may 2016 - students newsletter -...

STUDENTS'NEWSLETTERSILIGURI BRANCH OF EICASA

THE INSTITUTE OF CHARTEREDACCOUNTANTS OF INDIA( SET UP BY AN ACT OF PARLIAMENT )

MAY 2016MAY 2016

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIAICAI BHAWAN, Post Box No. 7100,Indraprastha Marg, New Delhi - 110002Tel. : +91(11) 39893989E-mail : [email protected] Website : http://www.icai.org

EASTERN INDIA REGIONAL COUNCIL, ICAI7, Anandilal Poddar Sarani (Russel Street)Kolkata - 700071Tel. : +91(33) 39893989E-mail : [email protected] : http://www.eirc-icai.org

SILIGURI BRANCH OF EIRC OF ICAIICAI Bhawan, Near Over Bridge, Tinbatti MoreSiliguri, Dist-Jalpaiguri, W.B. - 743015Tel. : +91(353)256 0445/2984E-mail : [email protected] : http://www.siliguri-icai.org

Taxation and Procedures inTrust & Societies

Guess Who???

Appreciation of Hard Work

Glimpses

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STUDENTS' NEWSLETTER May 2016I02

EDITORIAL TEAM

MEMBERS

ADVISORS

STUDENT NEWSLETTER COMMITTEE MEMBERS

1. CA. Pankaj Kumar Maskara

Editor ( Members Newsletter)

2. CA. Sanjay DasEditor (Students Newsletter)

3. CA. Kanhaiyalal Khetan

4. CA. Vivek AgarwalSub-

1. CA. Adarsh Chandak

2. CA. Lekh Ram NyoliwalaIn-charge - Student Inputs

3. CA. Manish Agarwal (306118)In-charge - Members Inputs

4. CA. Pooja Jindal

5. CA. Prateek Pugalia

6. CA. Rahul Goyal

1. CA. R. N. Chandak

CA. Manish Goyal

1. Aditya Minda

2. Rishab Goyal

3. Sachin Agarwal

4. Raksha Agarwal

5. Sneha Agarwal

6. Anindita Roy

Editor

The views and opinions expressed or

implied in STUDENTS' NEWSLETTER

are those of the authors and do not

necessarily reflect those of Siliguri

Branch of ICAI. Unsolicited articles and

transparencies are sent at the owner's

risk and the publisher accepts no liability

for loss or damage. Material in this

publication may not be reproduced,

whether in part or in whole, without the

consent of Siliguri Branch of ICAI.

Index

Announcement

Articles are invited from Students in the

upcoming issues of the Students' Newsletter.

The articles based on CA curriculum should be

received latest by 10th of the preceding month

in which the article is to be published. The article

should comprise 1600 to 2200 words only. The

author are advised to

1. Mail a Softcopy of the article with complete

communication along with e-mail address

and Student Registration number to

[email protected]. Article received without the

details / enclosures specified above will not

be considered.

2. A Softcopy of latest passport size colour

photograph should also be mailed.

Articles invited for Students' Newsletter

Siliguri Branch of EICASA of ICAI

STUDENTS' NEWSLETTER May 2016I 03

INTRODUCTION

Analysis

Amendment [with effect from assessment year 2016-17]

Section 11, 12 and 13 of Income Tax Act, 1961 provides exemption in respect of an income of a Charitable Trusts. The expression 'Charitable purpose' is defined under section 2(15) of the Act of Income Tax Act 1961 which includes :

1. Relief of the poor.2. Education,3. Medical relief,4. Preservation of environment including water sheds, forest and wildlife 5. Preservation of monuments or places of historic interests,6. The advancement of any other object of general public utility and7. Yoga (w.e.f. AY 2016-17)

(a) "Yoga" would cover teachings of yoga, books on yoga, yoga health camps.(b) activities in relation to yoga constitute charitable purpose only if private gain is excluded.(c) Business activity in pursuit of yoga :

(i) proviso to section 2(15) will not apply.(ii)business profits may be exempt under section 11(4A), if specified conditions are

fulfilled.

It has been noticed that a number of entities operating on commercial lines are claiming exemption on their income under section 11 of the Act on the ground that they are charitable institutions. This is based on the argument that they are engaged in the "advancement of an object of general public utility" as is included in the fourth limb of the current definition of "charitable purpose". Such a claim, when made in respect of an activity carried out on commercial lines, is contrary to the intention of the provision.

Thus advancement of any other object of general public utility was amended w.e.f AY 2009-10, Such activity will not be considered as charitable purpose if it involves carrying on of :

� any activity in nature of trade, commerce or business, or� any activity of rendering any service in relation to trade, commerce or business for a

cess/fee/any other consideration, irrespective of nature of use or application or retention of income from such activity.

