Amount received - Trust
This query is : Resolved
01 December 2022
Dear all, I am facing below case kindly help me clarify
Case:
Moon ltd Public Limited company (unlisted) is engaged in Agricultural business which has hospital facilities for its staff.
Sun Ltd (Exempted trust) charitable organization (charity arm of Moon Ltd group - Separate entity) is now willing to finance the hospital facilities of Moon Ltd.
Sun Ltd (Trust) & Moon Ltd (Company) are related parties ( Directors)
Now the MoM of Sun Ltd states that Sun Ltd can finance by advancing money to Moon & in turn moon can run the hospital.
I want to know Tax aspects of both companies & also accounting / auditor observations if any
Case:
Moon ltd Public Limited company (unlisted) is engaged in Agricultural business which has hospital facilities for its staff.
Sun Ltd (Exempted trust) charitable organization (charity arm of Moon Ltd group - Separate entity) is now willing to finance the hospital facilities of Moon Ltd.
Sun Ltd (Trust) & Moon Ltd (Company) are related parties ( Directors)
Now the MoM of Sun Ltd states that Sun Ltd can finance by advancing money to Moon & in turn moon can run the hospital.
I want to know Tax aspects of both companies & also accounting / auditor observations if any
CA R SEETHARAMAN
(Expert)
01 December 2022
Disclosure is required, in a note to the accounts, where the reporting charity enters into a related party transaction.
Such payment by charitable trust to the company is taxable as it will not be considered as charitable activities as it's beneficial to a business entity.
Such payment by charitable trust to the company is taxable as it will not be considered as charitable activities as it's beneficial to a business entity.
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