02 April 2009
An educational school registered as society received fees Of Rs 15 Lacs during the FY 2008-09. It has surplus of Rs 1.20 lacs after accounting of expenses(i.e Fees-Expenses) 1.Whether Society has to get accounts audited and has to file IT Return for FY 2008-09 ? 2.Whether audit depends upon the receipts of fees ?
02 April 2009
If the trust is a registered trust under income tax enjoying tax benefits then it should be compulsiorly audited and should file the return.
If it is not a registered trust then it will be treated as an AOP under income tax act and since the turnover is rs.15 lakhs which is lesser than 40Lakhs (tax audit case) the accounts need not be audited.
Above mentioned society wants to take tax benefit u/s 10(23C)(iiiab) . In that case as its income is less than Rs 1.50(below Exemption Limit) even then it requires to get its accounts audited ?
24 July 2024
For an educational institution registered as a society, here are the clarifications regarding your queries:
1. **Audit Requirement and Filing of IT Return for FY 2008-09:** - **Audit Requirement:** As per the provisions of the Income Tax Act, a trust or a society engaged in educational activities is required to get its accounts audited if its total income exceeds the maximum amount not chargeable to tax (i.e., basic exemption limit). For FY 2008-09, this limit was Rs 1,50,000. - **Income Threshold:** The society received fees of Rs 15 lakhs during FY 2008-09. After deducting expenses, it had a surplus of Rs 1.20 lakhs. The surplus is considered as income for tax purposes. - **Audit Requirement Analysis:** - The surplus of Rs 1.20 lakhs is less than the basic exemption limit of Rs 1.50 lakhs for FY 2008-09. - Therefore, technically, the society's income does not exceed the exemption limit, but it's important to note that audit requirement is not solely based on income but also on gross receipts. - Since the society received fees of Rs 15 lakhs, which is well above the threshold for audit (typically Rs 10 lakhs for educational institutions under Section 44AB), the society would still be required to get its accounts audited.
- **Filing of IT Return:** Even though the income (surplus) is below the exemption limit, due to the gross receipts exceeding the prescribed limit for audit under Section 44AB, the society is required to get its accounts audited and file an income tax return for FY 2008-09.
2. **Tax Benefit u/s 10(23C)(iiiab):** - **Eligibility:** Section 10(23C)(iiiab) provides for exemption of income of educational institutions if certain conditions are met, including the requirement that the institution applies its income or accumulates it for educational purposes. - **Audit Requirement:** To claim benefits under Section 10(23C)(iiiab), the educational institution (society in this case) must fulfill the conditions laid down by the Income Tax Act, which include getting its accounts audited. - **Audit for Exemption Purpose:** Even if the income is below the exemption limit, the audit is necessary for claiming tax benefits under Section 10(23C)(iiiab) because compliance with audit and filing requirements demonstrates proper utilization of funds for educational purposes.
### Conclusion: Based on the above analysis: - Yes, the society needs to get its accounts audited for FY 2008-09 because it received fees amounting to Rs 15 lakhs during the year, which exceeds the audit threshold prescribed under Section 44AB. - Filing of income tax return is mandatory along with the audit report. - Despite the income being below the exemption limit, audit is required to claim tax benefits under Section 10(23C)(iiiab) due to compliance requirements.
It is advisable to consult with a qualified chartered accountant or tax advisor to ensure compliance with all regulatory requirements and to accurately prepare and file the income tax return and audit report for the society.
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