Charitable trust - Depreciation on fixed assets
This query is : Resolved
21 May 2008
As per law if any charitable trust made some capital expenditure for charitable purpose, it will be treated as sufficient compliance for application of income for charitable purpose as per senction 11 of the Income Tax Act.
My question is whether the depreciation provided on that assets would also be treated as application of income for charitable porpose.
and if yes, would it not be a case of double befefit of an expenditure.
My question is whether the depreciation provided on that assets would also be treated as application of income for charitable porpose.
and if yes, would it not be a case of double befefit of an expenditure.
21 May 2008
No only the actual cash flow will be considered and not the depreciation.
21 May 2008
If only the actual cash flow would be considered what about the expenses booked during the current year but paid in the next year.
21 May 2008
Booked but not paid expenditure will not be considered. But you have time till you file the return to spend it
18 August 2011
There is a difference of opinion from Mr Srini's reply.
1.As per the existing provisions of I.T Act and Appropriate Accounting Standards we have to follow only Accrual Basis for the Trust also. After Implementation of ITC only Cash Basis for Trusts shall be followed.
2. All accrued Expenses which may be paid before filig returns can be termed as Application of Income.
3. The Department allowing both Capital Expenses , Depreciation as Application Of Income. Eventhough it seems to be double deduction - for purely charitable trusts -the depreciation allowance is for the purpose of augmentation of corpus purposes. The Double Deduction matter is pending in many Tribunals and Courts and most of the decissions are allowing Double Deduction.
4. After introduction of ITC the problem may not arise, since we have to follow only Cash Basis Accounting for Trusts.
5. Even in that case we should have accrual basis also, if we need a True & Fair view Balance Sheet.for accounting purposes.
1.As per the existing provisions of I.T Act and Appropriate Accounting Standards we have to follow only Accrual Basis for the Trust also. After Implementation of ITC only Cash Basis for Trusts shall be followed.
2. All accrued Expenses which may be paid before filig returns can be termed as Application of Income.
3. The Department allowing both Capital Expenses , Depreciation as Application Of Income. Eventhough it seems to be double deduction - for purely charitable trusts -the depreciation allowance is for the purpose of augmentation of corpus purposes. The Double Deduction matter is pending in many Tribunals and Courts and most of the decissions are allowing Double Deduction.
4. After introduction of ITC the problem may not arise, since we have to follow only Cash Basis Accounting for Trusts.
5. Even in that case we should have accrual basis also, if we need a True & Fair view Balance Sheet.for accounting purposes.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax on capital gains revoked us 54f
- Should I include march foreign salary received in April in my income for FY 2023-24?
- HSN Details in IFF/GSTR-1 & in GSTR 9
- Refund of AY 22-23
- TDR receipts for agreement holder
- Inventory of finished goods
- Applicability of Ind As to associate of associate
- GST APPLICABILITY ON POLLUTION CHECK SERVICE
- Company Incorporation - CA and directors signing from different states
- Confusion around Form 26QB fields
- Refund AY 2012-13 and 2013-14
- DIRECT TAX CODE 2025
- MODEL FILLED AUDIT REPORT FOR TRUSTS IN FORM 10B
- 115TD on cancellation of 12A 80G Registration
- MIS MATCH OF INVOICE NUMBER
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- CASE INTIMATION OF LIABILITY UNDER SECTION 73(5)(Rule 142(1A)
Trending Online Classes
CAclubindia
