01 March 2008
WHETHER RUNNING OF AN EDUCATIONAL INSTITUTION BY A CHARITABLE TRUST/SOCIETY WHO IS REGD U/S 12A WILL BE CONSIDERED AS INVOLVED IN THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE,COMMERCE OR BUSINESS AS ALMOST ALL INSTITUTIONS RECEIVES FEES ETC AND THERE FOR NOW WILL LOOSE THEIR EXEMPTION U/S 10(23C) OR U/S 11. pLEASE EXPLAIN THE LATEST POSITION AFTER AMENDMENT.
01 March 2008
I HOPE YOU REFER TO THE FOLLOWING AENDMENT. In section 13 of the Income-tax Act, with effect from the 1st day of April, 2001, after sub-section(5), the following sub-section shall be inserted, namely:–“(6) Notwithstanding anything contained in sub-section (1) or sub-section (2), but without prejudiceto the provisions contained in sub-section (2) of section 12, in the case of a charitable or religioustrust running an educational institution or a medical institution or a hospital, the exemption undersection 11 or section 12 shall not be denied in relation to any income, other than the income referredto in sub-section (2) of section 12, by reason only that such trust has provided educational or medicalfacilities to persons referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) ofsub-section (3).”. IF YOUR REFERENCE IS TO THE ABOVE AMENDMENT ,THE POSITION IS CLEAR THAT THE BASIC PURPOSE OF THE INSTITUTION WHEN MAINTAINED ,THERE IS NO DENIAL OF EXEMPTIONS PROVIDED IN THE ACT. THERE ARE CLEAR GUIDELINES AND PRECEDENTS IN THE MATTER OF CHARITABLE PURPOSE.THE ASSESSING OFFICERS AND ALSO THE LAW ENFORCING AGENCIES ADHERE TO THE SAME TO ENSURE THAT THE LINE OF DEMARCATION IS MAINTAINED BETWEEN MEETING BASIC OBJECTIVES AND BECOMING GROSSLY COMMERCIALISED. R.V.RAO
04 March 2008
Sir, Thank you very much for giving response to my querry but my question is not related to Section 13(3).
My question relates to proposed amendment brought by Finance Bill 2008 in Section 2(15) which defines "Charitable Purpose". Through this amendment "advancement of an object of general public utility" shall not be a charitable purpose if it involves the carrying on of any activity in the nature of trade,commerce or business......for a fess or cess or any other consideration.
I want to know that after amendment whether a trust/Society registered U/A 12A who is running an educational Insitution will get exemption U/S 11(1) or 10(23C) or not as normally all institutions are charging fees etc.
CAclubindia
