30 July 2013
A public trust has received donations with specific directions i.e to purchase gym equipments.Donations received are credited to a seperate a/c,i.e eqpmnt fund u/h other earmarked funds.The said amount is also utilised for the purchase of gym eqpmnts. I just want to confirm whether the income arising from this invstmnt,i.e,gym fees will be credited to the fund or it will be shown as income in the income & expenditure a/c.
30 July 2013
Here there are two aspects of your question
1) The donation received by you for the purpose of the Gym is taxable or not. If you treat this as general donation then it is but if you treat this as corpus of the trust then it is not taxable.
2) Regular income from the investment is your activities but now it is to be considered whether this is in the nature of charity or commercial activities. This cannot be treated as charity as you are collecting money for uses and therefore, it is not exempted income.
31 July 2013
Thank you, sir...Thanks a lot. There's one more thing to ask,i.e,under what head will be the Gym Equipments shown in the balance sheet format of a public trust.I suppose there is only one head,i.e,Furniture & Fixtures. Will it be right doing this and at what rate depreciation will be allowed? are the rates same as that we use in Income tax.Please guide on this matter.
CAclubindia
