Effect of denial of exemption to charitable Trust u/s11

[Rajaraman Iyer]

In the assessment of Charitable Trust, exemption u/s11 was rejected. What is the method of computation of Income? The view of the department is that entire income will be charged to tax. More importantly, no application of Income for charitable purposes will be considered.

To illustrate: Donations 100/- Interest Income ₹ 1000/- Lets us say application is ₹ 995/=. due to not filing the Form10B in time, Exemption rejected. Now the Department says ₹ 1,100/= will be taxed without giving recognition to ₹ 995/- spent towards objectives of the Trust. .

[RAHUL AGRAHARI]

Dear, Mr. Rajaraman Iyer

Please let us know whether you file ITR-5 or ITR-7?

As per the Income tax rule If your Exemption u/s 11 was rejected till the scrutinies date (i.e. 30th september of Succeeding year ) then you can not claim exemption u/s 11.

you need to file ITR-5 till the approval of 12A/80G and will have to pay the tax on the income .

Thanks

AI Summary

Charitable Trust Faces Full Taxation Due to Late Form 10B Filing; Section 11 Exemption Denied In a discussion forum, a query was raised about the denial of tax exemption under Section 11 for a charitable trust due to late filing of Form 10B. The department's stance is to tax the entire income of the trust without considering the funds applied towards charitable purposes. An example given was donations and interest income totaling 1,100, with 995 spent on charitable activities, yet the full amount being taxed. A respondent advised that if the exemption is rejected by the scrutiny date, the trust must file ITR-5 and pay taxes on the income until approval under Sections 12A/80G is obtained.