Charitable Society Closure

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This discussion outlines the procedure for closing a school run by a society registered under the Societies Act, 1860, particularly when facing closure due to a lack of students. It covers the legal requirements for dissolution and advises on potential tax implications, suggesting that donating the school building to another charitable trust could help avoid tax liabilities. The society is not registered under Section 12A of the Income Tax Act.

VIPIN GUPTA

VIPIN GUPTA (Querist)
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20 June 2021 Dear Sir,
One of our client is running a school since 1998. The society is registered under Societies Act , 1860. They are having School building in there books Rs 1.5 Crores. Now the society wants to close the school and the society and during lock down there are no students. What the procedure is to be followed. and tax implication under which section

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 June 2021 Is it registered under section 12A of the income tax act.

VIPIN GUPTA

VIPIN GUPTA (Querist)
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22 June 2021 No not registered under 12A its gross receipts are around 35 lacs. From School fees

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 June 2021 Any number not less than three-fifths of the members of any society may determine that it shall be dissolved, and thereupon it shall be dissolved forthwith, or at the time then agreed upon, and all necessary steps shall be taken for the disposal and settlement of the property of the society, its claims and liabilities .
School building may be donated to a charitable trust to avoid any tax liability.

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