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Unregistered trust taxability

Lokesh Rathod (Senior Auditor) (24 Points)

30 May 2016

A unregistered Public trust who's Donation recieptsare less than basic exemption limit and the same have been spent for religious purpose is it liable to tax? and what is the procedure if the total expenditure is disallowed by the CPC what shall be the further move?

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CA Rohan Dedhia (Practicing Chartered Accountant) (83 Points)
Replied 01 June 2016

Hi Prabhat,

The problem has arisen since your Trust would not have been registered u/s 12A(a) of the Income Tax.

The Legitimate way to go about it is as follows -

1. Appeal against the Order with the CIT-A.

2. In the meanwhile, apply for 12A(a) and obtain the same. (Make sure 12AA is not rejected and never cancelled).

3. present the case before the CIT-A at the time of hearing and benefits of sec. 11 will be given to your trust.

Please note that there are other short-term measures to solve your problem but the same may cause issues in Future.

The above method is the most suitable in your case.