Calculation of Income in case of certain violations - Section 13(10)/(11) - Income Tax - Ready Reckoner - Income Tax

Calculation of Income in case of certain violations - Section 13(10)/(11) Consequences of failure to comply with stipulated conditions W.e.f. A.Y. 2023-24, if a trust or institution violates certain stipulated conditions, the income chargeable to tax shall be computed after allowing deduction for the expenditure (other than capital expenditure) incurred in India, for the objects of the trust. The following are the violations Where the provision of section 13(8) is applicable or violations of conditions stipulated u/s 12A(1) clause (b) or (ba) i.e., Where the commercial receipts exceeds 20% of gross receipts in case of advancement of any other objective of general public utility or It fails to maintain prescribed Books of Accounts of trust; or It fails to get books of account Audited and furnish audit report on or before the specified date or It fails to file return of income u/s 139(4A) or 139(4C), within time stipulated under section 139(1) or 139(4). Condition to be fulfilled for claim of deduction of revenue expenditure (i) Such expenditure is not from the corpus standing as on the end of last year; (ii) Such expenditure is not from any loan or borrowing; (iii) Claim of depreciation is not in respect of an asset, acquisition of which has been claimed as application in any PY; and (iv) Such expenditure is not in the form of any contributions or donation to any person. Disallowances- While determine the amount of expenditure allowable as deduction, the following points need to be considered: a) Disallowance u/s 40(a)(ia) , on account of non-deduction of tax or non-payment of tax deducted at source on or before the due date of filling of return, would be attracted. b) Disallowance of expenditure in respect of cash payment in excess of ₹ 10,000/- under section 40A(3) / 40A(3A) would be attracted. c) For the purposes of computing income, no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed under any other provision of this Act. d) Capital expenditure is not allowed as a deduction.