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October 2022

Charitable Trusts – Recent Amendments Pertaining to Books of Accounts and Other Documents – Part I

By R. S. Kadakia, Chartered Accountant
Reading Time 30 mins
INTRODUCTION

Section 12A(1)(b) of the Income-tax Act 1961 (“the Act”) has been amended by the Finance Act, 2022 w.e.f the assessment year 2023-24 to provide that a charitable institution claiming exemption u/s 11 and 12 shall keep and maintain books of account and other documents (“books of account/documents”) in such form and manner and at such place, as may be provided by rules.

BRIEF ANALYSIS OF THE SECTION

(a)    On a literal reading, even a solitary point of difference between the assessee and the Assessing Officer (“AO”) as to whether prescribed books/documents are maintained or whether they are maintained at the prescribed place or whether they are maintained in the prescribed form or in the prescribed manner can result in denial of exemption u/s 11/12 and taxation u/s 13(10). On the other hand, it has been held that “when there is general and substantive compliance with the provisions of a rule, it is sufficient.” [CIT vs. Leroy Somer and Controls India (P.) Ltd., (2014) 360 ITR 532 (Del), cited in Worlds Window Impex (India) (P.) Ltd. vs. ACIT, (2016) 69 taxmann.com 406 (Del.-Trib.)]

Also see:

•    Arvind Bhartiya Vidhyalya Samiti vs. ACIT, (2008) 115 TTJ 351 (Jaipur)
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