Charitable trust

This query is : Resolved

Akbar Ali (Querist)
Follow

05 September 2009 Dear Sir

Please solve my following query
I want to know regarding religious/charitable trust. Can we capitalised expenses made for making new 1 floor building. As i heard that in charitable trust we cannot capitalised capital expenditure we have to claim whole expenditure in income and expenditure account. So could you please guide me regarding these. If we cannot capitalised then in which head we should make an entry

ARUN KUMAR V

ARUN KUMAR V (Expert)
Follow

05 September 2009 Under sec 11,12 of IT Act 85% of Income should be expended for charitable/Religious purposes. For that you can take both capital and revenue expenditure. But when you praparing Income & Ex A/C, it should be made in accordance with usual accounting priciples.So asset and Liabilities will go to B/S and Income and expenditure recognised in I & E account.
While making computation you can claim both revenue and capital ependiture for 85% ceiling.
You should be little cautious when taking depreciation, because u might have got benefit of capital expenditure while you acquired the asset. Both views are there for depreciation.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok