Existing scheme of section 11 as well as section 10(23C) provides exemption in respect of income when it is applied to acquire a capital asset. Subsequently, while computing the income for purposes of these sections, notional deduction by way of depreciation etc. is claimed and such amount of notional deduction remains to be applied for charitable purpose. Therefore, double benefit is claimed by the trusts and institutions under the existing law. The provisions need to be rationalised to ensure that double benefit is not claimed and such notional amount does not get excluded from the condition of application of income for charitable purpose.

In view of the above, it is also proposed to amend the Act to provide that under section 11 and section 10(23C), income for the purposes of application shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under these sections in the same or any other previous year.

These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years.

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Category : Income Tax (26760)
Type : Articles (16256)
Tags : Budget (1951) Budget 2014 (172)

0 responses to “Budget 2014 – Loophole allowing Double deduction to Charitable Trust Related to Capital Assets and Depreciation plugged”

  1. s sudarshana says:

    Appreciate CBDT for plugging the loophole. It is not uncommon that some payments qualify under two Acts; but no one can claim under both Heads. It is like showing negative income tax!
    Mr Rao may enlighten the Readers about 2nd proviso to section 44AB of IT act 2001

  2. B S K RAO says:

    SIGNIFICANT AMENDMENT, APPRECIATE CBDT FOR PLUGGING THE LOOPHOLE. SIMILARLY WHY CAN’T CBDT LOOK AT WRONG AMENDMENT CARRIED OUT IN 2ND PROVISO TO SECTION 44AB OF INCOME-TAX ACT IN FINANCE ACT, 2001.

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