Trust - Page 2

Proposed Important Amendments for Charitable Trust by Finance Bill 2017

While presenting budget 2017, there were several amendments proposed by Finance Minister Mr. Arun Jaitley with respect to Taxation of Charitable Trust...

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Posted Under: Income Tax | ,

Charity Commissioner, Maharashtra State Special Drive 2017

Charity Commissioner, Maharashtra State Special Drive 2017- For Filing of Audited Accounts and Change Reports under Bombay Public Trusts Act, 1950...

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Posted Under: Income Tax |

Pre-School falls in the term 'education' as envisaged u/s 2(15)

Green Acres Educational Trust Vs. DCIT (ITAT Mumbai)

The education has got different meaning, purpose or object for each person depending upon its position and background. We have education of various types e.g. Pre-schooling, schooling, higher education, professional education, vocational training, professions training etc etc....

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Recent case laws applicable to NGOs / Charitable Trusts

[2015] 55 taxmann.com 255 (SC) SUPREME COURT OF INDIA Queen’s Educational Society v. Commissioner of Income-tax *In favour of assessee Where a surplus was made by educational institution which was ploughed back for educational purposes, said institution was to be held to be existed solely for educational purpose and not for purpose ...

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Posted Under: Income Tax |

No mandatory Trust registration cancellation u/s 12AA for Turnover

Circular No. 21/2016-Income TAx (27/05/2016)

It is clarified that it shall not be mandatory to cancel the registration already granted u/s 12AA to a charitable institution merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution...

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Congress not eligible to claim exemption u/s 13A

Commissioner Of Income Tax Vs Indian National Congress (I)/All India Congress Committee (Delhi High Court)

Delhi HC helkd that, All India Congress Committee (AICC) and Indian National Congres (INC) Delhi are not eligible to claim exemption u/s 13A of Income Tax Act for AY 1994-95 & 1995-96. The Court further holds that voluntary contributions received by political parties cannot be equated with corpus donation or capital receipts....

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Denial of exemption U/s. 11 to the total income of a trust, in view of violation of section 13(1)(c) / 13(1)(d), is not legally tenable

Section 11 of the Income-Tax Act, 1961 (the Act) excludes from the income of charitable or religious trusts, income to the extent it is applied towards the objects of such trusts, during the previous year in India. It may be stated here that there are several conditions laid down under section 11 of the Act, for the purpose of claiming ex...

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Posted Under: Income Tax |

Educational and Medical Institutions – Heed the wake-up call!

The Finance (No.2) Act 1998 has made far-reaching changes in the provisions of Income-Tax Act 1961 relating to the taxation of educational and medical institutions. The reasons for the same, as stated in the Finance (No.2) Bill 1998, are as follows:...

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Posted Under: Income Tax |

Section 11-CBDT notifies online forms for accumulation of income by a trust

Notification No. 03/2016 (14/01/2016)

NOTIFICATION NO. 03/2016 Exercise of option etc under section 11. (1) The option to be exercised in accordance with the provisions of the Explanation to sub-section (1) of section 11 in respect of income of any previous year relevant to the assessment year beginning on or after the 1st day of April, 2016 shall be in Form No. 9A and shall ...

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Income Tax : Trust Registration and Tax Rate

Trust formed for charitable or religious purposes which are not intended to do commercial activities are allowed various benefits under the Income-Tax Act, inter-alia, exemption under section 11. The term religious purpose is not defined under the Income-Tax Act. However, Section 2(15) of the Act defines charitable purpose to include reli...

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Posted Under: Income Tax |

Taxation Regime for Real Estate Investment Trusts and Infrastructure Investment Trusts

The Finance (No.2) Act, 2014 had amended the Income-tax Act to put in place a special taxation regime in respect of business trusts. The business trust as defined in section 2(13A) of the Income-tax Act before amendment by the Act, included a Real Estate investment Trust (REIT) and an Infrastructure Investment Trust(InviT) which is regist...

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Posted Under: Income Tax |

No exemption u/s 10(23C) if institution exists apparently for philanthropic purpose and in reality for profits

M/s Yash Society Vs Chief Commissioner of Income Tax (Bombay High Court)

The contention of the revenue was that the intention of the Legislature is to benefit those institutions which cater to variety of illness and suffering as a service to the society and solely for philanthropic purpose and not for the purpose of profit. ...

