Capital gain on charitable trust
This query is : Resolved
25 August 2014
there is charitable trust registered charitable trust having education as main object. the trust has acquired land in the year 2009, but did not start any education institution. now the trust wants to sell the land and market value is 400 lac ( cost of acquisition was rs 15 lacs in 2009 )
my query is
1 if the trust sells this land and does not purchase any other land , and donate the whole sale consideration to another charitable trust having same object,then whether trust will be liable to capital gain tax or not.
2 whether donation will be treated as application of funds or not
my query is
1 if the trust sells this land and does not purchase any other land , and donate the whole sale consideration to another charitable trust having same object,then whether trust will be liable to capital gain tax or not.
2 whether donation will be treated as application of funds or not
25 August 2014
2.debateable.................
25 August 2014
in case of trust , deduction of capital gain is not allowed u/s 54, becoz that section is for individual and huf. for ur information deduction from capital gain for charitbale trust is itself given in sec 11, . but my question is about application of funds .
any other expert pls reply
any other expert pls reply
25 August 2014
for ur kind information u can refer sec 11 (1A) for capital gain and if u know it then y u aksing?
only if used for acquiring another capital asset then its taken as application of income
only if used for acquiring another capital asset then its taken as application of income
25 August 2014
1. Yes trust is liable to pay CG tax since sales consideration of immovable property is not income derived from the property held under trust to which only exemption is allowed if donated to similar trust.
2. Donation dealt in the query will not be considered as application of income by virtue of the above observation.
2. Donation dealt in the query will not be considered as application of income by virtue of the above observation.
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25 August 2014
dear chackerpani ji
pls understand, my question is that if the trust donates the amount recd from sales consideration, then whethar it will be application of income under sec 11 (1)
becoz pls refer to sec 11 (1A), which deals with capital gain on trust.....
it reads as under
(1A) for the purposes of sub sec (1).....
this shows that income from sale of capital assets will be income under sec 11 (1) and if it is correct , than donation to the other charitable trust will be application of income and there should not be any tax liability on trust.
pls help me to interpret the section correctly
pls understand, my question is that if the trust donates the amount recd from sales consideration, then whethar it will be application of income under sec 11 (1)
becoz pls refer to sec 11 (1A), which deals with capital gain on trust.....
it reads as under
(1A) for the purposes of sub sec (1).....
this shows that income from sale of capital assets will be income under sec 11 (1) and if it is correct , than donation to the other charitable trust will be application of income and there should not be any tax liability on trust.
pls help me to interpret the section correctly
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25 August 2014
Sir
I have understood your question. Please read my answer no.2. May I repeat that, such donation is out side 11(1)(a) since sale value of land is not "income derived from the property held under trust".
I have understood your question. Please read my answer no.2. May I repeat that, such donation is out side 11(1)(a) since sale value of land is not "income derived from the property held under trust".
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