of Relaxation under Section 13(4) |
492
| >> |
| 37. - Case Studies Relevant to Issues Regarding Section 13(3) |
493
| >> |
| Benefit to interested persons -- Consequences |
493
| >> |
| Loan to manager of trust -- Consequences |
495
| >> |
| Use of trust funds by interested persons -- Tax Consequences |
495
| >> |
Section D : Computation of Income by Trusts/Institutions |
498
| >> |
| 38. - Income of Charitable Trusts -- Computation Thereof |
498
| >> |
| Various types of income in relation to charitable trust |
498
| >> |
| General provision regarding income exempt in case of charitable trust |
498
| >> |
| Income to be computed in normal commercial manner and need not to be computed headwise |
499
| >> |
| Real income concept vis-a-vis income of charitable trusts |
501
| >> |
| No income arises in case of revaluation of investment |
502
| >> |
| Amounts exempt under section 10 -- Reckoning of |
502
| >> |
| Agricultural income vis-a-vis total income as laid down in section 11 |
503
| >> |
| Exemption as regards to deemed income under section 68 |
503
| >> |
| Applicability of section 14A in case of income exempt under section 11 or 12 |
503
| >> |
| Non-applicability of sections 28 to 43D |
503
| >> |
| Applicability of provisions of Chapter IV, i.e., sections 22 to 27 |
504
| >> |
| Applicability of section 145 in case of charitable trust |
504
| >> |
| Income which is to be considered for purpose of application or accumulation |
504
| >> |
| Treatment of various 'interest' income |
505
| >> |
| Interest earned from grants |
505
| >> |
| Interest income on bank deposits |
505
| >> |
| Income-tax payments -- Reckoning of |
506
| >> |
| Income-tax refund cannot be regarded as income derived from property held under trust |
507
| >> |
| Interest income on amount of grants from government constitutes 'income' for section 11 |
507
| >> |
| Management and normal expenditure allowable |
508
| >> |
| Grant-in-aid from government and local authorities |
508
| >> |
| Subsidy in the nature of grant in aid received by assessee as a nodal disbursing agency |
509
| >> |
| Loss on sale of shares held allowable on facts |
509
| >> |
| Expenditure on literacy and cultural activities |
509
| >> |
| Receipt of foreign contribution from Government of France |
509
| >> |
| Entrance fee |
510
| >> |
| Development fee as a compulsory charge on students |
510
| >> |
| Provision for bad and doubtful debts |
510
| >> |
| Applicability of principle of mutuality |
510
| >> |
| Steps for calculating income of a trust or institution |
510
| >> |
| PRACTICE SPECIFIC QUERIES |
511
| >> |
| Charitable Trust -- Taxable Income -- Computation of |
511
| >> |
| Charitable Trust -- Donations -- Commission Paid, Whether Treated as Spent for Charitable Purpose |
512
| >> |
| CASE STUDY |
513
| >> |
| Computation of Income of Charitable Trust -- Whether to be made on Commercial Basis |
513
| >> |
| 39. - Applicability of Disallowance Provision Vis-a-Vis Charitable Trusts |
517
| >> |
| Disallowance under section 40(a)(ia) and 40A(3)/(3A) made applicable to charitable trusts |
517
| >> |
| Provisions of section 40(a)(ia) |
517
| >> |
| Provisions of section 40A(3)/40A(3A) |
518
| >> |
| Impact of amendment |
519
| >> |
| Steps to apply Explanation 3 |
519
| >> |
| Applicability only if disallowance could be made under section 40(a)(ia)/ 40A(3)/40A(3A) |
519
| >> |
| Applicability of section 40(a)(ia) to charitable trust, etc. |
520
| >> |
| Application of section 40A(3) to charitable trust |
520
| >> |
| Provisions illustrated vis-a-vis application of section 40(a)(ia) and section 40A(3) |
520
| >> |
| 40. - Income by Voluntary Contribution |
522
| >> |
| Voluntary contribution is income of trust or institution |
522
| >> |
| Treatment of voluntary contribution received by trust or institution |
522
| >> |
| Taxable value of services provided to specified persons by charitable or religious trust |
522
| >> |
| Voluntary contribution included in definition of income |
523
| >> |
| Voluntary contribution, when treated as anonymous donation |
523
| >> |
| No exclusion from total income if first proviso to section 2(15) becomes applicable |
523
| >> |
| Treatment of involuntary contribution |
524
| >> |
| Observations on erstwhile section 12 relevant upto assessment year 1972-73 |
524
| >> |
| Instances where contribution held to be voluntary contribution under erstwhile section 12 |
526
| >> |
| Contribution from tickets and advertisements in souvenirs |
526
| >> |
| Grants in aid from government |
526
| >> |
| Contribution from assessee's members |
526
| >> |
| Donation from devotees through deposits in boxes |
526
| >> |
| Ascertainment of the nature of contribution |
527
| >> |
| Treatment of donations to trust mandated by educational institution |
528
| >> |
| Capitation fee received from students |
529
| >> |
| Entrance fee |
530
| >> |
| Treatment of donation given with specific direction |
531
| >> |
| Projects grant |
531
| >> |
| Development fee received as part of total fee |
531
| >> |
| Return of loan is not income and is not covered by section 12(2) |
531
| >> |
| 41. - Taxation of Anonymous Donations |
532
| >> |
| Taxation of anonymous donation |
532
| >> |
| Meaning of anonymous donation |
532
| >> |
| Scheme to tax on anonymous donation |
532
| >> |
| Entities covered by sub-section (1) of section 115BBC |
532
| >> |
| Rate of tax in respect of anonymous donations |
532
| >> |
| Anonymous donation not liable to tax |
534
| >> |
| Entities covered/not covered by section 115BBC |
534
| >> |
| Entities covered |
534
| >> |
| Entities not covered |
535
| >> |
| Position regarding taxation of anonymous donation under different circumstances |
535
| >> |
| Trust created wholly for religious purposes |
535
| >> |
| Trust created for both religious as well as charitable purposes |
536
| >> |
| Wholly charitable trusts |
537
| >> |
| Scope of anonymous donation |
537
| >> |
| What is "record" |
537
| >> |
| Period for which such record is to be kept |
538
| >> |
| Addition under section 115BBC justified in case of non-maintenance of details and records |
538
| >> |
| Addition where details of contribution not furnished |
538
| >> |
| No addition to be made where details of donations received in donation boxes could not be furnished |
539
| >> |
| Income taxable under section 115BBC not to be exempt under section 11 or 12 |
539
| >> |
| Applicability of sections 68 to 69C in case of anonymous donation |
539
| >> |
| Levy of interest under section 234B or under section 234C in case of anonymous donation |
541
| >> |
| Non-applicability of section 115BBC where trust is charitable as well as religious |
542
| >> |
Section E : Taxation of Charitable Trusts |
543
| >> |
| 42. - Income Taxation of Charitable Trusts |
543
| >> |
| Appropriate status of trust under direct tax laws |
543
| >> |
| Provision relevant to taxation of charitable trusts |
544
| >> |
| Charge of non-exempt income of wholly charitable trust, etc. |
544
| >> |
| Rate of tax on income in respect of which exemption forfeited under section 13(1)(c)/(d) |
545
| >> |
| Tax rate applicable to trust having investment and business incomes |
546
| >> |
| Tax rate applicable to trust having investment in prescribed media as also in other than prescribed media |
546
| >> |
| Rate of tax on income of charitable trust losing exemption under section 13(1)(b) |
547
| >> |
| Charge of non-exempt income of partly charitable trust [Section 164(3)] |
548
| >> |
| Exception to the provisions of section 164(3) [First proviso to sub-section (3)] |
548
| >> |
| Where no beneficiary having any other chargeable income [Clause (i) of first proviso to section 164(3)] |
549
| >> |
| Where trust declared by will [Clause (ii) of first proviso to section 164(3)] |
549
| >> |
| Where trust created before 1-3-1970 [Clause (iii) of first proviso to section 164(3)] |
549
| >> |
| Charge of tax of income of trust where income includes profits and gains of business or profession [Second proviso to section 164(3)] |
549
| >> |
| Where income not exempt [Third proviso to section 164(3)] |
549
| >> |
| Illustration |
550
| >> |
| Computation of tax liability in (i) |
550
| >> |
| Computation of tax liability in (ii) and (iii) |
550
| >> |
| Maximum marginal rate -- Meaning of |
550
| >> |
| Taxability of charitable trust at maximum marginal rate |
551
| >> |
| Taxation till grant of registration |
551
| >> |
| Taxation of anonymous donation |
552
| >> |
| 43. - Tax on Accreted Income of a Charitable Trust/Institution |
553
| >> |
| Tax on accreted income when payable |
553
| >> |
| Trust or institution when deemed to have been converted into any form not eligible for registration |
553
| >> |
| Rate of tax on accreted income |
554
| >> |
| Specified date |
554
| >> |
| Meaning of accreted income |
555
| >> |
| Tax on accreted income payable even if no income-tax payable |
556
| >> |
| Time limit within which tax on accreted income payable |
556
| >> |
| Tax paid shall be treated as final |
557
| >> |