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Charitable activities cannot be held as business merely due to charge of fee for rendering services

Institute for Development and Research in Banking Technology (IDRBT) Vs ACIT (ITAT Hyderabad)

The object and activities of the assessee were entrusted to it by RBI as a part of its supervisory role over the bank in India. Revenue doubted that assessee is engaged in commercial activities and hence proviso of section 2 (15) was applicable to the case of assessee and hence not eligible for exemption u/s 11. ...

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Testing and Consultancy Services provided for a fees without profit motive not falls within the ambit of Section 2(15)

Association of State Road Transport Vs CIT (ITAT Delhi)

Assessee association was established with the main object of improving public transport system in the country and its objects as per memorandum of association clearly reveals that the objects of the assessee association are dedicated towards improving road safety standards ...

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Assessment of Charitable Trusts and Institutions – A Ready Referencer

Many Non Governmental Organizations spread across the world are supplementing the efforts of the governments in promoting social welfare and economic development. Tax administrations have also recognized the voluntary efforts of these NGOs and provided tax incentives to those engaged in charitable activities. The present booklet under ‘...

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Permission u/s 11(1)(c) for rendering help to victims of Nepal Earthquake

The Central Board of Direct Taxes has decided to fast track all applications made u/s 11(1)(c) of the Income Tax Act, 1961 seeking approval for rendering help to the victims of earthquake in Nepal. It will be the endeavor of the Department to process these applications within two working days of receiving the completed applications....

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Posted Under: Income Tax |

Short guide on Legal issues involved with NGOs in India

NGO’s or charity work in India can be carried out by various methods/forms of business, such as a Trust/ A society or by a Non-Profit Company. Coming to the point of why the Government cancelled these licenses. What I have gathered is because:...

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Posted Under: Income Tax |

A guide to formalising the charity work you are intending to do in India

Forming a, Trust or a Society, or a Company Generally speaking, any organisation that devotes its funds for public welfare is a not-for-profit organisation (NPO). This includes schools, colleges, hospitals, religious organisations, etc. It also includes non-governmental organisations (NGOs). There are three common forms of not-for-profit ...

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Posted Under: Income Tax |

3 Important Income Tax Case laws on Charitable or Religious Trusts and Institutions

1. Whether the Tribunal was right in negating the assessee’s claim for accumulation of unspent income? 2. Whether repayment of borrowed funds utilised for construction of commercial complex augmenting income of trust and amounts to application of income for charitable purpose eligible for exemption under section 11? ...

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Posted Under: Income Tax |

Deeming fiction created by virtue of sec. 50C cannot be extended to sec. 11(1A)

Asstt. CIT Vs M/s The Upper India Chamber of Commerce (ITAT Lucknow)

Assessee is a charitable society and is registered under section 12A of the Act. The question of applicability of provisions of section 50C of the Act on transfer of capital asset in the case of a charitable society was examined by the Tribunal in the case of ACIT vs. Shri. Dwarikadhish Temple Trust, Kanpur in I.T.A. No. 256 & 257/LKW/201...

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Budget 2015 defines Business Trust & includes Yoga in charitable activities

Rationalisation of definition of charitable purpose in the Income-tax Act The primary condition for grant of exemption to a trust or institution under section 11 of the Act is that the income derived from property held under trust should be applied for charitable purposes in India. ‘Charitable purpose’ is defined in section 2(15) of t...

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Posted Under: Income Tax |

Mere Presence of other objects does not mean that Institution was not existing Solely for Educational Purpose

Allahabad Young Mens Christian Association Vs CCIT (Allahabad High Court)

In the instant case, it is not disputed that the petitioner society is running an educational institution. Merely because there are other objects of the society does not mean that the educational institution is not existing solely for educational purpose. ...

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Reasonable remuneration paid to secretary of trust, who is also a trustee is allowable

PNR Society for Relief & Rehabilitation of the Disabled Trust Vs DDIT (ITAT Ahmedabad)

In the instant case, the assessee is a charitable trust registered u/s. 12AA of the Act. The assessee trust paid remuneration of Rs 4,80,000/- to Shri Anantbhai K. Shah who is a full time secretary and trustee of the assessee trust....

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Taxation of ‘Alternate Investment Funds’ having status of non-charitable trusts -Reg.

