Defects in income tax return of society approved u/s 10(23c)

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Sushant Mahajan (Querist)

01 November 2013 If a society is carrying on charitable activities of education institutions and is approved u/c 10(23C) and the following defects are found in the return after the scrutiny u/s 142 started:

1) On some expenses TDS was not deducted
2) Payments were made which were ineligible as deduction due to 40(A)(3) dis allowance.

Since, the entire income is exempt under section 10(23C), will any tax be leviable on these amounts or not?

Please reply. Its very urgent.

Ajay Mishra

Ajay Mishra (Expert)

01 November 2013 Which kind of payment you are talking about.

Under section 10(23C)(iv) and (v) of the Income-tax Act, income received by certain charitable and religious funds, trusts and institutions is exempt from tax if the conditions specified for this purpose are satisfied. One such condition, as laid down in the third proviso to section 10(23C), is that the fund, trust or institution applies its income, or accumulates it for application, wholly and exclusively to the object for which it is established and it does not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette specify) for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 of the Income-tax Act.
For expenses disallowances go to the following link:

https://www.caclubindia.com/articles/expenses-disallowed-under-section-40a-3-and-40a-3a--8806.asp#.UnM-ohenyVE

Sushant Mahajan

Sushant Mahajan (Querist)

01 November 2013 Sir,

payments are like

1) For TDS point :on a salary of Rs. 360000 no TDS was deducted.

2) For 2nd point: for another salary of Rs. 480000, monthly payments of 40000/- were made on single day in cash in each month?

If these amounts are disallowed, then will any tax be leviable since entire income of the AOP is exempt u/s 10(23C).

Ajay Mishra

Ajay Mishra (Expert)

01 November 2013 As per my understanding, it is required to deduct TDS from salary paid, because it is taxable under the person who is getting salary. It will not be considered as charitable activities.

So TDS will be considered by such society at the time of making payment of salary.

Sushant Mahajan

Sushant Mahajan (Querist)

01 November 2013 Sir, the case has now opened up in scrutiny u/s 142 and we want to offer Rs.840000 on account of non compliance of TDS provisions and disallowance u/s 40(A)(3).

My query is that:

Since the entire amount earned by the aop is exempt u/s 10(23C), will any tax be liable to be paid on this offer?

Please reply.

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