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PRovision Relating to Charitable Trust

Others 874 views 1 replies

CA Ankur Mittal

Assistant Manager @ Reliance Communicati

759 Points Posted on 20 January 2011

Ankur Mittal

( Author )
20 January 2011

A Charitable Trust XYZ is Registered it runs a Reputed hospital on a land given by the govt for a very nominal amount on the condition that it will reserve 10% of the bed for poors
The Hospital Charges are very High it earns near 100 crore that clearly indicates that its not charitable purpose any more.as amended in the budget
"The advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business."
So is this the Business Income of the Trust.
Secondly the Hospital Runs a Pharmacy Store which is a Trading Activity so i am pretty much sure it requires a separate disclosure in the Books ..are there any statutory requirement for this ,if yes please quote section..
I need the Answer ASAP
Thanking you
Ankur Mittal

Replies (1)

CA Sandeep Kumar

Audit Assistant

804 Points Posted on 20 January 2011

earning crores of rupees itself does not make the charitable institution a non - charitable one. provisions of the income tax act state that the income so earned must be applied for charitable activities. In fact, many such institutions in our country earn in crores, example, BCCI, IT dept not agreeing with BCCI's claim though, after IPL concept of cricket was introduced ..

There are many case laws which are very useful in deciding whether an activity constitutes charity or not.

There is recent amendment in income tax act, wherein gross receipts of business activity if it does not exceed, then the institution would still enjoy exemption..

well, if it exceeds, and if you can clearly maintain separate books of accouts for the same, i do not think there shoud be any problem to the hospital as regards exemtion is concerned.