Circular No. 13/2014-Income Tax (28/07/2014)

Circular No. 13/2014-Income Tax The SEBI (Alterative Investment Funds) Regulations, 2012 ('AIF Regulations') vide Regulation No.4 issued in May 2012 aims at regulating all forms of private pool of funds in India. The said Regulations divide the Alternative Investment Funds ('AIFs') into three broad categories - Category-I, Category-II an...

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Budget 2014- Taxability of Anonymous donations under section 115BBC

Anonymous donations under section 115BBC The existing provisions of section 115BBC of the Act provide for levy of tax at the rate of 30 per cent. in case of certain assessees, being university, hospital, charitable organisation, etc. on the amount of aggregate anonymous donations exceeding five per cent of the total donations received by ...

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Posted Under: Income Tax |

Trusts to give notice for accumulation of Income (From 10) electronically from A.Y. 2014-15

CA Sandeep Kanoi CBDT has vide notification NOTIFICATION NO. 24/2014, Dated: April 1, 2014 amended the rule 12 of Income Tax Rules, 1962 and provided that notice under clause (a) of sub-section (2) of section 11 of the Act, shall be furnished  electronically in form No. 10 w.e.f. Assessment year 2014-15 before expiry of time […]...

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Posted Under: Income Tax | ,

CBDT withdraws tax-exemption of four cricket associations

PRESS NOTE (09/01/2014)

The Income Tax authorities have looked into the affairs of the four cricket associations, namely Saurastra Cricket Association, Baroda Cricket Association, Kerala Cricket Association and Maharastra Cricket Association and have found that these cricket associations were engaged in certain activities which were considered commercial in natu...

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Posted Under: Income Tax |

Trust evading Tax due to casual approach of Income Tax Department : CAG

ITD granted registrations/approvals/notifications to the 799 Trusts without verifying necessary documents such as copy of the Trust Deed, proper clauses in the Trust Deed, audited accounts etc. ITD granted registrations/approvals/notifications to 73 Trusts having no PAN which is in contravention of the provisions of Act....

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Posted Under: Income Tax |

Imparting of yoga training by Baba Ramdev Trust is charitable educational object

Divya Yog Mandir Trust Vs. JCIT (ITAT Delhi)

Imparting of yoga training through well structured yoga shivirs/ camps also falls under the category of imparting education, one of the charitable objects defined under section 2(15) of the Act. ...

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Selling some product at a profit ipso facto hit proviso to section 2(15)

Sabarmati Ashram Gaushala Trust Vs ADIT (Exemption) (ITAT Ahmedabad)

The objective of the proviso to section 2(15) is to deny exemption to such assessee who are engaged in business activities in the garb of charitable purpose. Mere selling some product at a profit will not ipso facto hit the assessee by applying the proviso to section 2(15) and deny the exemption available u/s 11. ...

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Section 10(23C) cannot be interpreted regressively to deny exemptions

Tolani Education Society Vs Deputy Director of Income-tax (Exemptions) - I(2), Mumbai (Bombay High Court)

In the present case, the sole and dominant nature of the activity is education and the Petitioner exists solely for the purposes of imparting education. An incidental surplus which is generated, and which has resulted in additions to the fixed assets is utilized as the balance-sheet would indicate towards upgrading the facilities of the c...

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Anonymous donations not to be taxed in case of wholly religious trusts

Shri Girraj Educational and Welfare Society Vs Income-tax Officer 3(4) (ITAT Agra)

With a view to prevent channelisation of unaccounted money to these institutions by way of anonymous donations, a new section 115BBC has been inserted to provide that any income of a wholly charitable trust or institution by way of any anonymous donation shall be included in its total income and taxed at the rate of 30 per cent. ...

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Trust not entitled to exemption if carrying only incidental objects which are not charitable

M. Visvesvaraya Industrial Research & Development Centre Vs Commissioner of Income-tax (Bombay High Court)

An assessee that engages itself only or predominantly in activities relating to its ancillary or incidental objects which do not relate to any charitable purpose and does not carry on any activity relating to its main object which pertains to a charitable purpose is not entitled to an exemption under Section 11. A view to the contrary wou...

