Taxability of interest recd on fdrs & trf to corpus fund

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 August 2013 A trust established for the benefits of particular cast and runs "Sabhasad Suraksha Yojana" It is Regi.u/s 12AA. Trust is having FDR Interest income of Rs.5.00 lacs in F.Y. 12-13. As per Trust deed, it has transferred 90% of i.e. Rs.4.50 lacs to the CORPUS as provision for future Death Fund liability. Whether whole of the Interest of Rs.5.00 lacs is taxable or only 50000/- is taxable?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

16 August 2013 First of all the charitable trust should be irrespective of any caste or creed but in special cases like yours it can be. Now, you have to understand the meaning of corpus. You or the trust cannot create or decide which income is revenue or corpus. Corpus is a fund which created by the Trust and is donated by a particular person to that fund is only to be treated as corpus and regular income cannot be transferred to corpus as has been done by you. The entire income is revenue receipt and has to be treated as per the requirement of the IT Act provided the money which was received from various person forms the corpus fund including interest accrued otherwise 100% is to be treated as income provided it is not spent for the purpose of the trust.

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