A not-for-profit trust undertakes philanthropic activities through an educational institution and a hospital. During the P.Y. 2023-24 the trust had…

CA Final · Direct Tax Laws and International Taxation · MTP · November 2024
A not-for-profit trust undertakes philanthropic activities through an educational institution and a hospital. During the P.Y. 2023-24 the trust had annual receipts of 3 crores from its educational institution and 4 crore from the hospital. During the P.Y. 2023-24, it desires to avail exemption under section 10(23C)(iiiad) and 10(23C)(iiiae), as the individual threshold under each of the sub-clauses, is less than 5 crore. Can it do so? Examine.

Suggested Answer and Working Notes:

As per Explanation below to section 10(23C)(iiiae), it has been clarified that the limit of annual receipts of 5crore is qua 'taxpayer' and not qua 'activity'. Therefore, if the aggregate annual receipts from educational activity and medical activity exceeds 5crores, then exemption under sub-clause (iiiad) and (iiiae) cannot be availed. Since, in the present case, the aggregate annual receipt of 7crores (3crores of educational institution and 4crores from hospital) exceeds the threshold of 5crores, exemption under section 10(23C)(iiiad) and (iiiae) cannot be availed, even though the individual receipts have not exceeded 5crores.

Topics: Assessment of Trusts and Institutions, Political Parties and Other Special Entities

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