Section 115TD of the Act provides for accreted income of a trust being taxed, where
the trust
(a) is converted into a form which is not eligible for grant of registration u/s.12AA
or 12AB or 10(23C) or
(b) has merged with another entity which is not having similar objects and is not
registered u/s.12AA or 12AB or 10(23C) or
(c) failed to transfer upon dissolution to another trust having similar objects
enjoying registration u/s.12AA or 12AB or 10(23C), within 12 months from the
end of the month in which dissolution takes place
Section 115TD also provides that the trust or institution shall be deemed to have
been converted into another form not eligible for registration if
(1) the registration is cancelled
(2) has not applied for fresh registration u/s.12AA or 12AB or 10(23C) or where
such fresh application is rejected or
(3) the trust fails to make an application u/s.10(23C) or u/s.12A within the time
stipulated
One can therefore see that if a trust or institution loses its registration or fails to
register, the provisions of section 115TD gets triggered. Is it time for a one time
option being given to withdraw from the exemption which is otherwise available by
having its registration cancelled without 115TD being attracted? This would be all the
more relevant since the conditions for claim of exemption particularly the rules
governing registration and the timeline for various compliances becoming stricter
which an average trust may find difficult to comply with. Such trusts would be happier
paying the required taxes on surplus rather than going through the rigours of
continuing to claim exemption. But for this, the rigours of section 115TD will have to
be atleast temporarily relaxed.
