Gangaram Public Charitable Trust runs a hospital, which derived income of Rs.250 lakhs, from its operational activities. Expenses incurred to earn such income are Rs.55 lakhs. Depreciation on various assets used in the hospital is Rs.15 lakhs. Out of income of Rs.250 lakhs, the amount accrued but not received as on 31-03-2005 is Rs.20 lakhs. The institution earmarked and set apart Rs.30 lakhs in March, 2005 to give as advance for a building intended to be taken on lease for expansion of the hospital, but the amount was paid on 7th April, 2005, as the lease agreement could not be signed by 31st March, 2005. The trust has got an ERP package developed and installed by an IT company during the year. The total cost to the trust on account of the ERP package was Rs.85 lakhs. Advice the trust on its total income, if the trust has incurred Rs.12 lakhs for purchase of a number of desktop and laptop computers for use in the hospital.
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TAXABILITY ON CHARITABLE TRUST
Replies (1)
Dear Sir,
I wil not dare to comment anything on the computation of Total Income since best known authors have totally different opinion of case of computation of TI in case of Trust.
But can surely say that in case of Fixed asset - Trust gets double benefit -
First, at the time of incurring expenditure/making payment it is considered as Application of Income.
Second, in the form of Depreciation.
As far as ur question regarding treatment of Rs. 12 Lakhs goes -It will be treated as application in the year of capitalization + Depreciation will also be allowed in future years.
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