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Exemption to Charitable institution cannot be denied on the basis of a hypothetical assumption of an event that will happen in future

Additional Commissioner of Income-tax Vs N.L. Education Society (ITAT Agra)

The whole case revolves upon the lease deed dated 24.12.2004 executed between the lessor, Smt. Sudha Saraswat and the assessee-society through which the land measuring 5150.48 sq. meter was let out to assessee society for 30 years. Copy of the lease deed is appended with the assessment order. The assessee paid Rs. 10,000/- as premium and ...

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Providing sports facilities to general public without restriction to any caste, creed, religion or profession eligible for exemption U/S. 11

Director of Income-tax (Exemption) Vs Goregaon Sports Club (Bombay High Court)

This Court had the occasion to consider similar issues in a Judgment delivered in the case of DIT (Exemption) v. Chembur Gymkhana [Income Tax Appeal No. 5568 of 2010, dated 13-2-2012]. This Court, following the law laid down by the Supreme Court, has held that the fact that the membership of the club is open to a section of the community ...

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No need to Pay Cess – SC Order for Trust in Maharashtra

State of Maharashtra & Ors Vs. The Salvation Army, Western India Territory (Supreme Court of India)

According to a Supreme Court order as given below, there is no need for the Charitable & Religious Trusts Registered in Maharashtra to pay the 2% Annual Cess / Levy / Fees Tax Contribution to the Charity Commissioner's Office, of their total income, which is used to run the Charity Commissioner's office....

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Holding of classes not mandatory to qualify as educational institution

Council for The Indian School Certificate Examinations Vs Director General of Income Tax (Delhi High Court)

Assessee has filed writ petition against order passed by the Director General of Income Tax (Exemptions), for denying them exemption under Section 10(23C)(vi) of the Income Tax Act, 196, on the ground that the aforesaid institute was not directly imparting education and had not employed teachers who were teaching or giving lectures to the...

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No Exemption to charitable organization in case commercial receipts exceed the specified threshold

In case where the activity of any trust or institution is of the nature of advancement of any other object of general public utility, and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from the commercial activities does not exceed Rs. 25,00,000/- in the previous y...

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Posted Under: Income Tax | ,

Budget 2011-12 – Exemption of specified income of notified body or authority or trust or board or commission

It is proposed to insert a new clause in section 10 of the Income-tax Act to provide exemption from income-tax to any specified income of a body, authority, board, trust or commission which is set up or constituted by a Central, State or Provincial Act or constituted by the Central Government or a State Government with the object of regul...

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Posted Under: Income Tax |

Interpretation of the words "manufacture or production" for the purpose of deduction U/s. 10B

ITO Vs E-Infochips Ltd. (ITAT Ahmedabad)

In view of the foregoing, we are in agreement with the findings of Id. CIT(A) that activities undertaken by the taxpayer were in respect of production and export of computer software within the meaning of provisions of section 10B of the Act, especially when the AO himself concluded so for the purpose of section 80HHE of the Act. We are a...

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Concessional ticket to travel Agents cannot be termed as commission

CIT Vs. Singapore Airlines Ltd. (Delhi High Court)

12. In order to come to a definite conclusion whether section 194H of the Act would be applicable to the assessee-airline in respect of transaction, in issue, we propose to first look at the scope and ambit of section 194H of the Act and then analyse the transaction as to whether it falls within the purview of the said Section. In this co...

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ICAI Disciplinary Committee decision in breach of natural justice is invalid

Partha Ghosh vs. ICAI (Bombay High Court)

In October 2007, Disciplinary proceedings were initiated against two partners of M/s Pricewaterhouse (PWC) for alleged professional and other misconduct in conducting the statutory audit of Global Trust Bank. The proceedings were based on the findings in the Special Audit report and the Annual Financial Inspection of the RBI. Though sever...

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Prerequisite of section 12AA of IT Act for rejection of registration of a trust

Memorial Medical Association Vs CIT (ITAT Mumbai)

7. Under section 12AA1(a) of the Act, the CIT is empowered to call for information to satisfy himself about the genuineness of activities of trust /institution. The Commissioner may make such enquiries as he thinks fit for the purpose. Under section 12AA1(b) of the Act, after having satisfied about the objects of Trust/institution and gen...