| No deduction under any other provisions |
557
| >> |
| Payment of interest |
557
| >> |
| Trust or institution when deemed to be assessee in default |
557
| >> |
| 44. - Common Areas of Enquiry by Department While Handling Assessment of Charitable Trusts/Institutions |
559
| >> |
| Activities of Charitable Trusts |
559
| >> |
| Utilisation and application of funds by trusts |
559
| >> |
| Accumulated income and its utilisation |
560
| >> |
| Inter trust donation to be looked into |
560
| >> |
| Corpus donation |
561
| >> |
| Anonymous donation |
561
| >> |
| Enquiry regarding business income of trust |
562
| >> |
| Scrutiny by assessing officer with a view to check the existence of any prohibitions contemplated under section 13 |
562
| >> |
| Enquiry regarding registration of trust |
562
| >> |
| Section F : Trust Deeds -- Preparation and Samples |
564
| >> |
| 45. - Constitution of Charitable Entity Via Trust Deed -- Governing Principles |
564
| >> |
| Requirement of documentary evidence while creating a trust |
564
| >> |
| Relevance of express words employed in the trust deed |
564
| >> |
| Construction of deeds |
564
| >> |
| Deed must be read as a whole |
564
| >> |
| Circumstances prevailing at the time of drafting also relevant |
565
| >> |
| Conflicting provisions of deed |
565
| >> |
| Valid and invalid parts |
565
| >> |
| Substance of the matter, rather than precise language, relevant |
565
| >> |
| Supplementary trust deed |
566
| >> |
| Binding nature of supplementary deed |
566
| >> |
| Certificate of registration with Endowments Department vis-a-vis creation of trust |
566
| >> |
| Rectification of trust deed |
567
| >> |
| Procedure for rectification of trust deed |
567
| >> |
| Relevant case law |
567
| >> |
| Effect of rectification of trust deed |
569
| >> |
| Charitable trust to apply for fresh registration each time its objects are modified |
570
| >> |
| Rejection on the ground that amended deed not produced |
571
| >> |
| Civil court's power to direct for administration of trust under section 92 of Civil Procedure Code |
571
| >> |
| Trust deed binds trustees |
572
| >> |
| For dedicating property for public charitable purposes, registered deed not necessary |
572
| >> |
| Drafting of trust deed |
573
| >> |
| Definition of the terms relevant for drafting according to section 3 of the Indian Trust Act, 1982 |
573
| >> |
| Charitable purpose of the trust |
574
| >> |
| The three essential certaintees for creation of trust |
574
| >> |
| Special points to be borne in mind for enabling availing of exemption under the Income Tax Act |
574
| >> |
| As to trustees |
575
| >> |
| Working of the trust |
575
| >> |
| Suggestion providing proper safeguard |
575
| >> |
| 46. - Specification of Objects in Charitable Trust Deed |
576
| >> |
| Charitable objects of the trust must be specified with particularity |
576
| >> |
| Primary (dominant) vis-a-vis incidental objects |
577
| >> |
| Trustees empowered to spend funds on any of the objects |
578
| >> |
| Presence of ancillary or secondary non-charitable object |
578
| >> |
| Object meant merely to give logical conclusion to the primary object |
579
| >> |
| Invalidity of one object -- Where not allowed to affect the other objects |
579
| >> |
| Activities ancillary to primary object |
579
| >> |
| Primary purpose advancement of objects of general public utility, but incidental entry into the political domain |
580
| >> |
| Where it is established that objects of trust were charitable, the fact that trustees authorised to carry on business to find funds for trust is not relevant |
580
| >> |
| Discretionary power of trustees to give preference also to other members of public in case of a trust meant for certain persons -- Effect of |
580
| >> |
| Interpretation of objects clauses |
581
| >> |
| Intention of the settlor to be gathered from the trust deed as a whole |
581
| >> |
| Substance of the matter should be looked at |
581
| >> |
| All objects to be considered |
581
| >> |
| Purpose of trust to be ascertained from constitution thereof |
581
| >> |
| Deduction of intention of one object from other objects |
581
| >> |
| Ejusdem generis rule |
582
| >> |
| Further evidence besides trust deed may also be considered |
583
| >> |
| Objects of the trust and not power of trustees or intention of settlor decisive |
583
| >> |
| Objects of the trust distinguished from beneficiaries |
584
| >> |
| Uncertain objects make trust not charitable |
584
| >> |
| Activities not intended to be taken |
585
| >> |
| Non-charitable objects not carried out -- Effect of |
585
| >> |
| Charitable trust to apply for fresh registration each time its objects are modified |
586
| >> |
| 47. - Preparation of Charitable Trust Deed and Sample Deeds |
587
| >> |
| Guidance notes for preparing trust deed under specific circumstances |
587
| >> |
| Preamble |
587
| >> |
| Name clause |
588
| >> |
| Clause specifying income sources, specific objects to which income is to be applied, etc. |
588
| >> |
| Specific objects clause |
589
| >> |
| Clauses for ensuring exemption under sections 11 and 12 to the trust and enabling deduction under section 80G to the donors to the trust |
591
| >> |
| Provision for administrative management expenses |
591
| >> |
| Provision of power to trustee to accept donations, to make transfer of trust property and accept voluntary contributions towards corpus only for meeting conditions under section 12 |
592
| >> |
| Provision for enabling trustees to amalgamate with any trust |
592
| >> |
| Enlargement of object to purposes for which donations may be easily attracted |
592
| >> |
| Provision enabling management of the trust |
593
| >> |
| Clause as to the trustees themselves, their number, filling up vacancies in the Board of Trustees, taking care of the contingency of the vacation of office by a trustee, etc. |
594
| >> |
| Provision regarding maintenance of accounts, auditing, etc. |
595
| >> |
| Provision relating to custody of trust property, bank accounts, its operation and for borrowing moneys on security for the purposes of the trust |
595
| >> |
| Provision regarding investment of trust funds, dealing with trust properties, alienation of immovable properties of trust, etc. |
596
| >> |
| Provisions regarding vesting of properties in and ancillary powers of trustees |
597
| >> |
| Provision limiting liability and answerability of trustees |
598
| >> |
| Provision of procedural aspects of meetings of Board of Trustees and the decision making |
599
| >> |
| Clause enabling spending and utilisation of trust funds and dissolution thereof |
599
| >> |
| Concluding part |
599
| >> |
| Sample Deed of trust for temple |
600
| >> |
| Sample deed of Memorial Trust |
602
| >> |
Part II : Trusts, Funds, Educational and Medical Institutions Exempt Under Section 10(23C) |
610
| >> |
Section A : Exemption Under Section 10(23C)(iv)/(v)/(vi)/(via) |
611
| >> |
| 48. - Institutions Claiming Exemption under Section 10(23C)(iv)/(v) |
611
| >> |
| Scheme of exemption under section 10(23C)(iv) |
611
| >> |
| Scheme of exemption under section 10(23C)(v) |
611
| >> |
| Application for approval by fund, trust or institution w.e.f. 1-4-2021 |
611
| >> |
| Action to be taken by Principal Commissioner or Commissioner on receipt of application |
612
| >> |
| Applicability of approval under new provision |
613
| >> |
| Validity period of approval |
613
| >> |
| Procedure for approval and re-approval -- At a glance |
613
| >> |
| Approval to fund, or trust or institution as relevant upto 31-3-2021 |
614
| >> |
| Justification of denial of approval arbitrarily |
616
| >> |
| Application of income |
616
| >> |
| Any sum paid to other charitable trust or institution as corpus donation shall not be treated as application of income |
617
| >> |
| Clarification as regards corpus donation |
617
| >> |
| Money utilised out of corpus funds or out of loan or borrowings not to be treated as application of income |
618
| >> |
| Application of disallowance provision under section 40(a)(ia) and 40A(3)/(3A) |
618
| >> |
| Restriction on application of income out of accumulated fund |
618
| >> |
| Depreciation not to be allowed as deduction while computing income for the purpose of application or accumulation |
619
| >> |
| Income from business -- When exempt |
619
| >> |
| Business income incidental to achieving main objects of charitable trust |
619
| >> |
| Requirement regarding audit of fund, trust or institution |
620
| >> |
| Funds approved for purpose of section 10(23C)(iv)/(v) cannot claim exemption under other clauses of section 10 except in case of agricultural income |
620
| >> |
| Fund, trust or institution eligible for tax exemption even where donations in kind are not in the form of articles notified by the CBDT -- Circular No. 580, dated 14-9-1990 |
620
| >> |
| Exemption in respect of deemed income under section 68 |
621
| >> |
| Exemption where application for registration under section 12A pending |
621
| >> |
| Rejection of application if not addressed to competent authority |
