AUDIT REPORT IN CASE OF TRUST

only form 10B is to be issued with balance sheet and income and expenditure of the trust which forms parts of audit report i.e form 10B is the audit report in case of trust and 3CB and 3CD are for tax audit not trust audit..

Agree with above Reply ;)

T.V.VENKATARAMAN,

ADVOCATE,

CHENNAI.

02-09-2010

Form 10 -B is the format for the Trust Audit.  However I am of the view that when the Trust has business activities for which a separate set of accounts is to be maintained , then for the business segment as usual  Audit under Sec. 44-AB  of the I..T Act and consequentially Form 3CB & 3 CD are applicable. Hence both the reports may have been attached.

Yes you are right

My Question is What is corpus find & Own Funs ,Which are Taxable Which are Non Taxable..

Please Clarify My Concept.

in case of trusts corpus donation.i.e.donation made with a specific direction that it shd form part of corpus of trust is not taxable u/s11..non corpus donations are taxable u/s 12.....however before claiming exemption on corpus donations..sec 115BBC needs to be taken care of...................................

Agree with Mr.Venkataraman

BUT WHAT DOES THIS SPECOIFIC DIRECTION MEANS?

specific direction means written request or directive by doner for use of fund donated by him & duly accepted by the receipent trust

T.V.VENKATARAMAN,

Chennai.

10-09-10

 Specific Donation :   Generally donation to a Trust are classified as General Donations;  Donations for Specific purposes.  The  general donations are to be included in the Income and Expenditure A/c and is subject to taxation U/s 11, read with sec12& 13 of the I.T.Act

However if the donations are with a specific direction by the Donor that the Donations should form part of the Corpus (Nucleus ) Funds then the said Donation is exempt from the purview of Income Tax U/s 11(1)(d).  These funds need to be kept invested in the securities approved under the I.T.Act U/s13 and cannot be used for the day to day activities of the Trust.  Only the  Income out of such Corpus Donation can be used provided there is not restriction / direction on that usage.     Generally a confirmation  letter is taken from the donor  along with his name, address and PAN, wherein the  any specific direction the Donor would like to give with reference to the Donation made can and is generally included.  The Trust has to then act accordingly subject to the overall guidance in the I.T.Act.