Vishwas Trust, a public charitable trust registered under section 12AB of the Income-tax Act, 1961, operates a hospital offering medical treatment…

CA Final · Direct Tax Laws and International Taxation · MTP · May 2025
Vishwas Trust, a public charitable trust registered under section 12AB of the Income-tax Act, 1961, operates a hospital offering medical treatment for various diseases. Mr. Arjun, the son of Mr. Ranbir, the founder of the trust, was admitted to the hospital for heart surgery. While the general public is charged - 7.4 lakhs for similar treatment, Mr. Arjun was charged a concessional fee of 3.6 lakhs. The Board of Trustees is concerned that providing this benefit to a relative of the founder may result in the cancellation of the trust's registration under section 12AB and the denial of exemption under section 11 on the entire income of the trust for the P.Y. 2024-25. 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. 2024-25.
(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. Ranbir 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. Ranbir 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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