Practical Accounts And Taxation
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Are all Trust allowed to get registered under Sec 12 A and take benefit of income tax exemption? NO.
In a case where assessee trust was carrying on business activity as a sub-contractor under which they supply food to poor school children. The Assessee applied for Registration of Trust under section 12 A ( under which a charitable trust or NGO can take one time exemption from paying income tax).
High course held that the assessee was only supplying food as a subcontractor and from business activity assessee accumulated profit.
Since there was no charitable activity involved on part of the assessee trust and therefore Registration under section 12A can’t be allowed for merely implementing government schemes.
Trusts and NGO can get registered u/s 12A given that it is engaged in genuine charitable activities.
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