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THE FINANCE BILL 2015 -Charitable trusts

Income Tax - Direct Tax Code - DTC - By: - CA DEV KUMAR KOTHARI - Dated:- 2-4-2015 - The Finance Bill, 2015 proposes some amendments relating to charitable trusts and institutions. These are discussed below with proposed changes, notes thereon reproduced with highlights for easy understanding, analysis and catchwords: Amendment of section 2 3. In section 2 of the Income-tax Act, with effect from the 1st day of April, 2016,- (b) in clause (15),- (i) after the word education, , the word yoga, shal .....

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or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent. of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year; ; Notes It is proposed to amend clause (15) of the aforesaid section t .....

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r fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent. of the total receipts, of the trust or institution undertaking such activity or activities, of that pr .....

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included in education now it has been considered a special class of education. Therefore, amendment is only a clarification and apply to earlier years also. Appellate authorities and courts have held that yoga is also an educational activity. The amendment may lead to further disputes because the proposal says that it will be w.e.f. 01.04.2016, therefore, tax authorities are likely to take view that before that yoga was not included in education . The amendment should be described as an explana .....

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rlier by prescribing limit of ₹ 25 lakh should not be withdrawn and the amendment should be on the following lines: the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent. of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year, or Rs. Twenty five lakh whichever is higher ; Amendment of section 11. 8. In section 11 of the Income-tax Act,( Amendment of section 11) with effect f .....

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may be prescribed) shall be substituted; (II) in sub-section (2), for clauses (a) and (b) and the first and second provisos, the following shall be substituted, namely:- (a) such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumula .....

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junction of any court, shall be excluded. . Notes on Clauses: Clause 8 of the Bill seeks to amend section 11 of the Income tax Act relating to income from property held for charitable or religious purposes. Sub-section (2) of the aforesaid section provides that where eighty-five per cent. of the income is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, for application to such purposes in In .....

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xceed five years; and (ii) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5) of section 11. With a view to amend the conditions specified in sub-section (2) of the aforesaid section, it is proposed to insert a new clause to provide that the statement referred to in the said clause (a) is required to be furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previ .....

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uent years. Amendment of section 13. 9. In section 13 of the Income-tax Act,( Amendment of section 13.) after sub-section (8) and before Explanation 1, the following sub-section shall be inserted with effect from the 1st day of April, 2016, namely:- (9) Nothing contained in sub-section (2) of section 11 shall operate so as to exclude any income from the total income of the previous year of a person in receipt thereof, if- (i) the statement referred to in clause (a) of the said sub-section in res .....

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