Page 109 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes any person who has made a substantial contribution to the trust or institution, that is to
say, any person whose total contribution up to the end of the relevant previous year
exceeds ` 25,000,
where the author, founder or other substantial contributor is a Hindu Undivided Family,
any member of the family,

any trustee of the trust or manager, by whatever name called, of the institution,
any relative of such author, founder, person, member, trustee or manager, referred to
above, and

any concern in which any of the above mentioned persons has a substantial interest.

Notes The expression ‘relative’ used for this purpose has been defined in the Explanation (1)
to Section 13 to mean:

(a) the spouse of the individual,
(b) brother or sister of the individual,
(c) the brother or sister of the spouse of the individual,
(d) any lineal ascendant or descendant of the individual,

(e) any lineal ascendant or descendant of the spouse of the individual, and
(f) the spouse of any of the persons referred to in (b) to (e) above and any lineal
ascendant or descendant of a brother or sister of either the individual or the spouse
of the individual.

The income or the property of the trust or institution or any part thereof shall be deemed to have
been used or applied for the benefit of the specified persons and consequently the trust will
forfeit its exemption from income tax in the following cases specified in Section 13(2):
1. Where any part of the income or property of the trust or institution is, or continues to be
lent to any of the specified persons for any period during the previous year without either
adequate security or adequate interest or both;
2. If any land, building or other property of the trust or institution is or continues to be made
available for the use of any of the specified persons for any period during the previous
year without charging adequate rent or other compensation;

3. If any amount is paid by way of salary, allowance or otherwise during the previous year
to any of the specified persons out of the resources of the trust or institution for service
rendered by that person to such trust or institution and the amount so paid is in excess of
what may reasonably be paid for such service;
4. If the services of the trust or institution are made available to any of the specified persons
during the previous year without adequate remuneration or other compensation;
5. If any security, share or other property is purchased by or on behalf of the trust or institution
from any of the specified persons during the previous year for a consideration which is
more than adequate;
6. If any share, security or other property is sold by or on behalf of the trust or institution to
any of the specified persons during the accounting year for a consideration which is less
than adequate;

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