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Provision for a liability allowable if it can be estimated & if there is reasonable certainty

CIT Vs Insilco Limited (Delhi High Court)

5. Having heard the learned counsel for the Revenue as well as the assessee, we are of the view that no fault can be found with the reasoning of both the CIT(A) as well as the Tribunal. In our view, the issue raised by the Revenue before us that the liability under the "long service award" scheme of the assessee is contingent as the payme...

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Levy of service tax on educational institutions- regarding

Circular No. 107/01/2009 – ST (28/01/2009)

Circular No. 107/01/2009 – ST   New Delhi, dated 28th January 2009 F.No137/23/2007- CX.4 Government of India , Ministry of Finance , Department of Revenue , Central Board of Excise and Customs Subject: Levy of service tax on educational institutions- regarding Various educational institutions impart training and conduct courses in dif...

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Allowability of exemption under section 11(1)(a) of IT Act claimed by a society having both charitable as well as religious objectives

Calicut Islamic Cultural Society Vs. ACIT (ITAT Cochin)

When the legislature has categorically defined the purposes like religious and charitable and if the assessee-society is engaged as per their objects in mixed activities, which are partly charitable and partly religious, it cannot be said that section 11(1)(a) does not contemplate such situation....

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Cash Credit & Addition under Section 68 of Income Tax Act

If there is cash credit, creditworthiness of the creditor, genuineness of the entry, identity of the creditor, the source of money, etc. is required to be considered under section 68 of Income-tax Act....

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Posted Under: Income Tax |

Amendment In Definition Of `Charitable Purpose'

A number of trusts, societies and other organization avail exemption under Section 11 or Section 10(23C) by virtue of having income derived from property held under trust wholly for charitable or religious purposes, to the extent of the application of such income. Background of amendment Section 2(15) of the Act defines the term ‘Ch...

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Posted Under: Income Tax |

Taxability Of Income From Trusts Under Section 166 of the Income Tax Act, 1961

H.H. Maharaja v. ACIT - September 12, 2008 - Section 166 can be invoked only when the income is received by the assessee; unless and until the trustees exercise the discretion and distribute the income in favour of any of the beneficiaries, i.e. the assessee, such income cannot be said to be received by the assessee; merely on the basis o...

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Posted Under: Income Tax |

Department Issuing Notice to Charitable Trust If They Collecting Any Fess, Cess Or Other Consideration For Services Rendered

As per the new definition of charitable purpose in Finance Act 2008, advancement of any object of public utility, which was earlier considered to be “charitable purpose,” is now not so if it involves the “carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to ...

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Posted Under: Income Tax |

Amendment to Section 20 of The Indian Trusts Act, 1882

Amendment to Section 20 of the Indian Trusts Act, 1882 (2 of 1882) which relates to investment of trust money has been approved by the Cabinet today. A Bill will be introduced in the ensuing Session of Parliament. ...

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Posted Under: Income Tax |

FAQs by NGOS, Queries related to Income Tax Act, 1961

Q1 : Whether the Income-tax Act, 1961 is applicable to all the Voluntary Organisations who are engaged in socio-economic development programmes in India ? Please clarify. Ans : The Income Tax Act, 1961, is applicable to Voluntary Organisations which are engaged in public charitable or religious activity. Hence, Voluntary Organisations whi...

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Posted Under: Income Tax |

Delayed TDS on ‘usance interest’ – Payment of interest u/s 201(1A)

IN the present case which was referred to the Third Member of the Tribunal, the dispute revolves around the issue of, whether interest u/s 201(1A) is payable on the ''usance interest'' from the date of payment or from the date of pronouncement of High Court decision in the Vijay Ship Breaking Corpn case...

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Posted Under: Income Tax |

Is FBT Applicable on Charitable Trusts?

FBT is not payable by a trust, fund or institution if its income is exempt under section 10(23C) or it is registered under section 12AA of the Income-tax Act. Therefore, a company registered under section 25 of the Companies Act will also not be liable to FBT if its income is exempt under section 10(23C) or such company is registered unde...

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Posted Under: Income Tax |

Incentives for Educational Institutions under Income-Tax Act, 1961

Presently, India is witnessing a knowledge and information technology boom. New BPO (Business Process Outsourcing) units and Call-Centres are being opened every day throughout the length and breadth of the country. In addition, KPO (Knowledge Process Outsourcing) units are also being established in view of tremendous demand for the same. ...

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Posted Under: Income Tax |

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