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Taxation of trust income

Dinesh (F.C.A) (37 Points)

07 February 2016

Our trust has one of the objective to build Hindu temples and maintenance of these. The CIT rejected our application under section 12AA of income tax. During the previous year donation of Rs.4 lac received out of which 3.75 lacs spent on parsad /langar, now what shall be treated income of trust RS.4 LACS OR RS.25 THOUSAND after deducting expenses? Thank you!

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ROSHAN (TAX PRACTITIONER) (74 Points)
Replied 08 February 2016

Hi,

As you said the donation received of Rs. 4 Lakhs is spent for prasad, which is not the primary objective of the trust. Hence when the objective is not met there is no question of applying the donation as expense.

So the Income of the trust will be total donation receipt, i.e.. 4 Lakhs in your case.