Question And Answer
Subject: Charitable Trust
Querist: Manali
Answered by:
Tags: ,
Date: September 17, 2022
Query asked by Manali

Assessee is charitable trust having object of having Goshala, construction of Hostel for Girls, Meditation center and research center etc. and also constructed a temple in premises. The trust is having registration u/sec. 12AA and recognition u/Sec. 80 G of the Income Tax.  On the land own by the trust, it had developed a shopping complex and with the permission of Charity commissioner has decided to sale the shops for the purpose of using the funds for construction of cow sheds and meditation center as well as Bhojanshala etc. Till the time the sale proceeds from sale of shops are utilised for the above purpose  the funds are are utilised assessee trust has kept the same in Fixed deposits for a period more than 13 months.

1. Whether there will be tax implication under Income Tax of above in the hands of trust?

2. Whether there profit is taxable as capital gain?

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Section 2(15) of the Income-tax Act, 1961 (Act) has defined “charitable purpose”. It would be pertinent to understand which charitable purpose is undertaken by the assessee [As per its Memorandum]

If the assessee’s objects/purpose is, relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest; then the proviso to section 2(15) of the Act which restricts the receipts from an activity in the nature of trade, commerce or business to 20 per cent of gross turnover, is not attracted.

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