Suppose a trust / NGO is there the same is registered under section 12A / 12AA. out of total receipts of Rs. 100 for a FY say FY 2014-15 it sets apart 15 % and out of remaining surplus of Rs. 100-150= 850 it further sets apart say Rs 300 for an earmarked purpose , say construction of a building. It also places a Fixed deposit in the bank for Rs 300.
The same will be reported in the Income tax return in form 10B. The trust / Ngo is required to spend this amount in five years as per law.
During these five years the bank allows the interest on these Fixed deposit also.
The accounting treatment of this interest in the books of accounts is that , it will be added to Fixed deposit itself and FD value will be increased.
My doubts/ questions are :-
01. Will this interest be added in the form 10B / Income tax return as further set apart for building fund , if yes why ? if no why ?
CAclubindia
