TMI BlogCapital gain arising to charitable trust - Whether it could be regarded as having been applied to charitable purposes if trust invests amount received from sale of capital asset in acquiring another capital asset for trust - Section 11(1) as amended by the Finance Act, 1970X X X X Extracts X X X X X X X X Extracts X X X X ..... held under trust for charitable or religious purposes is exempt from income-tax only to the extent such income is actually applied to such purposes during the previous year itself or within three months next following. As income includes capital gains a charitable or religious trust will forfeit exemption from income-tax in respect of its income by way of capital gains unless such income is also applied to the purposes of the trust during the period referred to above. In this connection, a question has been raised whether the capital gains arising to a charitable or religious trust from the sale of capital assets belonging to it would be regarded as having been applied to charitable or religious purposes, if the trust invests the amount rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year, in order to be entitled to exemption on the entire amount of its income. In this connection, a question was raised during the third meeting on the Direct Taxes Advisory Committee whether the capital gains arising to a trust from the sale of a capital asset belonging to it would be regarded as having been applied for the purposes of the trust, if the trust invested the amount received from the sale of the capital asset, including the capital gains realised, in acquiring another capital asset for the trust. This point has been considered and it has been decided that where a religious or charitable trust transfers a capital asset forming part of the corpus of its property solely with a view to acquiring another capital asset for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not, therefore, be able to comply with the requirements referred to above. In respect of the assessment year 1962-63, instructions were issued in the Boards Circular No. 17(LXX-4), dated 2-6-1962 [Clarification 6 to Sl. No. 165 on p. 1.499 post] that the first requirement should be regarded as having been fulfilled if the accumulated money were invested in the specified securities before September 30,1962, and similarly the second requirement should be regarded as having been fulfilled if copies of the relevant accounts along with details of investment and utilisation of the accumulated money were furnished to the Income-tax Officer concerned before September 30,1962. Having regard to the difficulty mentioned above, it has now been decide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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