Do the provisions of section 10(23C) deserve amendments and merger with sections 11 to 13?
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- Last Updated on 13 January, 2022
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V. K. SUBRAMANI – [2022] 134 taxmann.com 76 (Article)
Provisions relating to, taxation of charitable trusts or exemption provided to charitable trusts, in whatever way one looks at it, have been fine tuned in the recent times by plugging many unaddressed issues. The recent legal amendments providing applicability of sections 43A and 40(a)(ia) by inserting Explanation 3 to section 11(1) have made the intentions of the legislature loud and clear. The insertion of section 12AB prescribing the procedure for fresh registration w.e.f. 1-4-2021 have reaffirmed our belief that the lawmakers are vigilant and want only those who are really charitable to take shelter from taxation of their income and any other dubious design would be dealt with fairly and squarely.
Just to highlight the fact, one can take note of a recent decision of the Madras High Court in the case of S.R. Trust v. Pr. CIT [2021] 208 DTR 329 where the assessee-trust was subjected to a search in the year 2014 and again a second search was conducted under section 132 in September, 2016. Thus non-profit organisations are not out of the radar of the tax department.
This refresher takes note of section 10(23C) which is applicable independent of sections 11 to 13 (section 12AB included). The objective is to suggest amending section 10(23C) to limit its scope and merge rest of the provisions contained therein with sections 11 to 13.
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