As per section 11 of the income tax act, an organization is required to apply 85% of total receipts during the year. However it couldn’t be applied during time limits mentioned in the relevant section of the act and accordingly tax was paid on such underutilized amount.
Now my query is whether such income tax paid shall be treated as application of income during the year in which it was paid?
Regards
Rahul
Rahul,
Income Tax if any paid would be treated as application in the year of payment. Basically all payments (including capital payments, i.e. for assets and tax, etc.) would be treated as application in the year of payment.
DEAR SIR,
Thanx for ur response.
As per section 11(2) of income tax act, if any amount unutilized is accumulated and set apart for specific purpose on an application made to IT officer (generally it is to be utilized in 6 years) and the same is not utilized within the period as mentioned than it is liable to income tax.
Therefore trust is not wholly exempt from income tax..
Rahul Gupta
Dear Sir
The trust having 12A registration should not have any income tax liability. However if the turnover is over 25 L and falls under the fourth limb of section 2(15) the profit from business is subject to tax.
Yes it is application of fund, as it is a statutory liability to be discharged.
regards
srinivasan