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Tax on accreted income

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..... n respect of the total income of such specified person, the accreted income of the specified person as on the specified date shall be charged to tax and such specified person shall be liable to pay additional income-tax (herein referred to as tax on accreted income) at the maximum marginal rate on the accreted income. (2) The accreted income for the purposes of sub-section (1) means the amount by which the aggregate fair market value of the total assets of the specified person, as on the specified date, exceeds the total liability of such specified person, computed in accordance with the method of valuation, as may be prescribed: Provided that so much of the accreted income as is attributable to the following asset and liability, if any, related to such asset, shall be ignored for the purposes of sub-section (1), namely:- (i) any asset which is established to have been directly acquired by the specified person out of its income of the nature referred to in clause (1) of section 10; (ii) any asset acquired by the specified person during the period beginning from the date of its creation or establishment and ending on the date from which the registration under section 12A .....

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..... sub-clause (via) of clause (23C) of section 10 but the said application has been 9 [ rejected; or ] . ] 10 [ (iii) it fails to make an application in accordance with the provisions of clause (i) or clause (ii) or clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or sub-clause (ii) or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A, within the period specified in the said clauses or sub-clauses, as the case may be, which expires in the said previous year. ] (4) Notwithstanding that no income-tax is payable by a 6 [ specified person ] on its total income computed in accordance with the provisions of this Act, the tax on the accreted income under sub-section (1) shall be payable by such 6 [ specified person ] . (5) The principal officer or the trustee of the 6 [ specified person ] , as the case may be, and the 6 [ specified person ] shall also be liable to pay the tax on accreted income to the credit of the Central Government within fourteen days from,- (i) the date on which,- (a) the period for filing appeal under section 253 against the order cancelling the registration expires and no appeal has been fi .....

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..... ] (ii) specified date means,- (a) the date of conversion in a case falling under clause (a) of sub-section (1); (b) the date of merger in a case falling under clause (b) of sub-section (1); and (c) the date of dissolution in a case falling under clause (c) of sub-section (1). 8 [ (iia) specified person means- (a) any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or (b) a trust or institution registered under section 12AA or section 12AB; ] (iii) registration 4 [ under section 12AA or section 12AB ] shall include any registration obtained under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996. (33 of 1996.)] --------------------------------- Notes:- 1. inserted vide THE FINANCE ACT, 2016 with effect from the 1st day of June, 2016 2. Substituted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-06-2020 before it was read as under section 12AA 3. Substituted vide THE TAXATION AND OTHER LAWS (RE .....

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..... ctly acquired by the trust or institution out of its income of the nature referred to in clause (1) of section 10; (ii) any asset acquired by the trust or institution during the period beginning from the date of its creation or establishment and ending on the date from which the registration 4 [ under section 12AA or section 12AB ] became efective, if the trust or institution had not been allowed any benefit of sections 11 and 12 during the said period: Provided further that where due to the first proviso to sub-section (2) of section 12A, the benefit of sections 11 and 12 have been allowed to the trust or the institution in respect of any previous year or years beginning prior to the date from which the registration 4 [ under section 12AA or section 12AB ] is effective, then, for the purposes of clause (ii) of the first proviso, the registration shall be deemed to have become effective from the first day of the earliest previous year: Provided also that while computing the accreted income in respect of a case referred to in clause (c) of sub-section (1), assets and liabilities, if any, related to such asset, which have been transferred to any other trust or inst .....

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