A public charitable trust has 5 trustees. The trust is in existence for more than 15 years. Some with a lot of money approaches the trustees who have become aged, that they retire from the office of the Trustees in favour of the five active and young trustees (referred to as Group) so that the trust could function more effectively . As an inducement to the trustees the Group offers to pay them a particular some. An agreement is entered into to this effect. None of the Trustees were paid any remuneration at any time.
The question is whether the amount received by the outgoing trustees is taxable in their hands as:
1. As Capital Gains
2. Gift
3. Windfall
Whether the amount is taxable in their hands at all?
payment of any consideration to the trustees goes against the very concept of the charitable trust. It contravenes sec.13 of the IT Act,61 and the trust loses its exemption