Taxation of trust
This query is : Open
14 June 2013
The assessee is a society registered under Indian Societies Act, 1860 formed for charitable purpose & accordingly registered under sec. 12A of Income Tax Act.
During the A.Y 2013-14, the assessee has sold its land, receiving Net Sales consideration of Rs. 1 crore.
The cost of land purchased in F.Y 2001-02 was Rs. 2 Lac.
During the year assessee incurred Rs. 40 L as land development expenses.
These expenses were incurred to construct boundary wall and filling up the land sold during the year.
The society donated Rs. 50 Lac to a separate trust having charitable object of providing medical facilities.
The donee trust is also registered u/s 12A and 80 G of Income Tax Act 1961.
Please advice, how the sale consideration will be treated.
During the A.Y 2013-14, the assessee has sold its land, receiving Net Sales consideration of Rs. 1 crore.
The cost of land purchased in F.Y 2001-02 was Rs. 2 Lac.
During the year assessee incurred Rs. 40 L as land development expenses.
These expenses were incurred to construct boundary wall and filling up the land sold during the year.
The society donated Rs. 50 Lac to a separate trust having charitable object of providing medical facilities.
The donee trust is also registered u/s 12A and 80 G of Income Tax Act 1961.
Please advice, how the sale consideration will be treated.
17 June 2013
The sales consideration is Capital Gains.
U/s 11(1A)capital gain must be applied for charitable purpose in order to be exempt from income tax u/s 11.15% can be accumulated or set apart for charitable purpose.The balance should be utilised for charitable purpose.
Applied to charitable purpose includes donations to charitable trust registered under section 12AA.
It also includes,depreciation,revenue expenses,purchase of capital assets,repayment of loans taken for the purchase of capital assets.
U/s 11(1A)capital gain must be applied for charitable purpose in order to be exempt from income tax u/s 11.15% can be accumulated or set apart for charitable purpose.The balance should be utilised for charitable purpose.
Applied to charitable purpose includes donations to charitable trust registered under section 12AA.
It also includes,depreciation,revenue expenses,purchase of capital assets,repayment of loans taken for the purchase of capital assets.
19 June 2013
In support of your answer please sight case laws and also elaborate your views..
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