Income Tax Act

Official PDF pages 436–440

SOURCE PDF PAGE 436
Sl.
No.
Case   Specified date   Due date for the
payment of tax on
accreted income
A   B   C   D
( i )   ( ii )
objects same
or   similar
to it but the
said   merg -
er   does   not
fulfil   such
conditions,
as   may   be
prescribed;
or
( c )   r e g i s t e r e d
n o n - p r o f i t
organisation
that does not
have same or
similar   ob -
jects.
9.   T h e   s p e c i f i e d
person has failed
to transfer upon
dissolution,   all
its assets to any
other   registered
non-profit organ -
i s a t i o n   w i t h i n
twelve   months
from the end of the
month   in   which
the   dissolution
takes place.
The date of disso -
lution.
The date on which
such   period   of
twelve months ex -
pires.
(5) The payment of tax on the accreted income by the specified person under this
section shall be deemed as the final payment of tax in respect of the said income
a nd no further credit therefor shall be claimed by, or any deduction be allowed to,
the specified person or any other person in respect of the amount of tax so paid
under any other provision of this Act.
(6) Where the specified person, or the principal officer or trustee of such specified
person, fails to pay the whole or any part of the tax on the accreted income within
the time allowed under sub-section (4), such specified person, principal officer or
trustee shall be liable to pay simple interest, computed as per the following formula:—
I = 1% of (T × P)
where,—

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SOURCE PDF PAGE 437
I =   interest;
T =   tax on accreted income; and
P =   number of months beginning on the date immediately after the last
date on which such tax was payable and ending with the date on
which the tax is actually paid including part thereof.
(7) All the provisions of this Act shall apply for the collection and recovery of
income-tax in respect of the amount of tax payable by the specified person,
principal officer or trustee and the following persons shall be deemed to be assessee
in default:—
( a )   the specified person and principal officer or the trustee of such specified
person;
( b )   the person to whom any asset forming part of the computation of accret -
ed income under sub-section (2) has been transferred, where the tax on
accreted income is payable under the cases specified in sub-section (4)
(Table: Sl. No. 9).
(8) Subject to the provisions of sub-section (7), the liability of the person referred
to in clause ( b ) of the said sub-section shall be limited to the extent to which the
asset received by him is capable of meeting the liability.
Other violations.
353.   (1) Where any registered non-profit organisation—
( a )   fails to maintain books of account under section 347; or
( b )   fails to get books of account audited under section 348; or
( c )   fails to furnish its return of income under section 349; or
( d )   carrying out advancement of any other object of general public utility,
carries out any commercial activity in contravention of the provisions
of section 346,
during any tax year, its regular income for such tax year as reduced by the expen -
diture referred to in sub-section (3) shall be taxable regular income which shall be
chargeable to tax as per the provisions of section 334.
(2)   Irrespective of the provisions of section 338, any   specified income and
residual income of the registered non-profit organisation, which is not included in
sub-section (1) shall also be chargeable to tax under the provisions of section 334.
(3) The expenditure referred to in sub-section (1) shall be the expenditure incurred
in India (other than capital expenditure) for the objects of the registered non-profit
organisation, subject to the fulfilment of the following conditions:—
( a )   such expenditure shall be incurred in India;
( b )   such expenditure shall be for the objects of the registered non-profit
organisation;
( c )   such expenditure is not made from the corpus standing to the credit
of the registered non-profit organisation as on the end of the tax year
immediately   preceding   the   tax   year   for   which   income   is   being
computed;

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SOURCE PDF PAGE 438
( d )   such expenditure is not out of any loan or borrowing;
( e )   the claim of depreciation is not in respect of an asset, acquisition of which
has been claimed as application of income, in the same or any other tax
year;
( f )   such expenditure is not in the form of any contribution or donation to
any person;
( g )   such expenditure is not on account of a payment or aggregate of payments
made to a person in contravention to the provisions of section 36(4), (5),
(6) and (7); and
( h )   such payment is allowable under section 35( b )( i ).
(4) For the purposes of this section, no set off or deduction or allowance of any
application or expenditure other than those referred to in sub-section (3) shall be
allowed.
6. —Approval for purpose of deduction under section 133(1)( b )( ii )
Application for approval for purpose of section 133(1)( b )( ii ).
354.   (1) A registered non-profit organisation or a person referred to in Schedule
VII (Table: Sl. No. 1)   may, for the purpose of section 133(1)( b )( ii ), make an
application for approval in such form and manner, as may be prescribed, to the
Principal Commissioner or Commissioner, subject to the following conditions:—
( a )   it is not expressed to be for the benefit of any particular religious
community or caste;
( b )   it is established in India for a charitable purpose and does not incur any
expenditure of an amount exceeding 5% of its total income during a tax
year which is of a religious nature;
( c )   the instrument under which it is constituted does not, or the rules
governing it do not, contain any provision for the transfer at any time
of the whole or any part of its assets for any purpose other than a
charitable purpose;
( d )   it maintains regular accounts of its receipts and expenditure;
( e )   it prepares such statement for such period, as may be prescribed, and
deliver or cause to be delivered to the prescribed income-tax authority
or the person authorised by such authority such statement in such form
and verified in such manner and setting forth such particulars and within
such time, as may be prescribed;
( f )   it delivers to the said prescribed authority, a correction statement for
rectification of any mistake or to add, delete or update the information
furnished in the statement delivered under clause ( e ) in such form and
verified in such manner, as may be prescribed; and
( g )   it furnishes a certificate to the donor specifying the amount of donation
within such period from the date of receipt of the donation containing
the requisite particulars in manner, as may be prescribed.

