Article
Taxation of unexempt income of Public Charitable Trusts
By Samyak Navedia
Income derived from Trust property has been exempt under Income-tax laws since the Act of 1886. Tracing the legislative history in respect of income from property held under trust, the author examines amendments made by Finance Act, 1970; Taxation Laws (Amendment) Act, 1975; Finance Act, 1983; and Finance Act, 2022, the author concludes that the present iteration of Section 13(1)(c) / Section 13(1)(d) makes it evident that only that part of income which has been applied / invested in violation of the Section 13(1)(c) / Section 13(1)(d) shall be liable to denial of Section 11 exemption. He is also of the view that Section 13(1)(c) and Section 13(1)(d) function as independent bars on Section 11 exemption, and that any protection guaranteed by Section 13(4) may relax requirements of Section 13(1)(c), but Section 13(1)(d) will continue to apply towards any exempted income under Section 11…
Key amendments proposed in Income-tax Act vide Finance Bill, 2023
- Change in rate of taxes
- Deductions and Exemptions
- Income from business or profession
- Capital Gains
- Charitable and Religious Trusts
- Assessment and Appeals
- Set-off and carry forward of losses
- TDS and TCS
- Penalties and Prosecutions
Ratio decidendi
- Incidental income of a Trust managing a School, from letting out of auditorium to outsiders, is also eligible for exemption under Section 11 – ITAT Chennai
- Non-maintainability of writ against order under Section 148A(d) – Supreme Court sets aside High Court observations – Supreme Court
- Revenue Authorities cannot go behind Tax Residency Certificate issued by Revenue Authorities of foreign jurisdiction – Delhi High Court
- Where a taxpayer is a ‘non-resident’, his concession in the return of income as a ‘resident’ would not result in the taxpayer being regarded as a ‘resident’ – ITAT Mumbai
- Merely inclusion of words ‘Make Available’ in commercial agreement will not decide taxability as Fee for technical services under Tax Treaties – ITAT Delhi
