Benefit of remuneration

[shyamal roychowdhury]

The Trust deed of my client provides that the trustees will be eligible for remunaration according to work performed by them & also will be entittled to reimbursement of expences incurred by them for works of trust. The trust is also registerd under income tax & also under trust act . Accordingly trusttes drew monthly remunaration decided by trustees in their meeting & drew reimbursement for conveyance & other expences incurred,. Now assessing officer has disallowed same as benefit to trustees which is against the act . so is not taking under application of fund . Can anyone throw some lighton this ?

[CAGOPALJI AGRAWAL]

Please see the provisions of section 13(2)(c).I think that the onus is on the assessee that the remuneration is reasonable and commensurate to the services rendered by trustees.

AI Summary

Remuneration to trustees must be reasonable and proven commensurate with services to qualify as trust expenditure. Assessment disputes whether trustee remuneration and reimbursements authorised by the trust deed constitute permissible trust expenditures or prohibited personal benefit. The crucial compliance point is that, under Section 13(2)(c), the trust bears the onus of proving that trustee remuneration is reasonable and commensurate with services rendered so that such payments qualify as proper application of trust funds.