621
| >> |
| Assessee where collecting fee |
621
| >> |
| Trust providing accommodation, food, etc., to members and non-members and charging for it |
622
| >> |
| Return of income by charitable trust |
622
| >> |
| 49. - Educational Institutions Claiming Exemption under Section 10(23C) |
623
| >> |
| Statutory provisions governing exemption to educational institutions |
623
| >> |
| Sub-clause (iiiab) of section 10(23C) |
623
| >> |
| Sub-clause (iiiad) of section 10(23C) |
623
| >> |
| Sub-clause (vi) of section 10(23C) |
623
| >> |
| Connotation of educational institution for the purpose of section 10(23C) |
623
| >> |
| Institution to be established solely for educational purposes |
624
| >> |
| Institution providing Post Graduate Diploma Course in Construction Management |
626
| >> |
| Institution not affiliated to or recognised by university or Board |
626
| >> |
| Institution engaged in compilation, publication and printing of text books |
626
| >> |
| Institution providing hostel facility, books, tuition fee, financial assistance, etc. |
627
| >> |
| Institution established for propagating preachings |
628
| >> |
| Institution established for imparting training in use of fire arms and rifles |
628
| >> |
| Research institution imparting professional or specialised education |
628
| >> |
| Board of education |
629
| >> |
| Co-operative union imparting education |
629
| >> |
| Society engaged in running courses in Russian language as well as in paramedical and training/preparatory courses |
629
| >> |
| Object of serving church and nation |
630
| >> |
| Running coaching classes |
630
| >> |
| Institution established for training for development of entrepreneurship |
630
| >> |
| Deemed university -- Eligibility for exemption |
630
| >> |
| 50. - Medical Institutions Claiming Exemption under Section 10(23C) |
632
| >> |
| Statutory provisions governing exemption to hospitals and other philanthropic institutions |
632
| >> |
| Sub-clause (iiiac) of section 10(23C) |
632
| >> |
| Sub-clause (iiiae) of section 10(23C) |
632
| >> |
| Sub-clause (via) of section 10(23C) |
633
| >> |
| Existence of hospital for availing of exemption |
633
| >> |
| Any other philanthropic institution -- Meaning and scope |
633
| >> |
| Institution to be existing solely for philanthropic purposes |
634
| >> |
| Expression "Medical attention" in section 10(23C)(iiiae) |
635
| >> |
| Medical institution, etc., not to be exist for purposes of profit |
635
| >> |
| Exemption whether available to maternity hospital |
637
| >> |
| Exemption in respect of rental income |
637
| >> |
| 51. - Exemption to Educational and Medical Societies |
638
| >> |
| Condition as to imparting education |
638
| >> |
| Assessee society, where only acting as financial body |
639
| >> |
| Society running hospital |
639
| >> |
| 52. - Exemption Under Section 11 Vis-a-Vis Under Section 10(23C) |
641
| >> |
| Exemption available under section 11 |
641
| >> |
| Exemption where available both under section 10(23C) as well as under section 11 |
641
| >> |
| Trust approved under section 10(23C) or notified under section 10(46) can claim benefit of only one section either section 10(23C) or section 10(46) or section 11 |
641
| >> |
| 53. - Conditions for Availing of Exemption by Educational Institutions |
643
| >> |
| I. EXEMPTION WHEN AVAILABLE UNDER SECTION 10(23C)(iiiab) |
643
| >> |
| Two basic conditions to be fulfilled for purposes of exemption under section 10(23C)(iiiab) |
643
| >> |
| No exemption in case where abovementioned conditions not satisfied |
644
| >> |
| Meaning and scope of substantially financed by Government [As interpretated prior to specific meaning provided by the Explanation inserted in section 10(23C) w.e.f. assessment year 2015-16] |
644
| >> |
| Meaning of "substantially financed by the Government" |
645
| >> |
| Percentage of Government Grant for considering university, hospital etc. as substantially financed by the Government for the purposes of section 10(23C) |
645
| >> |
| Relevant case law |
645
| >> |
| No exemption where main motto is to earn profit |
646
| >> |
| II. EXEMPTION WHEN CLAIMABLE UNDER SECTION 10(23C)(iiiad) |
647
| >> |
| Exemption available under section 10(23C)(iiiad) where aggregate annual receipt not exceed Rs. 5 crore |
647
| >> |
| Computation of "aggregate annual receipt" |
647
| >> |
| Position effective from assessment year 2022-23 |
647
| >> |
| Provision illustrated |
648
| >> |
| Judiciary prior to amendment by Finance Act, 2021 |
648
| >> |
| Corpus donation vis-a-vis annual receipt |
650
| >> |
| Specific provision to be prevailed |
651
| >> |
| Denial of exemption on ground of disallowance of expenses |
651
| >> |
| Benefit of section 10(23C)(iiiad) can be considered even at the appellate stage |
651
| >> |
| No approval required from prescribed authority |
651
| >> |
| Exemption under section 10(23C)(iiiad) vis-a-vis existing solely for educational purposes |
652
| >> |
| Society providing coaching for competitive examinations |
653
| >> |
| III. EXEMPTION WHEN AVAILABLE UNDER SECTION 10(23C)(vi) |
653
| >> |
| Conditions to be fulfilled for claiming exemption under section 10(23C)(vi) |
653
| >> |
| IV. CONDITIONS WHERE EXEMPTION IS AVAILABLE UNDER SECTION 11 |
654
| >> |
| V. OTHER GENERAL CONDITIONS |
654
| >> |
| Actual existence of institution |
654
| >> |
| Actual existence to be investigated every year |
655
| >> |
| Solely for educational purposes |
656
| >> |
| Exemption not to be denied on the basis of other incidental activities |
656
| >> |
| Utilisation of fund allegedly for personal purposes |
658
| >> |
| Expenditure towards development and expansion of educational activities |
659
| >> |
| Activity of printing and publishing of books |
659
| >> |
| Educational courses for imparting theoretical and practical training in tool and die making and designing |
660
| >> |
| Huge amount towards charitable purposes and meagre amount for educational purposes |
660
| >> |
| Institution giving scholarship and not imparting any knowledge |
660
| >> |
| Institution organising occasional lectures and seminars |
661
| >> |
| Utilisation of funds for educational purposes |
661
| >> |
| Institution carrying on educational as well as charitable activities but separate accounts maintained |
662
| >> |
| Contribution to social club |
662
| >> |
| Deletion of non-charitable objective clause from the Memorandum and Articles of Association -- Impact of |
662
| >> |
| Minor contradiction or deviations in account vis-a-vis profit motive |
663
| >> |
| Exemption not to be denied where method of admission of students was illegal |
663
| >> |
| Exemption where apart from educational purposes, society's aims and objects contained several other objects |
663
| >> |
| Exemption not to be denied for non-maintenance of books of account |
664
| >> |
| Not for purpose of earning profit -- Scope of |
664
| >> |
| Exemption not to be denied, where surplus derived |
664
| >> |
| Exemption under sections 10(23C)(iiiad) or 10(23C)(vi) cannot be denied merely on the ground that educational activities incidentally resulted in surplus |
666
| >> |
| Real objective of institution to be examined |
667
| >> |
| Incidental profit earned by educational institution |
668
| >> |
| No exemption where educational institution run on commercial basis |
669
| >> |
| Benefit to founder member or his wife -- Impact of |
669
| >> |
| Advance to other schools out of surplus earned |
669
| >> |
| Burden to prove |
670
| >> |
| Relevance of exemption granted in earlier years |
670
| >> |
| No jurisdiction to assessing officer to deny exemption for not complying with the terms of the grant of exemption |
671
| >> |
| Assessee being Regulatory Commission to regulate operations of private universities |
672
| >> |
| Exemption not to be denied merely because memorandum and objects listed on a plain paper |
672
| >> |
| Denial of exemption merely on basis of alleged non-compliance of provision of Right of Children to Free and Compulsory Education Act, 2009 by assessee-school |
672
| >> |
| No exemption in case of non submission of audited accounts and balance sheet |
672
| >> |
| Approval application where sent to wrong jurisdictional CIT (Exemption) |
672
| >> |
| Exemption whether can be claimed in respect of deemed income |
673
| >> |
| No exemption where money collected over and above the prescribed fee |
673
| >> |
| Allowability of exemption where allegation as to misutilization of funds not established |
673
| >> |
| Assessment order where passed without awaiting for approval |
674
| >> |
| Application of surplus towards addition to school building |
674
| >> |
| Approval under section 10(23C)(vi) where assessee already granted registration under section 12A |
674
| >> |
| Assessee not having independent Memorandum of Association, Bye laws, etc. |
675
| >> |
| Impact of denial of section 11 benefit by AO |
675
| >> |
| Principles emerging from decision in Maharishi Institute of Creative Intelligence v. CIT (1997) 62 ITD 169 (All-Trib) |
