Income of European Economic

Community SECTION10(23BBB)

Any income of the EEC derived in India.

The Central Government here by notifies the
following scheme for investments by the EEC for
the benefit of establishment of joint ventures in
India.
The EEC has developed a financial instrument
called the European Community International
Investment Partners (ECIIP)
Income from trasfer of certain equity,
units etc.under [section 10(38)]
Any income arising on or after 1.10.2004 from the
transfer of long-term capital asset, being an equity
share in a company or a unit of an equity oriented
fund where—

 The transaction of such equity share or unit is

entered into on or after the date on which of the
finance (No 2) Act, 2004 comes into force ; and
 Such transaction is chargeable to securities
transaction tax under that chapter.
Explanation
For the purpose of this clause, “equity oriented fund’’ mean a
fund-

 where the invested by way of equity share in domestic

companies to the extent of more that sixty-five percent of the
total proceeds of such fund: and

 which has been set up under a scheme of mutual fund

specified under clause 10(23D)
 CAPITAL GAIN[SECTION11(1A)]
Provides for an exemption in respect of income
derived from property held under Trust for
charitable or religious purposes.
 (a)Assets held fully for religious or
charitable purposes
Eg;-
• If a trust had a capital asset costing Rs 1, 00,000 and
sold the same for Rs 1,50,000 and then bought a
capital asset for Rs 1,30,000, then the working will be
as follows:
• Sale proceeds of old asset 1,50,000
• Cost of the old asset 1,00,000
------------
• Capital gain 50,000
• Cost of the new asset 1,30,000
• Cost of the old asset 1,00,000
• Capital gain utilised is 30,000
• Capital gain taxable 20,000
 (b) Assets held partly for religious or
charitable purposes
Eg:-
• A trust has a capital asset costing Rs 2,00,000 and ½ of its income is utilised for
charitable purpose. It is sold for Rs 3,50,000. If trust buys another capital asset for
Rs 3,50,000 then appropriate fraction of the capital gain (Rs 3,50,000 – Rs 2,00,000
= Rs 1,50,000) i.e. Rs 75,000 (1/2 of Rs 1,50,000) will be deemed to have been
applied for charitable purpose. Supposing that the trust buys another asset for Rs
2,90,000, then the workings would be as shown hereunder:
• Capital gain on transfer of capital asset 1,50,000
• Appropriate fraction i.e. ½ 75,000
• Appropriate fraction utilised (½ of Rs 2,90,000) 1,45,000
• Appropriate fraction of the original capital
• Asset ½ of Rs 2,00,000 1,00,000
-----------
• Capital gain utilised 45,000
• Capital gain not utilised 30,000
 Accmulation of income [section
11(2)]
The following condition are fulfilled:

1. The assessee gives a notice to the assessing officer,in the

prescribed manner,specifying the purpose for which the income
is being accumulated or set apart and the period for which
income is to be accumulated or set apart which shall in no case
exceed 10 years.

2. The money so accumulated or set apart is invested or deposited

in the forms or modes specified in sub-sechion(5).
 Section 12 : Income from contributions
 Any voluntary contributions received by a trust created
wholly for charitable or religious purposes or by an
institution established wholly for such purposes (not
being contributions made with a specific direction that
they shall form part of the corpus of the trust or
institution) shall for the purposes of section 11 be
deemed to be income derived from property held
under trust wholly for charitable or religious purposes
and the provisions of that section and section 13 shall
apply accordingly.
 The term “voluntary contributions” has been defined in
section 2(24)(iia) of the Income-tax Act.
 However, any contributions received with a specific
direction that they shall form part of the corpus of the
trust or institution shall not be income of the trust or
institution. The term corpus has not been defined in
the Income-tax Act. Various dictionary meaning says
that it is capital.
Income from Contribution : (Contd…)

 Section 11(1)(d) grants exemption to donations made

with a specific direction that they shall form part of the
corpus, but the benefit of this section is available only
to trusts enjoying the benefit of exemption under
section 11. If a trust loses exemption under section
11, corpus donations would be taxable as income.

 In order to prove that a donation is towards the

corpus of a trust, it would be advisable to obtain a
specific letter from the donor mentioning clearly
that the donation is given towards the corpus of
the trust and that only the interest arising on the
investment of the corpus donation is to be utilized
for the objects of the trust.
 SECTION 12A(Conditions as to registration
of trusts )
• (a) The person who is applying for an application
for registration of the trust or institution in the
prescribed form and in the prescribed manner to
the Commissioner,or
• Before the expiry of a period of one year from
the date of the creation of the trust or the
establishment of the institution, whichever is later
than such trust or institution is registered under
section 12AA
• (b) The total income of a trust exceeds fifty
thousand rupees in any previous year.
• The accounts of the trust or institution for
that year have been audited by an accountant
as defined in the Explanation below sub-
section (2) of section 288.
 SECTION : 12AA
PROCEDURE FOR REGISTRATION
• Commissioner will scrutinized all
documents regarding section 12A clause.

• Commissioner will also rectify the

genuineness of the trustee by checking all the
activities of the institution
 CONT…..
• After applicant fulfill the condition under
section 12A the commissioner has to respond
to the applicant within six months from the
date of the registration.
CASE
Bhagwad Swarup Shri Shri Devraha Baba
Memorial Shri Hari Parmarth Dham Trust
v/s
Commissioner of Income-tax, Dehradun
 TAX EXEMPTION TO POLITICAL PARTIES
(SEC 13 A)
• Political party means an association of individual
citizen of INDIA registered with the election
comission of india as political party
• Political parties are liable to pay tax on their income
and they are assessed as ‘association of persons’
however the income derived by these parties as
income by way of voluntary contribution,income
from house propertyand income from other
sourceare exempt from subject to the following
conditions.
• The party keeps and maintains such books of
accounts and other document as would enable the
assessing officerto properly deduce the income.
• In respect of each voluntry contribution in excess of
rs 20,000 the party keeps and maintains the record
of the contributions and names & addresses of the
persons who have made such contribution.
• The accounts of the party are audited by chartered
accontant.
• The ceo of the political party is required to file a
return of income if the total income exceeds the
maximum amount which is not chargeable to
income tax.
 VOLUNTARY CONTRIBUTION RECEIVED BY AN
ELECTORAL TRUST (SECTION 13B)
Any voluntary contributions received by an electoral trust shall not
be included in the total income of the previous year of such electoral
trust, if—

(a) such electoral trust distributes to any political party,

registered under section 29A of the representation of the People
Act, 1951, during the said previous year, ninety-five per cent, of the
aggregate donations received by it during the said previous year
along with the surplus, if any, brought forward from any earlier
previous year, and

(b) such electroal trust functions in accordance with the rules

made by the Central Government.
 cont….
Illustration:

Donation received by electoral trust in 10,00,000

2009-10
Amount distributed to political parties 8,00,000

In this case electoral trust has to distribute Rs. 9,50,000 to the

political parties in order to avail of exemption under section
13B. As it has distributed only Rs. 8,00,000, hence Rs. 1,50,000
will be taxed as income in the hands of the electoral trust.