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Will Non-Claim Of Cenvat Credit By A Charitable Trust Result In Withdrawal Of S. 11 Exemption?

QUERY: (a) As we are charitable organisation / trust involved in education related activities. We are paying service tax on the fees collected from students. However, no Cenvat on input services is available while making payment of service tax as the head of organisation is of strong opinion that it will invite unnecessary audit queries and attention from the service tax department. The Cenvat credit for F.Y. 2012-13 works out to around Rs. 20,00,000/-. Section 13 of the Income- tax Act, 1961 provides for protection of property of the Trust and hence not claiming Cenvat of Rs. 20,00,000/- is a violation of the section?

(b) In charitable organisation, the trustees have given full authority to Director General and consequently Director General is also very vigilant in sanctioning any payments. Out of abandon caution and moral, ethical responsibility, Director General would like that payment made to him or his relative should be approved by the trustees. Whether his contention is right?

(c) A charitable trust involved in medical related facilities have received part income tax refund from department and that also without interest. The head of the organization is not in favour of writing a letter asking for part refund as well as interest on refund fearing any harassment from Income-tax Department. Whether such stand would invite section 13 of the Income tax Act, 1961?
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In view of the above, if CENVAT credit of Rs. 20/- lakhs or part of the income tax refund or interest on the said refund not claimed by the Trust, the trustee/s would be liable under section 36A of the Bombay Public Trust Act, 1950 for not protecting the property of the trust. However, the trust can not lose the exemption under section 3 of the Act as the amount is receivable from the Government

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