675
| >> |
| As to society not existing for profit |
675
| >> |
| Income from buses run by school |
675
| >> |
| Interest income from fixed deposits and other surplus |
676
| >> |
| Society also having some non-educational purpose |
676
| >> |
| 54. - Filing of Return by Educational and Medical Institutions Claiming Exemption under Section 10(23C) |
677
| >> |
| Requirement as to filing of return by educational and medical institutions |
677
| >> |
| Return when required to be filed |
677
| >> |
| Form of return |
677
| >> |
| Manner of furnishing of return of income |
678
| >> |
| Return filed under section 139(4C) to be treated as return filed under section 139(1) |
678
| >> |
| Penalty for non-filing of return |
678
| >> |
| Position emerging from certain case law |
678
| >> |
| 55. - Investigation and Verification by Department in Case of Educational Institutions |
680
| >> |
| Records which may be verified by assessing officer |
680
| >> |
| Sources of funds required to be examined |
680
| >> |
| Investigation of reasonableness of various expenses |
681
| >> |
| Areas to be taken care of by institutions |
682
| >> |
Section B : Procedural Aspects and Requirement of Various Provisos to Section 10(23C) |
683
| >> |
| 56. - Overview of Provisos to Section 10(23C) Vis-a-Vis Exemption to Institutions Claiming Exemption under Section 10(23C) |
683
| >> |
| Requirement as to filing of application for approval |
683
| >> |
| Action to be taken on receipt of application |
684
| >> |
| Conditions as to application or accumulation of income |
685
| >> |
| Notification under section 10(23C)(vi) vis-a-vis infringement of section 11(5) |
687
| >> |
| No denial of exemption under sub-clause (vi) or (via) in relation to any funds invested or deposited before 1-6-1998 |
687
| >> |
| No denial of exemption under sub-clauses (iv)/(v)/(vi)/(via) in relation to certain voluntary contribution |
688
| >> |
| No exemption in respect of profits and gains of business |
688
| >> |
| Applicability of approval |
688
| >> |
| Time limit for passing of order for approval |
688
| >> |
| Requirement as to audit |
688
| >> |
| Consequences of misutilisation or non-utilisation of funds |
689
| >> |
| Any sum paid to other charitable trust or institution as corpus donation shall not be treated as application of income |
689
| >> |
| Payment to other trusts out of accumulated fund not to be treated as application of income |
689
| >> |
| Withdrawal of approval by Central Government or by prescribed authority |
690
| >> |
| No exemption in respect of anonymous donation referred to in section 115BBC |
690
| >> |
| Status of pending applications |
690
| >> |
| No exemption to certain trusts referred to in section 10(23C)(iv)/(v) if the provisions of first proviso to section 2(15) become applicable |
691
| >> |
| Funds approved for purpose of section 10(23C)(iv)/(v)/(vi)/(via) cannot claim exemption under other clauses of section 10 except in case of agricultural income |
691
| >> |
| 57. - Procedure Regarding Approval by Trusts and Institutions Claiming Exemption under Section 10(23C) [As Applicable from 1-4-2021] |
692
| >> |
| Requirement as to filing of application for grant of approval under section 10(23C)(iv)/(v)/(vi)(via) |
692
| >> |
| Power to call for requisite documents and to make necessary enquiry and effective period of approval [Second proviso to section 10(23C)] |
693
| >> |
| Position upto 31-3-2021 |
693
| >> |
| Applicability of approval and time period for grant of approval to institutions specified in section 10(23C)(iv)/(v)/(vi) and (via) |
694
| >> |
| Position upto 31-3-2021 |
694
| >> |
| Form for furnishing application for approval for purpose of section 10(23C) |
695
| >> |
| Documents to be attached with Form No. 10A and Form No. 10AB |
695
| >> |
| Manner for furnishing Form 10A and Form 10AB |
696
| >> |
| Order of approval and cancellation thereof where application is made in Form No. 10A |
696
| >> |
| Order of approval where application is made in Form No. 10AB |
697
| >> |
| Effective date of approval where asked for under clause (iv) of first proviso to section 10(23C) |
697
| >> |
| Authority responsible for laying down relevant procedure |
697
| >> |
| Procedure regarding approval as applicable upto 31-3-2021 |
697
| >> |
| New procedure for approval or re-approval -- At a glance |
698
| >> |
| 58. - Scheme for Faceless Approval |
700
| >> |
| 59. - Various Issues Relevant to Approval |
701
| >> |
| Withdrawal of approval by prescribed authority |
701
| >> |
| Absence of approval from prescribed authority -- Impact of |
701
| >> |
| Rejection of application for approval -- Justification under varying circumstances |
702
| >> |
| Impact of consolidated application for exemption |
704
| >> |
| Non-furnishing of requisite documents due to on-going Covid-19 pandemic |
705
| >> |
| Power to condone delay |
706
| >> |
| Application for approval not to be rejected without specifying grounds therefor |
706
| >> |
| Rejection on ground of applicability of section 13 |
708
| >> |
| Rejection of approval on the ground of having multiple objects |
709
| >> |
| Rejection of renewal of recognition without providing hearing opportunity |
709
| >> |
| Generation of surplus and payment of honorarium to non-members |
709
| >> |
| Filing of fresh application on rejection of earlier application |
710
| >> |
| Shifting grant of approval from assessment year 2016-17 to assessment year 2017-18 |
710
| >> |
| Furnishing of application by society |
710
| >> |
| Certain clarifications by the CBDT regarding grant of approval and claim of exemption under section 10(23C)(vi)/(via) |
710
| >> |
| Scope of enquiry while granting approval |
710
| >> |
| Necessity for registration under section 12AA while seeking approval/ claiming exemption under section 10(23C)(vi) |
711
| >> |
| Generation of surplus out of gross receipts |
712
| >> |
| Collection of amounts under different heads of fee from students |
712
| >> |
| Impact of extraordinary powers of the Managing Trustees to appoint/remove or nominate other trustees |
712
| >> |
| Applicability of same principles while granting approval under section 10(23C)(via) |
713
| >> |
| 60. - Requirements As to Application or Accumulation of Income by Institutions Claiming Exemption under Section 10(23C) |
714
| >> |
| Condition regarding application or accumulation of income not relevant for institutions claiming exemption under sub-clauses (iiiab)/(iiiac)/(iiiad)/(iiiae) |
714
| >> |
| Requirement regarding application or accumulation of income by institutions covered by sub-clauses (iv)/(v)/(vi) and (via) of section 10(23C) |
714
| >> |
| Corpus donation vis-a-vis application of income |
715
| >> |
| Money utilised out of corpus funds or out of loan or borrowings not to be treated as application of income |
716
| >> |
| Applicability of provision of sections 40(a)(ia) and 40A(3)/(3A) |
716
| >> |
| Any sum paid to a charitable trust or institution as corpus donation shall not be treated as application of income |
716
| >> |
| Payment to other institution out of accumulated income not to be treated as application of income |
717
| >> |
| Consequences of non-compliance of requirement regarding application or accumulation of income |
717
| >> |
| Application of income wholly and exclusively to the objects for which it is established -- Scope of |
718
| >> |
| Requirement of application of income in India for availing of exemption under section 10(23C)(vi) |
720
| >> |
| Application of income vis-a-vis approval under section 10(23C) |
723
| >> |
| Requirement as to compliance of third proviso to be seen at the time of assessment and not at the time of registration |
724
| >> |
| Investment of accumulated funds by educational or medical institutions |
724
| >> |
| Accumulation of income by educational institutions vis-a-vis generation of profits |
726
| >> |
| Interest free loan given by one society to another society whether violates section 11(5) |
726
| >> |
| Withdrawal of approval on violation of provisions of section 13(1)(d)/11(5) |
727
| >> |
| Application of donation received in kind |
727
| >> |
| Institutions approved under section 10(23C)(vi)/(via) cannot claim general exemption under other clauses of section 10, except for agricultural income |
728
| >> |
| Depreciation not to be allowed as deduction while computing income for purpose of application |
728
| >> |
| 61. - Business Income of Institutions Claiming Exemption under Section 10(23C) |
729
| >> |
| Business income of institutions covered by sub-clauses (iiiab)/ (iiiac)/(iiiad)/(iiiae) of clause (23C) of section 10 |
729
| >> |
| Business income of institutions covered by clauses 10(23C)(iv)/(v)/(vi)/(via) |
729
| >> |
| Business income of fund or trust or institution claiming exemption under section 11 |
729
| >> |
| Scope of the word 'incidental' in the context of section 11(4A) as well as in context of seventh proviso to section 10(23C) |
730
| >> |
