A charitable trust aquired an asset in the year 2002 for Rs. 9 lacs. A donor has paid the cost of the asset to the the Trust by way of cheque in the year 2002. In that year, i.e 2002, the amount received from the donor, for the purpose of asset, has not been treated as income and kept under the head "Contribution for Asset" under Liability side. During the year 2008 the said asset has been sold by the trust received some Rs. 2 lacs. the cost of the asset is Rs. 9 lacs (Non Depreciable Asset). Now, how can i calculate the capital gain? what is my sales consideration? What will be the treatment for the money received from the donor for the purpose of the assset which showing as "Contribution for Asset" under the Liability side.
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Capital Gain of Charitable Trust
Replies (6)
i thnk,, u shud dispose off the item "cont for asset" from the liab side. since the said asset is in not existence.
further, the income of rs. 2 lakhs shud be credited to the income & exp. a/c or p/l whatsoever be.
the loss of rs 7 lacs shud be dispossed off as a capital loss .
hi, how can we dispose of the laibility? at the time of receipt, trust has not been credited the receipt to income. without paying a single money fom the trust account for the Asset, how can we book a of Rs. 7 lacs
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| Originally posted by :T K Ganesan | ||
| " | A charitable trust aquired an asset in the year 2002 for Rs. 9 lacs. A donor has paid the cost of the asset to the the Trust by way of cheque in the year 2002. In that year, i.e 2002, the amount received from the donor, for the purpose of asset, has not been treated as income and kept under the head "Contribution for Asset" under Liability side. During the year 2008 the said asset has been sold by the trust received some Rs. 2 lacs. the cost of the asset is Rs. 9 lacs (Non Depreciable Asset). Now, how can i calculate the capital gain? what is my sales consideration? What will be the treatment for the money received from the donor for the purpose of the assset which showing as "Contribution for Asset" under the Liability side. | " |
the whole 9lacs should b credited 2 d income side being dat d income of d trust not stated earlier and contribution 2 asset in liability side should b written off completely......cost of acquisition being nil.....2lacs is d long term capital gain 4 d charitable trust......
Contribution for asset was income of the year in which it was recd...........since the same was also applied for charitable purpose(asset acquired for charitable purpose) there is no taxable amount in that year . You may directly transfer the amount to General Reserve or Capital Fund or whatever name you have kept for corpus of the trust. Now book the loss on sale of asset to Income and Expenditure Account.
As you said the amount was donated to the trust and then trust puchased the porperty. it becomes property the trust and profit/loss on the same can be booked.
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