Exception - if aggregate value of receipts from such activities is Rs.25 lakh or less in the previous year.(Section 2(15))

Advancement of any object of general public utility is not a charitable purpose, if it involves carrying on of

(a) Any activity in the nature of trade, commerce, business; or(b) Any activity of rendering any service in relation to any trade, commerce or business Unless(c) The activity is undertaken in the course of actual carrying out of such advancement of any

other object of general public utility; and

Taxation and Proceduresin Trust & SocietiesBySACHIN AGARWALNRO-0373324


CA. Pankaj Maskara,Chairman, Siliguri Branch of EIRC of ICAI.

(d)Aggregate receipts from such activity< 20% of the total receipts of that previous year, of the institution. [ proviso to section 2(15) ]

Section 11 of Income Tax Act,1961 provides exemption in respect of a income derived from property held under a trust for charitable and religious purposes to the extent applied in India. However the following condition shall be satisfied :

1. The NGO should have been formed for public charitable purpose. Also its assets should be held under a trust or other legal obligation.

2. It must spend 85% of its income on its objects in India.3. It must keep its money in one of the approved modes.4.It must furnish an audit report in form 10B, if its income is more than Rs. 50,000 in a

particular year.5. Its funds or assets should not be used for personal benefit of key persons.6. It should not distribute its surplus (or net assets, on dissolution) to its members.7.It must register itself under section 12A3.

As per Section 12 of the Income Tax Act, 1961, 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.

Section 13 of the Act, specifies the circumstances under which the benefits under Section 11 would not be available to an organisation. An organisation, under the following circumstances, may risk losing its exemptions under section 11 :

(i)If the income is not applied for the benefit of the public [section 13(1)(a)].(ii)If the income is applied for the benefit of any particular religious community or caste

[section 13(1)(b)].(iii)If the income or property of the Trust/Institution is applied/used for the benefit of the

persons specified in section 13(3) who are the founders, trustees, managers, chief functionaries, major donors, relatives of the founders or persons who have a substantial interest in the organisation. [section 13(1)(c)].

(iv)If the funds are applied in modes other than those specified in section 11(5) or shares of companies other than a government company are held (not being a part of the corpus as on (1-6-1973). [Section 13(1)(d)].

Section 11 & 12 of Income Tax Act, 1961

Forfeiture of Exemption u/s 13

What happens if trust fails to apply 85% of its income from Charitable purposes?

Due to non-receipt of income Any other reason

The trust should make an applicationto Assessing Officer before due date

for applying such incomein the next year.

The trust should make an applicationto the Assessing Officer for applyingsuch income in the year in which it

receives or subsequent year.

However w.e.f AY 2015-16, Option to be exercised in a form and manner as may be prescribed.


Scope of Section 13

Anonymous Donation Section 115BBC

Accumulation of Income

Recent Other Amendments

The implication of the section is that incomes which are otherwise exempted under section 11 or section 12 will not be exempted if the provisions of section 13 are contravened. The applicability of section 13 arises only when an organisation is eligible for exemption provided under section 11. Therefore, only those organisation which are claiming exemption under section 11 are subject to the provisions of section 13.

Anonymous Donation is a voluntary contribution for which no proper records are maintained. This would be taxable @ 33.99% to the extent such donation exceed 5% of the total donations of such trust/institution or a sum of Rs. 1,00,000 whichever is more. The above provisions are applicable to all charitable institution but not applicable to religious trusts.

Where 85% of the total income is not applied to charitable institute or religious purposes in India during the previous year but is accumulated or set apart, such income so accumulated or set apart shall be exempted, provided the following condition are compiled with, namely :

a)such person specifies, by notice in writing in Form 10 to Assessing Officer, the purpose for which income is being accumulated or set apart and the period of accumulation, which shall in no case exceeds 5 years;W.e.f. AY 2015-16 the prescribed form (Form 10) should be filed by the charitable institution on or before the due date of filing return of income under section 139 (1).

b)the money accumulated or set apart is invested or deposited in the mode specified in Section 11(5).

In order to ensure that the year in which the trust is non-charitable the exemption should not be allowed to such trust and it cannot be argued that since the registration is not cancelled/approval is not withdrawn, therefore exemption shall be available, the amendments has been made in order to mandate the denial of exemption even if the registration of the trust is not cancelled or approval is not withdrawn or any notification is rescinded.

1.W.e.f 01/10/2014 Registration is liable to cancellation upon violation of section 13(1)[section 12AA(4)].

2.Also w.e.f AY 2015-16, Where cost of acquisition claimed as application of income, no deduction by way of depreciation in computing income [section 11(6)] whereas earlier charitable institution were eligible for

vdeduction of full cost of acquisition of asset as application of income.vdepreciation on the same asset in subsequent years.