| Exemption to educational society engaged in conducting chit business |
733
| >> |
Section C : Taxation and Audit of Charitable, Educational and Medical Institutions |
734
| >> |
| 62. - Taxation of Voluntary Contributions |
734
| >> |
| Voluntary contribution treated as income of Institution |
734
| >> |
| Treatment of voluntary contribution in case of institution referred to in section 10(23C)(vi)/(via) |
735
| >> |
| Voluntary contribution in case of institution referred to in section 10(23C)(iiiad)/(iiiae) |
735
| >> |
| Voluntary contribution in case of institution wholly or substantially financed by Government |
736
| >> |
| Treatment of involuntary donation |
736
| >> |
| 63. - Capitation Fee Received by Educational & Medical Institutions |
738
| >> |
| Relevance of capitation fee in the context |
738
| >> |
| Capitation fee allegedly diverted for personal benefits of trustees/members |
738
| >> |
| Receipt of capitation fee allegedly for allotment of seats under management quota |
738
| >> |
| Receipt of fee in the name of building fund or library fund liable for taxation |
739
| >> |
| Treatment of capitation fee credited to corpus of institution |
739
| >> |
| Institution not existing for profit motive |
740
| >> |
| Exemption not to be denied if funds utilized in imparting education |
741
| >> |
| Addition on the basis of alleged receipt of capitation fee |
742
| >> |
| Voluntary contributions, whether capitation fee |
742
| >> |
| Capitation fee which is more than prescribed fee and tax consequence |
742
| >> |
| 64. - Tax Treatment of Anonymous Donations Received by Charitable, Educational or Medical Institutions |
744
| >> |
| Meaning of anonymous donation |
744
| >> |
| Anonymous donation received by educational or medical institutions |
744
| >> |
| Anonymous donation referred to in section 115BBC to be included in total income |
744
| >> |
| Rate of tax in respect of anonymous donations |
745
| >> |
| 65. - Audit of Charitable, Educational and Medical Institutions |
746
| >> |
| Compulsory audit of institutions referred to in section 10(23C)(iv)/(v)/(vi)/(via) |
746
| >> |
| Audit when to be done |
746
| >> |
| Form of report for the purposes of section 10(23C)(iv)/(v)/(vi)/(via) |
746
| >> |
| Audit report in form other than relevant form -- Exemption can still be allowed |
746
| >> |
| Audit report to be furnished electronically |
746
| >> |
| Form No. 10BB |
747
| >> |
| Contents of Form No. 10BB |
747
| >> |
| Auditor's responsibilities |
747
| >> |
| Check list |
747
| >> |
Section D : Sample Draft Deeds |
750
| >> |
| 66. - Sample Draft Deed of Trust For Charitable Dispensary or Hospital |
750
| >> |
| Sample Draft deed |
750
| >> |
Part III : Donations and Approval Under Section 80G |
753
| >> |
| 67. - Deduction to Donors under Section 80G Regarding Their Donations to NGOs/Societies, Etc. |
754
| >> |
| Donation : Meaning of |
754
| >> |
| Donation : Tax treatment |
754
| >> |
| Donation to any institution or fund established in India for charitable purpose eligible for deduction |
754
| >> |
| Scheme of deduction |
754
| >> |
| Upper limit of deductible amount |
756
| >> |
| Conditions to be fulfilled by institution or fund for availing of deduction under section 80G |
757
| >> |
| Condition regarding approval and reapproval as effective from 1-4-2021 |
759
| >> |
| Time limit for making application |
759
| >> |
| Validity period of approval |
759
| >> |
| Time limit for passing order |
760
| >> |
| Applicability of approval |
760
| >> |
| Approved trusts, institutions required to provide statement of donation |
760
| >> |
| Filing of statement of donation received |
760
| >> |
| Furnishing of certificate to donor |
760
| >> |
| Consequences of non-compliance |
761
| >> |
| No other deduction permitted where deduction under section 80G availed of |
761
| >> |
| Relaxation in respect of donation for religious purposes |
761
| >> |
| No deduction in case of cash donation exceeding Rs. 2,000 |
762
| >> |
| Donation for benefit of Scheduled Castes, Schedule Tribes and other backward classes, etc. does not amount to be for benefit of particular religious community |
762
| >> |
| No denial of deduction in certain cases in spite of denial of exemption to donee fund or institution |
762
| >> |
| Deduction under section 80G in respect of donation to be allowed after verification thereof |
763
| >> |
| Donation need not to come out of income chargeable to tax |
763
| >> |
| Year of allowability of deduction |
763
| >> |
| Donation by cheque -- Relevant date for computing deduction |
763
| >> |
| Failure to produce evidence in respect of payment of donation |
763
| >> |
| Computation of gross total income |
763
| >> |
| Institutions notified by Central Government to be deemed to be institutions established in India for charitable purposes |
764
| >> |
| Games and sports specified via Notification No. 357/2002, dt. 29-11-2002 [F.No. 142/16/2002-TPL] |
764
| >> |
| Donations must be of a sum of money |
764
| >> |
| 68. - Procedure as to Approval of Trusts, Institution, Etc. |
766
| >> |
| Procedure for approval as applicable upto 31-3-2021 |
766
| >> |
| Procedure laid down by rule 11AA as applicable upto 31-3-2021 |
766
| >> |
| Validity of approval granted under section 80G(5)(vi) |
767
| >> |
| New procedure regarding application for approval [Effective from 1-4-2021] |
768
| >> |
| Time limit for application for approval under varying circumstances |
768
| >> |
| Action to be taken by PCIT/CIT where trust or institution already approved before 1-4-2021 |
768
| >> |
| Action to be taken by PCIT/CIT, where approval is due to expire or where provisional approval is converted into normal approval |
768
| >> |
| Where the institution or fund makes an application for approval in any other case |
769
| >> |
| Applicability of approval |
769
| >> |
| Status of pending applications |
769
| >> |
| Form in which application to be made for purpose of section 80G(5)(vi) |
770
| >> |
| Documents to be attached with Form 10A and Form 10AB |
770
| >> |
| Manner of furnishing application |
771
| >> |
| Order of approval where application made in Form 10A |
771
| >> |
| Cancellation of approval |
771
| >> |
| Effective date in case of provisional approval |
771
| >> |
| Order of approval where application is made in Form 10AB |
772
| >> |
| Authority empowered to lay down requisite procedure |
772
| >> |
| Scheme for faceless approval |
772
| >> |
| New procedure for approval -- In nutshell |
773
| >> |
| 69. - Procedure as to Furnishing of Statement and Certificate |
774
| >> |
| Trusts approved under section 80G require to furnish statement of donation to prescribed authority and certificate of donation to donor |
774
| >> |
| Filing of statement of donation received |
774
| >> |
| Furnishing of certificate to donor |
774
| >> |
| Consequences of non-compliance |
774
| >> |
| Form of statement of particulars for purpose of section 80G(5)(viii) and authority to whom such statement required to be furnished |
775
| >> |
| Particulars to be furnished by the reporting person |
775
| >> |
| Time limit for furnishing Form 10BD |
775
| >> |
| Manner of furnishing Form 10BD |
775
| >> |
| Furnishing of certificate to donor |
776
| >> |
| Authority empowered to lay down relevant procedure |
776
| >> |
| 70. - Issues Relevant to Grant of Approval |
777
| >> |
| Approval to be granted on fulfilment of requisite conditions |
777
| >> |
| Opportunity of hearing to be provided before declining/renewal of exemption |
778
| >> |
| Reasons to be recorded while refusing approval |
779
| >> |
| Justification of refusal to recognise NGO, etc. on charitable vis-a-vis religious ground for section 80G |
780
| >> |
| Justification of rejection of application on ground of non-application of income |
781
| >> |
| Effective date for recognition of approval |
781
| >> |
| Impact of having been registered under section 12AA |
781
| >> |
| Institutions or funds notified under section 10(23C), not automatically recognised for the purposes of section 80G -- Circular No. 416, dt. 11-4-1985 |
783
| >> |
| Deduction is not allowable where whole or substantially whole purpose is of religious nature |
783
| >> |
| Refusal of approval on the ground of being engaged in business activities |
784
| >> |
| No deduction in case of mixed trusts |
786
| >> |
| Renewal of registration where objects included construction of temples |
787
| >> |
| Renewal of section 80G recognition where diversion of funds exceeding five per cent of religious nature |
787
| >> |
| Renewal of approval vis-a-vis rule of consistency |
789
| >> |
| Renewal of recognition for the purposes of section 80G |
791
| >> |
| Justification of refusal to renew registration on ground of alleged violation of section 11(5) |
794
| >> |
| Trust, when not entitled to approval for the purposes of section 80G |
795
| >> |
| Donee trust not required to produce exemption certificate |
796
| >> |
| No deduction in case of donation to college having no approval |
796
| >> |
