As per Section 11(1A), if any capital Assets of trust which is WHOLLY for charitable or religious purpose is transferred; & with the Net Consideration received by the transfer of such assets is invested in another Capital Asset then; the capital gain on transfer shall be DEEMED TO BE APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES.
Now; One thing must be kept in mind the Capital Gain would be exempt only to the extent the Net Consideration has been invested in new assets.
To make it more simple. I would like to give you just 2 simple aspects;
1. If whole of the Net Consideration is utilised in new asset = THEN WHOLE CAPITAL GAIN WOULD BE EXEMPT.
2. if part of Net Consideration is utilised in new asset = Then Capital Gain would be exempt as Follows;
[The Amount Utilised in new Assets - The Cost of Old Assets (which is Transferred)]
and the capital gain on excess amount would be taxable normally.
zing zang is an individual manufacturing a product. he has T/O of 9850000. which is inclusive of amt of 25 lakhs recd through electronic clearing syste. the accounts are not properly maintained and you have advised him to pay tax u/s 44 AD . on how much income he will pay tax for AY 2018-19?