175. Requirement of investing funds of trust in modes specified in section 13(5) during previous year commencing on or after April 1, 1981 in terms of section 13(1)(d) - Whether, in cases where previous year is calendar year 1981, assessment year for invoking of section 13(1)(d) would be assessment year 1982-83 or 1983-84
Circular No. 322 was issued by the Central Board of Direct Taxes on 16 January 1982. Its subject is 175. Requirement of investing funds of trust in modes specified in section 13(5) during previous year commencing on or after April 1, 1981 in terms of section 13(1)(d) - Whether, in cases where previous year is calendar year 1981, assessment year for invoking of section 13(1)(d) would be assessment year 1982-83 or 1983-84.
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Fixes the first year in which section 13(1)(d) can cost a trust its section 11 exemption. The provision applies from the very first assessment year relevant to a previous year beginning on or after 1-4-1981, so a trust whose previous year is the calendar year 1981, which began before that date, does not lose exemption under section 13(1)(d) for assessment year 1982-83. Correspondingly, a Commissioner may renew the section 80G certificate in such a case, but may not renew it where the previous year begins on or after 1-4-1981 and the trust has not complied with section 13(1)(d). The Board says this holds for all previous years starting after 1-4-1981, whatever the assessment year.
References were received asking whether, for a trust following the calendar year, section 13(1)(d) was to be invoked in assessment year 1982-83 or 1983-84.
175. Requirement of investing funds of trust in modes specified in section 13(5) during previous year commencing on or after April 1, 1981 in terms of section 13(1)(d) - Whether, in cases where previous year is calendar year 1981, assessment year for invoking of section 13(1)(d) would be assessment year 1982-83 or 1983-84
1. Section 13(1)(d ) provides that subject to the provision of section 13(1)(bb ) a trust/institution for charitable or religious purposes will lose the exemption under section 11 for assessment year commencing from the assessment year 1982-83 if any funds of the trust or institution are invested or deposited or continue to remain invested or deposited for any period during any previous year commencing on or after April 1, 1981 in any of the forms or modes other than those specified in section 13(5). The Board has received references as to whether in cases where the previous year of the trust/institution is the calendar year 1981, the assessment year for invoking the provision of section 13(1)(d) would be the assessment year 1982-83 or 1983-84.
2. The Board desire to point out that if any previous year commences on or after April 1, 1981, the provision of section 13(1)(d) would be applicable from the very first assessment year relevant to the previous year beginning after April 1, 1981. However, where the previous year commences before April 1, 1981, the provision of section 13(1)(d) will not apply for the assessment year 1982-83 and the trust will not lose the exemption under section 11 merely by the application of section 13(1)(d). In such cases, renewal of recognition certificate under section 80G by the Commissioners would be in order. The Commissioner will, however, not be able to renew section 80G certificate where the previous year begins on or after April 1, 1981 and the trust has not complied with the provision of section 13(1)(d). This position will hold good for all previous years starting after April 1, 1981, irrespective of the assessment year involved.
3. The legal position may please be brought to the notice of all officers working in your charge particularly those assessing the cases of charitable and religious trusts.
Circular : No. 322 [F. No. 186/47/81-IT(A-I)], dated 16-1-1982.
On a trust assessment denying section 11 exemption for a non-conforming investment, or on a section 80G renewal application.
Source: the Income Tax Department’s own published text — its page for this instrument.
