Non-profit compliance failures trigger taxation of regular, specified and residual income, with deductions limited to qualifying expenditure.

Section 353 applies where a registered non-profit organisation fails to maintain required books, obtain an audit, furnish its return, or carries on commercial activity contrary to section 346. Regular income less allowable expenditure becomes taxable regular income chargeable under section 334. Only expenditure incurred in India for organisational objects and satisfying prescribed corpus, borrowing, depreciation, donation and payment restrictions is allowable. No other set-off, deduction or allowance may reduce taxable regular income.

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