Hi Experts
A trust X has paid to trust Y a certain amount to maintain an orphanage which is ancillary to the objects of trust Y. But Trust X deducted TDS u/s 194C making it business income for Trust Y. Hence it faces danger of loosing exemption u/s 11 because the amount received from Trust X is 25% of total receipts.
If a charitable trust registered u/s 12A looses exemption due to more than 20% business activities which are ancillary to main activities how should the return be filed?
1. Should ITR 7 be used?
2. Will the trust not get deduction for expenses like salary too on the remaining 75% donations?
3. Will the trust have to pay tax @ 30% on the total gross receipts without any claim of expenses?
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