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Taxation of sec 25 company

08 May 2013

Owners of a commercial Building has formed a Companies u/s 25 of the Companies act to take care of the maintenance of the company.All the maintenance activity is taken care by the Company formed.The said company collect monthly maintenance charges from the owners having office space in that Building.At the end of the year the Company has made surplus.How this surplus shall be treated for tax purpose. Whether any income tax benefit will be available. Read more at: /experts/modify_message.asp?entry_id=628649

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2 Replies

Chintan Shah (Proprietor) (71 Points)
Replied 08 May 2013

Hi,

The very object of Section 25 Company is not to earn profit and the amount collected in excess of expenditure is not income but receipts held by the Company in fudiciary capacity.

In my view, it is not income but surplus over expenditure unless the same is collected from a non-member.

(Guest)

CA Kush, first please explain the object of the company formed u/s 25.

Because section 25 applies only if the nature of the company is promotion of commerce, art, science, religion, charity or any other useful project.

promotion of commerce, art, science, religion, charity or any other useful object

Read more at: /forum/formation-of-a-company-under-section-25-81814.asp