3.Amendment in section 13 (with effect from assessment year 2016-17) :Exemption under section 11(2) will not be available to a charitable institution if -

(a)it does not file Form 10 before the due date of filing of return of income under section 139(1); or

(b)it does not file the return of income before the due date of filing of return of income under section 139(1). [section 13(9)]


Guess Who???ByRAKSHA AGARWALERO-0198362

The love for this person begins when we first breath,The love for this person stays till we last breath,Guess who??

The one who is no less than an artist,Coz this person carves out infinite designs just to make us happy,Guess who??

The one who will hide one's tear,Just to keep us away from fear,Guess who??

The one whom we may pour all the harsh words in anger,Yet get in return only love ,care and pamper,Guess who??

The one who will get wet in rain but always keep us in the shade,The one who will say 'I am not hungry' just to give us the last piece of meal when we say we are starving,The one who has no complaints and no demands and yet fulfills all our needs and demands,Guess who??

Yes,She is our Mother,The selfless person who always wants us to prosper,

People may come and go,Their love might rise and might become low,But the one who will always bother,Is always your mother��.

Caution : Poems are sweeter than chocolates.


One young academically excellent person went to apply for a managerial position in a big

company. He passed the first interview, the director did the last interview, made the last decision. The

director discovered from the CV that the youth's academic achievements were excellent all the way,

from the secondary school until the postgraduate research, Never had a year when he did not score.

The director asked, "Did you obtain any scholarships in school?" The youth answered "none".

The director asked, "Was it your father who paid for your school fees?" The youth answered,

"My father passed away when I was one year old, it was my mother who paid for my school fees".

The director asked, "Where did your mother work?" The youth answered, "My mother worked

as clothes cleaner. The director requested the youth to show his hands. The youth showed a pair of

hands that were smooth and perfect".

The director asked, "Have you ever helped your mother wash the clothes before?" The youth

answered, "Never, my mother always wanted me to study and read more books. Furthermore, my

mother can wash clothes faster than me".

The director said, "I have a request. When you go back today, go and clean your mother's

hands, and then see me tomorrow morning".

The youth felt that his chance of landing the job was high. When he went back, he happily

requested his mother to let him clean her hands. His mother felt strange, happy but with mixed

feelings, she showed her hands to the kid. The youth cleaned his mother's hands slowly. His tear fell

as he did that. It was the first time he noticed that his mother's hands were so wrinkled, and there were

so many bruises in her hands. Some bruises were so painful that his mother shivered when they were

cleaned with water.

Appreciation of Hard Work

ByNIRMALA CHHETRIER0-0196976


This was the first time the youth realized that it was this pair of hands that washed the clothes

everyday to enable him to pay the school fee. The bruises in the mother's hands were the price that

the mother had to pay for his graduation, academic excellence and his future. After finishing the

cleaning of his mother's hands, the youth quietly washed all the remaining clothes for his mother. That

night, mother and son talked for a very long time. Next morning, the youth went to the director's

office.

The Director noticed the tears in the youth's eyes, asked: "Can you tell me what have you done

and learned yesterday in your house?" The youth answered, "I cleaned my mother's hand, and also

finished cleaning all the remaining clothes".

The Director asked, "please tell me your feelings". The youth said, "Number 1, I know now what

is appreciation. Without my mother, there would not the successful me today. Number 2, By working

together and helping my mother, only I now realize how difficult and tough it is to get something done.

Number 3, I have come to appreciate the importance and value of family relationship".

The director said, "This is what I am looking for to be my manager. I want to recruit a person

who can appreciate the help of others, a person who knows the sufferings of others to get things

done, and a person who would not put money as his only goal in life. You are hired". Later on, this

young person worked very hard, and received the respect of his subordinates. Every employee

worked diligently and as a team. The company's performance improved tremendously.


GLIMPSESGLIMPSES

Students are moving in the Rice Mill areato observe production process

CA. Lekhram Nyoliwala, member of Newsletter committeeis felicitating Shri Rajesh Pd. Bhagat, Director of the Company

CA. Sanjay Das, Chairman, Siliguri branch of EICASA is standing beside Shri Bhagat.


GLIMPSESGLIMPSES

LtoR) CA. Sudipto Bhattacharjee, MOC, CA. Neeraj Harodia, Speaker, Shri Aditya Minda Vice Chairman-EICASA

and Shri Akash Agarwal Member- EICASA

Participating students


CA. Manish Goyal, Vice-Chairman, EIRC, CA. Sanjay Das,Vice-Chairman, CA. Madhukar N Hiregange, Speaker

and CA. Pankaj Kumar Maskara, Chairman.

GLIMPSESGLIMPSES

The dignitaries along with the Student Newsletter Committeemembers after publication of Students Newsletter for March'16


GLIMPSESGLIMPSES

Mock Test Programme is in Progress

The speakers of the 1st day of the session (06.04.16)

Students are viewing the online presentations

may 2016 - students newsletter -...

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