| Denial on the allegation of assessee not having spent money towards objects of trust |
796
| >> |
| Refusal of recognition on the ground that particulars of donors not given |
797
| >> |
| Justification of denial of exemption on the ground of non-genuineness |
797
| >> |
| Expenses where incurred on CSR activity |
798
| >> |
| Impact of disallowance of donation expenditure |
798
| >> |
Part IV : Accounting by Trusts and Institutions |
799
| >> |
| 71. - Applicability of Accounting Standards to Trusts and Institutions |
800
| >> |
| Relevance of Accounting Standards |
800
| >> |
| Accounting Standards normally not applicable to charitable entities |
801
| >> |
| Accounting Standards applicable to charitable entities |
801
| >> |
| 72. - Revenue Recognition by Trusts and Institutions [AS-9] |
802
| >> |
| Introduction and scope |
802
| >> |
| Exclusions from scope of AS-9 |
802
| >> |
| Meaning of revenue |
803
| >> |
| Exclusions from revenue |
803
| >> |
| Time of recognition of revenue |
803
| >> |
| Sale of goods |
803
| >> |
| Illustrations relating to sale of goods as per AS-9 |
804
| >> |
| Rendering of services |
805
| >> |
| Illustrations relating to recognition of revenue arising from rendering of services |
806
| >> |
| Use by others of enterprise resources yielding interest, royalty and dividend |
807
| >> |
| Effect of uncertainties on revenue recognition |
809
| >> |
| Revenue recognition -- Transfer of property in the goods |
809
| >> |
| Recognition of amount received on transfer of rights not belonging to company |
809
| >> |
| Accounting for interest on overdue outstandings |
810
| >> |
| Revenue recognition of amounts receivable on completion of performance guarantees |
810
| >> |
| Disclosure requirements as per AS-9 |
811
| >> |
| AS-9 and Income-tax interface |
811
| >> |
| Recognition of revenue |
811
| >> |
| Treatment of taxes collected from customers |
812
| >> |
| Treatment of interest received on enhanced compensation |
812
| >> |
| Recognition of dividend received |
813
| >> |
| Recognition of interest, royalties etc. |
813
| >> |
| Recognition of expenditure |
813
| >> |
| Recognition of income on deferred basis |
814
| >> |
| Important judicial pronouncements on recognition of different types of revenue |
814
| >> |
| Income from securities |
814
| >> |
| Interest on deposits |
815
| >> |
| Margin money forfeited by bank |
815
| >> |
| Forfeiture of advance received in respect of transfer of capital asset |
815
| >> |
| Interest on doubtful debt |
815
| >> |
| Refundable advance received from customers |
815
| >> |
| Retention of money as security |
815
| >> |
| Question of extent of revenue recognition in relevant year and role of AS-9 where sale price realised in toto, but performance bank guarantee provided |
816
| >> |
| Method of accounting in respect of finance charges earned by a leasing company |
817
| >> |
| Accounts cannot be rejected merely because changed accounting method results in lower taxable income |
818
| >> |
| 73. - Accounting of Government Grants by Trusts and Institutions [AS-12] |
820
| >> |
| Introduction and scope |
820
| >> |
| Government |
820
| >> |
| Government grant |
820
| >> |
| Time of recognition of government grant |
820
| >> |
| Accounting methods of recognition of government grants |
821
| >> |
| If government grant is received for specific assets |
821
| >> |
| If government grant relates to revenue |
823
| >> |
| If the nature of government grant is of promoter's contribution |
824
| >> |
| If government grant is received in the form of non-monetary asset |
824
| >> |
| Application of provisions of other Accounting Standards |
824
| >> |
| AS-4 : Contingencies and Events Occurring after the Balance Sheet Date |
824
| >> |
| AS-5 : Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies |
825
| >> |
| Accounting treatment when government grants become refundable |
825
| >> |
| Grant related to specific fixed asset |
825
| >> |
| Grant related to revenue |
826
| >> |
| Grant in the nature of promoter's contribution |
826
| >> |
| Practical examples reflecting accounting and recognition of government grants |
826
| >> |
| Disclosures required under AS-12 |
828
| >> |
| Treatment of grant received for a particular project |
828
| >> |
| Treatment of grant received for repayment of loan and interest thereon |
828
| >> |
| Tax implications |
828
| >> |
| 74. - Requirements as Per Other Important Accounting Standards |
830
| >> |
| Disclosure of Accounting Policies [AS 1] |
830
| >> |
| Valuation of inventories [AS 2] |
830
| >> |
| Depreciation Accounting [AS 6] |
831
| >> |
| Accounting for Fixed Assets [AS 10] |
832
| >> |
| Effects of changes in foreign exchange rates [AS 11] |
834
| >> |
| Accounting for investments [AS 13] |
834
| >> |
| Related party disclosures [AS 18] |
836
| >> |
| Intangible assets [AS 26] |
837
| >> |
| Impairment of assets [AS 28] |
838
| >> |
| Provisions, contingent liabilities and contingent assets [AS 29] |
839
| >> |
| 75. - Preparation of Annual Accounts by Trusts or Institutions |
842
| >> |
| Accounts of charitable entity |
842
| >> |
| Significance of annual accounts of a charitable entity |
842
| >> |
| Format of annual accounts of a charitable entity |
843
| >> |
| 76. - Guidance Notes As to Accounting in Case of Schools |
859
| >> |
| Accounting by schools |
859
| >> |
| Need of adequate accounting mechanism |
859
| >> |
| Scope of applicability of Guidance Note |
859
| >> |
| Preparation of separate books of accounts |
860
| >> |
| Terminology defined |
860
| >> |
| School |
860
| >> |
| Financial statements |
860
| >> |
| Accounting period |
860
| >> |
| Accounting policies |
860
| >> |
| Accrual basis |
860
| >> |
| Fair value |
860
| >> |
| Principles of accounting for schools |
861
| >> |
| Basis of accounting |
861
| >> |
| Cash basis of accounting |
861
| >> |
| Accrual basis of accounting |
861
| >> |
| Income arising to schools |
862
| >> |
| Income -- Meaning of |
862
| >> |
| Income recognition criteria |
862
| >> |
| Applicability of requirements of AS-9 : Revenue Recognition |
862
| >> |
| Recognition related principles of certain peculiar items |
863
| >> |
| Recognition and measurement of grants-in-aid and donations |
865
| >> |
| Grants -- Meaning of |
865
| >> |
| Scope of grant |
865
| >> |
| Recognition of grants-in-aid and donations |
866
| >> |
| Expenses incurred by schools |
867
| >> |
| Expenses -- Meaning of |
867
| >> |
| Recognition criteria for items of expenses |
867
| >> |
| Basis of recognising expenses |
868
| >> |
| Recognition of certain peculiar items of expenses |
868
| >> |
| Recognition and measurement of assets |
870
| >> |
| Assets -- Meaning of |
870
| >> |
| Recognition criteria for assets |
870
| >> |
| Recognition related principles of certain peculiar items of assets |
870
| >> |
| Recognition and measurement of liabilities |
873
| >> |
| Liabilities -- Meaning of |
873
| >> |
| Types of settlement of liabilities |
873
| >> |
| Recognition criteria |
873
| >> |
| Measurement of liabilities |
873
| >> |
| Recognition and measurement of provisions |
874
| >> |
| Provisions -- Meaning of |
874
| >> |
| Recognition and measurement |
874
| >> |
| Recognition of contingent liabilities |
874
| >> |
| Contingent liabilities -- Meaning of |
874
| >> |
| Recognition |
874
| >> |
| Books of account to be kept by schools |
875
| >> |
| Books of account |
875
| >> |
| Registers and other records to give adequate information |
875
| >> |
| Formats of financial statements |
875
| >> |
| Preparation and presentation of income and expenditure account |
876
| >> |
| Preparation of balance sheet |
876
| >> |
| Principles of fund based accounting |
876
| >> |
| Unrestricted funds |
876
| >> |
| Restricted funds |
877
| >> |
| Disclosures related requirements |
878
| >> |
| Disclosure as to related parties |
878
| >> |
| Related parties -- Meaning of |
878
| >> |
| Related parties -- Scope of |
879
| >> |
| Related party transactions |
879
| >> |
| Disclosure requirements |
879
| >> |
| Transitional provisions where basis of accounting is changed from cash to accrual |
880
| >> |
| Assets |
880
| >> |
| Liabilities |
880
| >> |
| Rates of depreciation as suggested for accounting purposes |
880
| >> |
| Formats of financial statements of schools |
881
| >> |
| 77. - Guidance Notes As to Accounting for Hospitals |
890
| >> |
| Need of accounting by hospitals |
890
| >> |
| Features of accounting for hospitals and medical institutions |
890
| >> |
| Features of accounting for other not-for-profit organisations |
891
| >> |
Part V : GST Implications Vis-a-Vis Trusts, Societies Etc. |
893
| >> |
Section A : GST -- Basic Aspects |
894
| >> |
| 78. - Overview of GST |
894
| >> |
| What is Goods and Services Tax? |
894
| >> |
| Central taxes subsumed within GST |
894
| >> |
| State taxes subsumed within GST |
895
| >> |
| Taxes and levies not subsumed within GST |
895
| >> |
| Goods not chargeable to GST |
895
| >> |
| Structure of GST in India |
895
| >> |
| Illustration 1 |
896
| >> |
| Illustration 2 |
