Examine and discuss each cases mentioned below. All Charitable Trusts registered under section 12AB as per the provisions of the Income-tax Act,…

(i) If a trust having its main object as advancement of any other object of general public utility, derives income from an activity in the nature of trade during a financial year, it will lose its charitable status if aggregate receipts from such activity is 20% or more of the total receipts of the trust in that year even if it applies such income for its main object. In the present case, receipts from the business of providing electrical scooters to various corporate employees i.e., ₹ 45 lakhs exceed 20% of total receipts of ₹ 190 lakhs (i.e., ₹ 38 lakhs) during the previous year 2025-26. Accordingly, Shiva Charitable trust would lose its charitable status for the P.Y. 2025-26 and would not be eligible for the exemption under section 11 and 12. (ii) The trust objective of providing training falls within the meaning of “education” is a charitable purpose as per section 2(15). The trust in the given case runs a clothing shop business, whose income is applied towards the objectives of the trust. In this case, the business income from the clothing shop will be eligible to avail exemption in respect of profits and gains of business, if such business is incidental to the attainment of the objectives of the trust and separate books of account are maintained in respect of such business. Therefore, in the given case, the profit from the business shall be eligible for exemption under section 11, assuming that the said business is incidental to the attainment of the objects of the trust and books of account for such business activity is maintained separately. (iii) Section 12AC provide that where a trust or institution approved under section 10(23C) or registered under section 12AB, as the case may be, merges with another trust or institution, the exit tax provisions contained in Chapter XII-EB i.e., exit tax would not apply if – the other trust or institution has same or similar objects. the other trust or institution is approved under section 10(23C) or registered under section 12AB; and the said merger fulfils the conditions as may be prescribed. In the present case, since the both the trust has similar objects, the exit tax under Chapter XII-EB would not be applied, assuming that both the trust are registered and fulfills the conditions as prescribed.