Assessment of Charitable Trust

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Shankar Rao (Querist)
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11 August 2010 Dear all
The Charitable trust running education institution has earned a net income of Rs.8,50,000 and the same has utilised for construction of Building during same Year

While filing Income tax return (ITR-VII)under which head I have to show this income of Rs.8,50,000 and how to claim exemption.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 August 2010 In the case of charitable trust, registered under section 12A of the IT Act,1961, unles they do business, the income is to be offered under the head "income from other sources". In that case income has to be computed, irrespective of the result in I & E account, in such a manner that the gross receipt has to be taken in the computation statement. From that, the expenses incurred for charitable purposes has to be summed up from the I & E account and shoud be deducted from the gross receipt under the head line" revenue expenses incurred for charitable purposes under section 11" of the said act. Like wise the capital expenditure, in your case the building construction expenses among others,can also be deducted from the gross receipt under the head line " capital expenditure incureed for charitable purposes covered under section 11". The resultant figure, in simple terms, is the taxable income of the trust.

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