Examine and discuss each of the following independent cases of charitable trust/institutions based on the relevant provisions of Income-tax Act,…

(i) Voluntary contribution of 95lakhs received with a specific direction that it should form part of the corpus of the trust, would be eligible for exemption, since investment in shares of M/s Active Care Ltd. a public sector company is permissible mode of investment under section 11 (5) . However as per provisions of section 11 (5) , where an investment is made in the shares of any public sector company and such public sector company ceases to be a public sector company, the investment so made shall be deemed to be an investment made for a period of three years from the date of such cessation. Therefore, it would continue to be eligible for exemption for a period of 3 years from the cessation date i.e., 31.3.2025 on which M/s Active Care Ltd., ceases to be a public sector company due to the disinvestment. (ii) A trust is required to deduct tax at source u/s 194J even if it is not subjected to tax audit u/s 44AB. Moreover, as per Explanation 3 to section 11 (1) , where tax has not been deducted at source on any expenditure, 30% of disallowance of expenditure for non-deduction of tax at source under section 40(a)(ia) would mutatis mutandis apply to a trust in determining application of income. Accordingly,30,000 being 30% of 1,00,000 would not be treated as application of income for non-deduction of tax at source on the consultancy fees paid to Mr. Sachin by M/s Covid Care Foundation.