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(2) The application under sub-section (1) shall be made in respect of the cases
referred to in column B of the Table below within the time limit provided in column
C of the said Table and the Principal Commissioner or Commissioner, on receipt of
such application, shall follow the procedure provided in sub-sections (3) and (4),
and shall pass an order in writing within the time limit provided in column D and
approval, if granted, shall be valid for a period provided in column E of the said Table:
TABLE
Sl.
No.
Case   Time limit for
furnishing appli -
cation
Time limit for
passing the
order
Validity of
approval
A   B   C   D   E
1.   Where the activities
of   the   applicant   have
not commenced.
At any time during
the tax year from
which approval is
sought.
O n e   m o n t h
from the end
of the month
in which appli -
cation is made.
Three tax years
commencing
from   the   tax
year in which
such   applica -
tion is made.
2.   Where   the   activi -
ties of the applicant
have commenced.
At any time during
the tax year from
which approval is
sought.
S i x   m o n t h s
from the end
of the quarter
in which appli -
cation is made.
Five tax years
commencing
from   the   tax
year in which
such   applica -
tion is made.
3.   Where the applicant
has provisional ap -
proval and activities
have commenced.
Within six months
of the commence -
ment of activities.
S i x   m o n t h s
from the end
of the quarter
in which appli -
cation is made.
Five tax years
commencing
from   the   tax
year in which
such   applica -
tion is made.
4.   Where   the   provi -
sional approval of
the applicant is due
to expire and activ -
ities have not com -
menced.
At least six months
prior to the expiry
of the provisional
approval.
S i x   m o n t h s
from the end
of the quarter
in which appli -
cation is made.
Five tax years
following   the
t a x   y e a r   i n
w h i c h   s u c h
application is
made.
5.   Where   the   period
for approval of a reg -
istered   non-profit
organisation is due
to expire.
At least six months
prior to the expiry
of the said approv -
al.
S i x   m o n t h s
from the end
of the quarter
in which appli -
cation is made.
Five tax years
following   the
t a x   y e a r   i n
w h i c h   s u c h
application is
made.

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SOURCE PDF PAGE 440
(3) Where an application has been made in any of the cases specified under
sub-section (2) (Table: Sl. Nos. 2 to 5), the Principal Commissioner or Commissioner
shall call for such documents or information or make such inquiries as he thinks
necessary in order to satisfy himself about the genuineness of the activities, and
compliance of such requirements of any other law in force, as are material for the
purposes of achieving its objects, and—
( a )   if he is so satisfied about the objects and the genuineness of the activities
and compliance of such requirements of any other law in force, he shall
pass an order in writing approving it; or
( b )   if he is not so satisfied, after affording a reasonable opportunity of
being heard,—
( i )   shall pass an order in writing rejecting the application, where the
application was made in any of the cases specified in sub-section
(2) (Table: Sl. No. 2); and
( ii )   in any other case, shall pass an order in writing rejecting the
application and also cancelling the approval,
and send a copy of the order to the applicant and the Assessing Officer.
(4) Where an application has been made in any of the cases specified in sub-section
(2) (Table: Sl. No. 1), the Principal Commissioner or Commissioner shall pass an
order granting provisional approval.
69
[Merger of registered non-profit organisation in certain cases.
354A.   Where any registered non-profit organisation merges with any other registered
non-profit organisation, the provisions of section 352 shall not apply if, —
( a )   the other registered non-profit organisation has same or similar objects;
and
( b )   the said merger fulfils such conditions as may be prescribed. ]
7. —Interpretation
Interpretation.
355.   For the purposes of this Part,—
( a )   “anonymous donation” means any voluntary contribution referred to in
section 2( 49 )( c ), where a person receiving such contribution does not
maintain a record of the identity indicating the name and address of the
person making such contribution and such other particulars, as may be
prescribed;
( b )   “approval” means an approval under the second proviso to section 80G(5)
of the Income-tax Act, 1961 (43 of 1961) or section 354;
( c )   “cancellation” includes withdrawal;
( d )   “donation” means any voluntary contribution received by a registered
non-profit organisation from any person;
69.   Inserted by the Finance Act, 2026, w.e.f.   1-4-2026 .