Trust return

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2014 Dear Sir,

what is the - Option to exercise before due date to AO ? while filling return of trust claiming u/s 11

Nikhil Kaushik

Nikhil Kaushik (Expert)

18 September 2014 that is the option to carry forward the unutilized funds to future periods.

Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2014 dear Sir, THANKS FOR REPLYING

our trust have fund -30,09,108
building fund- 7685276
other fund -1840105

so we, should "yes" in that option (option to exercise in writing before due date to AO )

FROM WHEN THAT OPTION IS APPLIED ?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

02 August 2025 You're asking about the **"Option to exercise in writing before due date to AO"** under **Section 11(1)(2)** of the Income Tax Act — specifically when a **charitable trust** is **unable to apply 85%** of its income during the financial year and wants to **carry it forward for application in a later year**.

Let me explain clearly:

---

## ✅ What Is This “Option” Under Section 11?

If your trust cannot apply **85% of its income** for charitable purposes **during the year**, it can **still claim exemption** **if**:

1. You **exercise an option in writing** to apply the income **in the next financial year**, and
2. You file this option **before the due date** of filing the return (usually **30th September** for trusts audited under 44AB).

This is governed by:

* **Explanation 2 to Section 11(1)**
* **Form 9A** – the form used to exercise this option (online filing is mandatory from A.Y. 2016–17 onward)

---

## ✅ From When Does This Option Apply?

The option under Section 11(1)(2) has **always existed** but was **codified more clearly** by Explanation 2 in later amendments (especially in 2002 and then updated in 2015).

### Key Timeline:

| Year | Applicability |
| ------------------------ | ----------------------------------------------------------------- |
| Before A.Y. 2015–16 | Option could be filed manually before due date |
| From A.Y. 2016–17 onward | **Form 9A mandatory**, filed **online** before due date of return |

---

## ✅ What You Should Do in Your Case (A.Y. 2014–15):

You mentioned:

* Trust income: ₹30,09,108
* Building fund: ₹76,85,276
* Other funds: ₹18,40,105

So, if you couldn’t spend **85%** of ₹30,09,108 during FY 2013–14, then you:

### ✅ Must Answer "Yes" to the Option:

> **“Whether option under Explanation to section 11(1) has been exercised in writing before the due date?”** → **Yes**

Then **attach a physical letter** to the **Assessing Officer**, stating:

* Amount unspent
* Reason
* That you will apply it in the next year
* Dated before or on **30th September 2014** (for A.Y. 2014–15)

No need for Form 9A online for this year — manual written intimation is enough.

---

## 📌 Format of Written Option Letter (For A.Y. 2014–15):

If you need a format, here's a summary:

```
To
The Assessing Officer,
[Jurisdiction],
Income Tax Department

Subject: Exercise of Option under Explanation to Section 11(1) – A.Y. 2014–15

Respected Sir/Madam,

We hereby exercise the option under Explanation to Section 11(1) of the Income Tax Act, 1961, to apply the unutilized income of ₹ [amount] in the subsequent year(s), as the same could not be applied during the current year due to [reason – e.g., project delay, fund earmarked for specific construction, etc.].

This option is being submitted within the prescribed time i.e., before the due date of return filing under Section 139(1).

Thanking You,
Yours faithfully,
Trustee
[Name of Trust]
[Date – on or before 30.09.2014]
```

---

## ✅ Summary:

| Question | Answer |
| --------------------------------------- | ------------------------------------------------------------------------ |
| What is “Option to AO before due date”? | It’s to carry forward unspent 85% income |
| From when is it applicable? | Always existed; formal online Form 9A from A.Y. 2016–17 |
| Should you answer “Yes” in return? | ✅ Yes, if you’ve opted to carry forward unspent income |
| What must you submit? | Written letter to AO before 30.09.2014 (manual allowed for A.Y. 2014–15) |

---

Would you like a **print-ready version** of the option letter (PDF/Word format)?

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