SALARY OF TRUST ADMISSIBLE?

This query is : Resolved

Saugata Chowdhury (Querist)
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17 September 2007 SIR I WOULD LIKE TO KNOW
IF IN THE MEMORUNDUM OF ASSOCIATION OR RULES AND REGULATION OF ANY TRUST PERMIT TO PAY SALARY TO THE CHAIRMAN OF THE TRUST THEN SUCH PAYMENT WILL BE AN ADMISSIBLE EXPENSES OR NOT AS PER INCOME TAX ACT?

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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22 September 2007 The trust will loose its exemption if if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) of section 13 out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services

The persons refereed in susection 3 of section 13 are as follows:
(a) the author of the trust or the founder of the institution91;

(b) any person who has made a substantial contribution to the trust or institution, 92[that is to say, any person whose total contribution up to the end of the relevant previous year exceeds 93[fifty] thousand rupees];

(c) where such author, founder or person is a Hindu undivided family, a member of the family;

(cc) any trustee of the trust or manager (by whatever name called) of the institution;]

(d) any relative of any such author, founder, person, [member, trustee or manager] as aforesaid;

(e) any concern in which any of the persons referred to in clauses (a), (b), (c) (cc)] and (d) has a substantial interest.

AS A MATTER OF PRECAUTION IT IS ALWAYS BETTER NOT TO PAY SUCH REMUNERATION