Capital Gain of Charitable Trust

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T K Ganesan

Articled Clerk

45 Points Joined February 2009

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 2002, the amount received from the donor, for the purpose of asset, has not been treated as income instead credited 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.

Replies (2)

Piyush

Student CA Final

24 Points Joined March 2007

Hi Ganeshan

in the year 2002, the trust had utilised the amount of Rs. 9lacs in full and it will be treated as utilisation of fund. if fund is utilised for charitable prupose, question of taxability does not arise. So for 2002 no taxability. in the year 2008 also there will not be any tax liability if at least 85% of Rs. 2lacs is utilised in the year of sale or next year. so if trust has utilised at least 1.7 lacs, there will be nil tax liability.

No treatment is to be done for money originally received (Rs. 9lacs) from the doner, as it was already utilised for the purpose mentioned while receiving the donation. it already becomes the part of copus. so not to worry about it.

T K Ganesan

Articled Clerk

45 Points Joined February 2009

Thak you Piyush. am clear. so i cant reduce cost of aquisition against current years sales consideration of Rs. 2. lacs as the same has been adjusted as utilisation of fund i r o 2002 receipt????