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Income Tax Laws – I

Notes 17. Income from property held under trust created before 1.4.1952 for charitable or religious
purposes is subject to conditions by …………………………
18. Income in the form of …………………..made with a specific direction that they shall form
part of the corpus of the trust or institution shall be fully exempt.

4.5 Income from Voluntary Contributions (Section 12)

The income of a trust by way of voluntary contributions would also be treated for all purposes
as income deemed to have been derived by the trust from property held by it under trust except,
however, in case where the voluntary contribution is received with a specific direction that it
shall form part of the corpus of the trust. As a result, voluntary contribution received by a trust
should also be applied for charitable purposes before the end of the accounting year or within 3
months following so that income-tax exemption could be availed of. However, voluntary
contributions could be accumulated for future obligation for charitable purposes in the same
manner as specified earlier.
The value of any services, being medical or educational services, made available by any charitable
or religious trust running a hospital or medical institution or an educational institution, to any
person referred to in Clause (a) or Clause (b) or Clause (c) or Clause (cc) or Clause (d) of
Sub-section (3) of Section 13, shall be deemed to be income of such trust or institution derived
from property held under trust wholly for charitable or religious purposes during the previous
year in which such services are so provided and shall be chargeable to income-tax notwithstanding
the provisions of Sub-section (1) of Section 11.

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Caution For the purposes of this sub-section, the expression “value” shall be the value of
any benefit or facility granted or provided free of cost or at concessional rate to any person
referred to in Clause (a) or Clause (b) or Clause (c) or Clause (cc) or Clause (d) of Sub-
section (3) of Section 13.
Notwithstanding anything contained in Section 11, any amount of donation received by the
trust or institution in terms of Clause (d) of Sub-section (2) of Section 80G which has been
utilised for purposes other than providing relief to the victims of earthquake in Gujarat or
which remains unutilized in terms of Sub-section 5(C) of Section 80G in respect of which accounts
of income and expenditure have not been rendered to the authority prescribed under clause (v)
of sub-section (5C) of that section, in the manner specified in that clause, and not transferred to
the Prime Minister’s National Relief Fund on or before the 31st day of March, 2004 shall be
deemed to be the income of the previous year and shall accordingly be charged to tax.

Task Discuss how Income in the form of voluntary contribution made with a specific
direction which shall form part of the corpus of the trust or institution shall be fully
exempt.

Self Assessment

State whether the following statements are true or false:
19. The income of a trust by way of voluntary contributions would also be treated for all
purposes as income deemed to have been derived by the trust from property held by it
under trust except.

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