896
| >> |
| Tax is leviable on supply of goods or services |
896
| >> |
| Goods -- Meaning |
897
| >> |
| Services -- Meaning |
897
| >> |
| Classification of goods and services |
897
| >> |
| IGST is leviable on inter-State supplies of goods or services |
898
| >> |
| Inter-State supply |
898
| >> |
| Supply of goods in the course of inter-State trade or commerce |
898
| >> |
| Supply of services in the course of inter-State trade or commerce |
898
| >> |
| Location of recipient of services |
899
| >> |
| Location of supplier of services |
899
| >> |
| Fixed establishment |
899
| >> |
| Inter-state movement of various modes of conveyance, carrying goods or passengers for repairs and maintenance -- Taxability of |
899
| >> |
| Supply of goods by artists from galleries outside State |
900
| >> |
| Import of goods or services |
900
| >> |
| Supply of goods imported into territory of India |
900
| >> |
| Supply of services imported into territory of India |
900
| >> |
| Supply of goods or services outside India |
901
| >> |
| Supplies in territorial waters |
901
| >> |
| Export of goods and services |
901
| >> |
| Rates of GST |
901
| >> |
| Input tax credit |
901
| >> |
| 79. - Levy and Collection of Tax |
903
| >> |
| Power to levy GST |
903
| >> |
| Legislative scheme of levy of GST |
903
| >> |
| Levy of CGST |
903
| >> |
| Rates of CGST |
904
| >> |
| Levy of SGST |
904
| >> |
| Levy of UTGST |
904
| >> |
| Levy of IGST |
904
| >> |
| Taxable event under GST |
905
| >> |
| Taxability of services rendered by NGOs, Charitable entities, Societies, etc. |
905
| >> |
| Liability to get registered |
905
| >> |
| Entities engaged in making both taxable as well non-taxable/exempt supplies |
905
| >> |
| Entities engaged exclusively in making non-taxable/exempt supply |
906
| >> |
| Taxability of supplies made without consideration |
906
| >> |
| Tax is payable by a taxable person |
907
| >> |
| Person -- Meaning |
907
| >> |
| Person having more than one registration -- Effect of |
908
| >> |
| Different establishments of a person |
908
| >> |
| Levy of tax on reverse charge basis on certain notified services |
908
| >> |
| Levy of tax on Reverse Charge i.r.o. supply received from unregistered person |
909
| >> |
| Position effective upto 31-1-2019 |
909
| >> |
| Position effective from 1-2-2019 |
909
| >> |
| Composition scheme for supply of goods |
909
| >> |
| Special composition scheme for supplier of goods or services or both |
911
| >> |
| Concessional rate of tax in respect of supply of goods to specified institutions |
912
| >> |
| 80. - Meaning and Scope of Supply |
916
| >> |
| Taxable event under GST |
916
| >> |
| Services -- Meaning |
916
| >> |
| Meaning and scope of supply |
916
| >> |
| Import of goods is not supply under GST |
917
| >> |
| Transfer of both title and possession is necessary |
917
| >> |
| Supply in the course or furtherance of business |
917
| >> |
| Business -- Definition |
918
| >> |
| Scope of the expression 'supply made in the course or furtherance of business' |
918
| >> |
| Supply by a taxable person |
919
| >> |
| Person ceased to be a taxable person -- Consequences of |
919
| >> |
| Clarifications in Tweet FAQs |
919
| >> |
| Disposal of scrap |
919
| >> |
| Slump sale |
920
| >> |
| Salary by a partnership firm to its partners |
920
| >> |
| Consideration -- Meaning |
920
| >> |
| Charitable activities of NGOs, Chartable Trusts, Societies are not supply |
920
| >> |
| Activities that are treated as supply even if made without consideration |
921
| >> |
| Permanent transfer or disposal of business asset |
921
| >> |
| Supply between related persons and distinct persons |
921
| >> |
| Supply of goods by principal to his agent and vice versa |
922
| >> |
| Import of service from a related person |
922
| >> |
| Taxability of gifts |
922
| >> |
| Gifts are treated as supply, when |
922
| >> |
| Gifts in cash and securities are not taxable |
922
| >> |
| Gift to an employee upto Rs. 50,000 is not regarded as supply |
922
| >> |
| Taxation of perquisites |
923
| >> |
| Transactions which are treated as supply of goods |
923
| >> |
| Transactions which are treated as supply of services |
923
| >> |
| Activities which are regarded neither supply of goods nor supply of services |
924
| >> |
| Activities or transactions specified in Schedule III |
925
| >> |
| Activities undertaken by Central Government, or State Government or any Local Authority which are treated neither supply of goods nor supply of services |
925
| >> |
| 81. - Composite and Mixed Supply |
927
| >> |
| Composite supply -- Meaning |
927
| >> |
| Principal supply -- Meaning |
928
| >> |
| Two or more supplies should be taxable supplies |
928
| >> |
| Tax liability on a composite supply |
928
| >> |
| Activity of bus body building -- Nature of supply |
928
| >> |
| Retreading of tyres -- Nature of supply |
928
| >> |
| Time of supply in case of composite supply |
928
| >> |
| Examples of two or more supplies naturally bundled in ordinary course of business |
929
| >> |
| Supply of cycle part and recovery of cartage and loading charges |
929
| >> |
| Hotels providing rooms with facility of breakfast |
929
| >> |
| Hotel booked for a conference on lump sum package |
929
| >> |
| Hospitals providing health care service and also supplying medicines |
930
| >> |
| Residential dwelling rented for use partly as residence and partly for non-residence purpose |
930
| >> |
| Services provided by freight forwarders |
930
| >> |
| Catering service provided together with renting of premises |
930
| >> |
| Services provided by boarding schools |
930
| >> |
| Indicators determining whether services are bundled in the ordinary course of business |
931
| >> |
| Perception of consumer or service receiver -- Relevance of |
931
| >> |
| Majority of service providers in a particular area of business providing similar bundle of services |
931
| >> |
| Nature of services in a bundle of services |
931
| >> |
| Other illustrative indicators of naturally bundled service |
931
| >> |
| Mixed supply -- Definition |
932
| >> |
| Levy of tax in case of mixed supply |
932
| >> |
| Time of supply in case of mixed supplies |
932
| >> |
| Example of services not naturally bundled in ordinary course of business |
932
| >> |
| A package consisting of different items supplied for a single price |
932
| >> |
| One floor of house rented for use as residence and ground floor given for printing press |
933
| >> |
| Teaching of a course leading to dual qualification |
933
| >> |
| 82. - Levy of Tax on Reverse Charge Basis |
934
| >> |
| Concept of reverse charge |
934
| >> |
| Reverse charge -- Meaning |
934
| >> |
| Applicability of reverse charge under different circumstances |
934
| >> |
| Reverse charge on supply of goods or services notified by Government |
934
| >> |
| Reverse charge on receipt of goods or services by a registered person from unregistered person [Position effective upto 31-1-2019] |
935
| >> |
| Scope of provision |
935
| >> |
| Reverse charge was not applicable in respect of exempted or non-taxable supply |
935
| >> |
| Reverse charge was applicable to composition dealer also |
936
| >> |
| Reverse charge on purchase of old jewellery by a jeweller from an individual |
936
| >> |
| Where place of supply is another State of unregistered supplier |
937
| >> |
| Exemption from levy of tax on reverse charge basis under section 9(4) |
937
| >> |
| Levy of tax on reverse charge basis was exempted upto 31-1-2019 |
937
| >> |
| Exemption in respect of supply of services or goods received by a deductor |
937
| >> |
| Exemption in respect of purchase of second hand goods by certain dealers |
937
| >> |
| Exemption in respect of import of services by a SEZ unit or developer of SEZ |
937
| >> |
| Reverse charge on receipt of goods or services by a registered person from an unregistered person [Position effective from 1-2-2019] |
938
| >> |
| Persons making supplies covered by reverse charge, not required to get registered |
939
| >> |
| Input tax credit cannot be utilized for payment of tax on reverse charge basis |
939
| >> |
| Tax paid on reverse charge basis can be claimed as input tax credit |
939
| >> |
| Recipient of goods or services is required to get registered |
940
| >> |
| Issuance of tax invoice by recipient of goods or services |
940
| >> |
| Issuance of payment voucher by recipient of goods or supply |
940
| >> |
| Time of supply of goods covered by reverse charge |
940
| >> |
| Time of supply of services covered by reverse charge |
940
| >> |
| Time of supply made by an associated enterprises located outside India |
941
| >> |
| Value attracting reverse charge is not included in aggregate turnover |
941
| >> |
| Supplies chargeable to tax on reverse charge basis are regarded as exempt supplies in the hands of supplier |
941
| >> |
| APPENDIXES |
941
| >> |
| Services Chargeable to Tax on Reverse Charge Basis |
941
| >> |
| Supply of Goods Chargeable to Tax on Reverse Charge Basis |
950
| >> |
Section B : GST on NGOs, Trusts, Societies |
