Is capital exp allowed as application of funds for trusts

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This query is : Resolved

Kaustubh (Querist)

30 March 2010 Public charitable trusts are required to apply at least 85% of their income in a year towards public or charitable purposes.

Is capital expense (purchase of computer) considered as application of income for this purpose?

Whether advance paid for purchase of asset considered as application of income for this purpose? For eg, Trust pays advance of full amount for purchase of asset on 30/03/2010 , however the asset is installed on 10/04/2010, will this advance be considered as application of income and included in calculating the 85% ?amount.?

Padmaja CA

Padmaja CA (Expert)

31 March 2010 Yes Purchase of computer for the use of trust also application of income and advance to fixed assets is surely application for 31 march

Kaustubh

Kaustubh (Querist)

31 March 2010 Thanks a lot for your reply. Had another query in relation to this..

What are the implication if in a year 85% of the proceeds are not applied for charitable purposes?
Can the unutilised balnce be carried forward to the next year without being taxed. Would highly appreciate if you could quote the section as well.....

Thanks in advance for your help

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