21 July 2009
If a trust is not registered under sec 12A of Income tax Act, having gross receipts of Rs. 3,50,000 and expenses of Rs. 2,50,000 on the objects of trust for the year 2008-2009, 1) is the trust liable to tax under the income tax? 2) if so on what amount ? ie, on net income or gross receipts.
21 July 2009
first of all procedure for registration of a trust with the Income Tax Department>>
The procedure for registering a Non-Government Organisation, which is a public charitable trust, is to file an application in Form 10A (As per Annexure 27) in duplicate. This application should be sent to the Commissioner having jurisdiction in the area where the trust is situated, and should be filed before the expiry of one year from the date of creation of the trust or the establishment of the institution. The enclosures referred to in the said form should also be attached to the application.
21 July 2009
Whether it is necessary for an NGO to be registered as a Charitable Society or a Public Trust for seeking registration under Section 12A of the Income tax Act, 1961?
Ans : An analysis of Section 12(a) and Rule shows that the fact to be established is the creation of the Trust and this fact is required to be established by producing constitution and evidential documents. Where the trust is not created under the instrument, the rule requires the production of evidential documents i.e. the instrument which has created the trust. The evidential document could not be limited to the document which directly proves the creation of the trust, they will include all documents which afford a logical basis of inferring creation of the trust and all such documents can be described to be "documents evidencing the creation of the trust" within rule 17A(a). Therefore, in Laxmi Narayan Maharaj vs. CIT (1984) 150 ITR 465 (MP) it was held that all the documents, though not directly showing the creation of the trust, [for example : (a) revenue records relating to lands held by the trust ; (b) orders relating to assessment of property tax] afforded a logical basis for inferring the creation of the trust and therefore, could be described as documents showing creation of the trust for the purpose of Rule 17A.
Therefore, it is not necessary for an NGO to be either a society registered under the Societies Registration Act or a Public Charitable Trust for seeking registration under Section 12A(a) of the Income Tax Act, 1961
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