| Question And Answer | |
|---|---|
| Subject: | Charitable Trust |
| Category: | Income-Tax |
| Querist: | Manoj |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | charitable trust, income from house property |
| Date: | December 19, 2022 |
Assessee is charitable trust having registration under Bombay Public Trust and U/Sec 12A of the Income Tax. The main object of the trust is of Educational activities. The trust has constructed a building with the support of corpus donations. However could not commenced the Educational activities and therefore given the said property on rental basis to another trust having similar object.
Issues :
1. How to offer income from rent for Tax ? Whether it is income from house property or Income by claiming exemption U/sec.. 11 of Income Tax Act.
2. How to maintained books of accounts of mercantile method or cash method .
The exemption under section 11 of the Income-tax Act, 1961 (Act) will not be denied merely because the trust is having residential income. However, the income would have to be applied for charitable purposes [Oswal Bandhu Samaj v. ITO – [2022] 138 taxmann.com 561 (Pune-Trib.)]. Section 11 to 13 of the Act being a code for computation of income in itself, the income cannot be offered as income from house property.
There is no prescribed method for a trust to maintain its books of accounts. It is advisable to consistently follow the method which is force.