175. Requirement of investing funds of trust in modes specified in section 13(5) during previous year commencing on or after April 1, 1981 in terms of section 13(1)(d) – Whether, in cases where previous year is calendar year 1981, assessment year for invoking of section 13(1)(d) would be assessment year 1982-83 or 1983-84

1. Section 13(1)(d) provides that subject to the provision of section 13(1)(bb) a trust/institution for charitable or religious purposes will lose the exemption under section 11 for assessment year commencing from the assessment year 1982-83 if any funds of the trust or institution are invested or deposited or continue to remain invested or deposited for any period during any previous year commencing on or after April 1, 1981 in any of the forms or modes other than those specified in section 13(5). The Board has received references as to whether in cases where the previous year of the trust/institution is the  calendar year 1981, the assessment year for invoking the provision of section 13(1)(d) would be the assessment year 1982-83 or 1983-84.

2. The Board desire to point out that if any previous year commences on or after April 1, 1981, the provision of section 13(1)(d) would be applicable from the very first assessment year relevant to the previous year beginning after April 1, 1981.  However, where the previous year commences before April 1, 1981, the provision of section 13(1)(d) will not apply for the assessment year 1982-83 and the trust will not lose the exemption under section 11 merely by the application of section 13(1)(d). In such cases, renewal of recognition certificate under section 80G by the Commissioners would be in order.  The Commissioner will, however, not be able to renew section 80G certificate where the previous year begins on or after April 1, 1981 and the trust has not complied with the provision of section 13(1)(d).  This position will hold good for all previous years starting after April 1, 1981, irrespective of the assessment year involved.

3. The legal position may please be brought to the notice of all officers working in your charge particularly those assessing the cases of charitable and religious trusts.

Circular : No. 322 [F. No. 186/47/81-IT(A-I)], dated 16-1-1982.

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