Satya Trust, a public charitable trust registered u/s 12AB of the Income-tax Act, 1961 runs a hospital for the treatment of various diseases. Mr.…

CA Final · Direct Tax Laws and International Taxation · RTP · November 2024
Satya Trust, a public charitable trust registered u/s 12AB of the Income-tax Act, 1961 runs a hospital for the treatment of various diseases. Mr. Shaurya, son of Mr. Neeraj, who is the founder of this trust, was admitted in the hospital for heart surgery. He was charged a total fee of 3.6 lakhs as against the amount of 7.4 lakhs charged by the hospital for similar treatment to the general public. The Board of trustees are of the opinion that on account of providing this benefit to Mr. Neeraj, the registration of the trust can be cancelled, and exemption under section 11 would be denied to the trust in respect of entire income for the P.Y. 2023-24. Is the opinion of the Board of trustees', correct?
(A) No; registration cannot be cancelled, however, the exemption under section 11 would be denied to the trust in respect of entire income of the trust for the P.Y. 2023-24.
(B) Yes, registration can be cancelled, and trust would not be eligible for exemption under section 11
(C) No; registration cannot be cancelled, and entire income is eligible for exemption under section 11.
(D) No; registration cannot be cancelled, and the value of benefit provided to Mr. Neeraj would be deemed as income of the trust.

Suggested Answer and Working Notes:

Correct Answer: Option (D)

No; registration cannot be cancelled, and the value of benefit provided to Mr. Neeraj would be deemed as income of the trust.

Topics: Double Taxation Relief, Assessment of Trusts and Institutions, Political Parties and Other Special Entities, Non-Resident Taxation

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