952
| >> |
| 83. - Charity and Social Care Services |
952
| >> |
| Levy of GST on charity and social care services |
952
| >> |
| Classification of service |
952
| >> |
| Rate of tax |
953
| >> |
| Exemption in respect of services by way of charitable activities |
954
| >> |
| Charitable activities -- Meaning |
954
| >> |
| Sale of spiritual products by a charitable entity is not exempt |
955
| >> |
| Charitable entity must be registered under section 12AA of the Income-tax Act |
955
| >> |
| Hostel accommodation provided by trusts to students is not a charitable activity |
955
| >> |
| Exemption in respect of conduct of religious ceremony |
956
| >> |
| Exemption in respect of renting of precincts of a religious place |
956
| >> |
| Nature of exemption |
956
| >> |
| Monetary ceiling for claiming exemption |
956
| >> |
| General public -- Meaning |
957
| >> |
| Exemption in respect of religious pilgrimage |
957
| >> |
| Exemption in respect of training or coaching in recreational activities |
957
| >> |
| Exemption in respect of services received from a provider of service located in non-taxable territory |
957
| >> |
| No GST leviable on free supply of food by religious institutions |
958
| >> |
| Place of provision of service |
958
| >> |
| 84. - Human Health and Social Care Services |
959
| >> |
| Levy of GST on human health and social care services |
959
| >> |
| Classification of service |
959
| >> |
| Rate of tax |
959
| >> |
| Exemption in respect of services provided by a veterinary clinic |
960
| >> |
| Exemption in respect of health care services |
960
| >> |
| Health care services -- Meaning |
960
| >> |
| Recognized system of medicine -- Scope of |
961
| >> |
| Acupressure, acupuncture, colour therapy, etc. are not recognized system of medicines |
961
| >> |
| Consultancy charges paid by hospitals to senior doctors are exempt |
961
| >> |
| Charges recovered for ancillary services are also exempt |
961
| >> |
| Supply of food to in-patients is exempt |
961
| >> |
| Room rent in hospitals is exempt |
962
| >> |
| Services for improving aesthetic beauty are taxable |
962
| >> |
| Hair transplant or cosmetic or plastic surgery is taxable |
962
| >> |
| Clinical establishment -- Meaning |
962
| >> |
| Authorized medical practitioner -- Meaning |
962
| >> |
| Paramedics -- Meaning |
962
| >> |
| Exemption in respect of transportation of a patient in an ambulance |
963
| >> |
| Nature of exemption |
963
| >> |
| Ambulance service provided by Government and PSP |
963
| >> |
| Services provided by PSPs to State Government by way of transportation of patients |
963
| >> |
| Exemption i.r.o. services provided by rehabilitation professionals |
963
| >> |
| Exemption in respect of services provided by cord blood banks |
963
| >> |
| Exemption in respect of health related charitable activities |
963
| >> |
| Exemption in respect of treatment or disposal of bio-medical waste |
964
| >> |
| Hospitals engaged exclusively in supplying exempt services are not required to get registered |
964
| >> |
| Supply of medicines and stents during the course of treatment of injury or operation -- Taxability |
964
| >> |
| Illustration |
965
| >> |
| Tax planning |
965
| >> |
| Place of provision of health care services |
965
| >> |
| Where location of supplier and location of recipient is in India |
965
| >> |
| Where location of supplier or location of recipient is outside India |
965
| >> |
| Allowability of input tax credit to recipient of health care services |
966
| >> |
| Position upto 31-1-2019 |
966
| >> |
| Position w.e.f. 1-2-2019 |
966
| >> |
| 85. - Education Services |
967
| >> |
| Levy of GST on education related services |
967
| >> |
| Classification of service |
967
| >> |
| Rate of tax in respect of education services |
968
| >> |
| Rate of tax on college hostel mess fees |
968
| >> |
| Exemption in respect of education related services |
968
| >> |
| Nature of exemption |
968
| >> |
| Educational institution -- Meaning |
969
| >> |
| Catering provided by educational institution itself is exempt |
969
| >> |
| Catering provided by other person is taxable |
969
| >> |
| Central and State Educational Boards to be treated as educational institution |
970
| >> |
| Vocational training provided by private ITIs |
970
| >> |
| Conduct of examination by private ITIs against entrance fee |
970
| >> |
| Services provided by Government ITIs |
970
| >> |
| Maritime courses conducted by Maritime Training Institutes are exempt |
970
| >> |
| Pre-school education and education upto higher secondary |
971
| >> |
| Meaning of pre-school |
971
| >> |
| Certifications given by international schools would be exempt |
971
| >> |
| Services provided by boarding schools |
971
| >> |
| Services of lodging/boarding in hostels are exempt |
971
| >> |
| Education as a part of a curriculum for obtaining a qualification recognised by law |
972
| >> |
| Degree granted by institutes affiliated to a University |
972
| >> |
| Recognition to be in force at the time of provision of service |
972
| >> |
| Qualification recognized in foreign country are not exempt |
972
| >> |
| One course leading to dual qualifications |
972
| >> |
| Effect of de-recognition of institution or establishment |
973
| >> |
| Conducting admission tests for admission to colleges |
973
| >> |
| Education as a part of approved vocational education course |
973
| >> |
| Nature of entry |
973
| >> |
| Approved vocational education course -- Meaning |
973
| >> |
| Exemption i.r.o. advancement of educational programmes by charitable entities |
973
| >> |
| Exemption in respect of services provided under National Skill Development Programme |
974
| >> |
| Exemption i.r.o. services provided by Indian Institute of Management |
974
| >> |
| Exemption i.r.o. services provided under Skill Development Initiative Scheme |
975
| >> |
| Exemption i.r.o. services by way of offering skill or vocational training courses |
975
| >> |
| Exemption i.r.o. giving on hire vehicle for transport of students, faculty and staff |
975
| >> |
| Services provided by Institute of Language Management |
975
| >> |
| Sale of study material or books by educational institutions is not taxable |
976
| >> |
| Amounts not included in value of taxable service |
976
| >> |
| Amount recovered towards students' special fund, alumni fund and deposit fund |
976
| >> |
| Amount collected towards sale of forms, prospectus |
977
| >> |
| Charges for re-examination fee |
977
| >> |
| Place of supply of education related services where location of supplier and location of recipient is in India |
977
| >> |
| Services by way of organisation of an educational event |
977
| >> |
| Other education related services |
977
| >> |
| Place of supply of education related services where location of supplier or location of recipient is outside India |
978
| >> |
| 86. - Clubs, Association or Society Services |
979
| >> |
| Activities of clubs or associations are regarded as "business" |
979
| >> |
| No service is provided by a club to members -- Not liable to pay tax |
979
| >> |
| Provision of services to members is chargeable to tax |
979
| >> |
| Classification of services of clubs or associations |
980
| >> |
| Rates of tax in respect of services provided by club, association or society |
984
| >> |
| Supply of food from restaurant of club -- Rate of tax |
987
| >> |
| Exemption in respect of value of supply below or equal to Rs. 1,000 |
987
| >> |
| Exemption in respect of services as trade union |
987
| >> |
| Exemption in respect of services by way of reimbursement of charges or share of contribution |
988
| >> |
| Exemption in respect of services by Resident Welfare Associations to its members |
988
| >> |
| Nature of exemption |
988
| >> |
| One person owning two or more flats -- Ceiling shall be applied separately |
988
| >> |
| If maintenance charges exceed Rs. 7,500, entire amount would be taxable |
988
| >> |
| Threshold exemption is also available |
989
| >> |
| ITC of input and input services can be claimed by RWAs |
989
| >> |
| ITC in respect of installation of lift is not allowable |
989
| >> |
| Amount collected from members for setting up of a corpus fund is not taxable |
989
| >> |
| Exemption i.r.o. services by NPOs engaged in welfare of labour or farmers |
989
| >> |
| Reverse Charge on receipt of goods transport agency service by certain entities |
990
| >> |
| Place of supply of services where location of supplier and location of recipient is in India |
991
| >> |
| Services by way of lodging of accommodation by clubs |
991
| >> |
| Place of supply of other services |
991
| >> |
| Place of supply of services where location of supplier or location of recipient is outside India |
991
| >> |
| Services by way of lodging of accommodation by clubs |
991
| >> |
| Other services by clubs or associations |
991
| >> |
| Input tax credit in respect of membership of club |
992
| >> |
| Position effective upto 31-1-2019 |
992
| >> |
| Position effective from 1-2-2019 |
992
| >> |