Income shall not include :
a) which applied for Specified* purpose and 15% of Income accumulated from such property.
b) where part of income from charitable or religious trust ,registered prior to this Act, such part of income applied for purpose and 15% of part of income accumulated.
c) where income applied outside India for charitable purpose for International welfare where India is interested and, (Trust Reg. After 1/04/1952) for religious purpose applied outside India (Trust Reg. before 1/4/1952)
d) income from voluntary contribution with specific direction.
Note : 15% of income under clause.(a) shall not include corpus receipt and where if short fall in application of fund in specified* purpose due to :
– part of income not received: such must applied for specified* in a year of receipt.
– For any other reason: such income must applied for specified* purpose in the year of receipt and succeeding year of the year in which receipt.
For above short fall and postponement of income Assessee has to opt this option before filing ITR 139(1).
Note : Income of trust donated to another trust registered U/s 10(23C), 12AA and 12AB shall not be treated as application of Income. However, where trust applied it’s income as per provision, is dissolved, the A.o may allow this transfer as application of income.
Capital Asset Transfer:
a) If net consideration applied, wholly capital gain would be exempt.
b) Part of net consideration applied, C.G= cost of new asset – Cost of t/f asset.
Note : 85% of income not utilize in any previous year, can be accumulated up to 5 year and investing in specified manner* before intimating to A.O in specified manner.
Note : if any part of income accumulated is not applied in the specified period that amount of income would be subject to tax in previous year in which it originally suppose to applied.
Specified manner*: Accumulated income can be invested in following manner:
Saving certificate , UTI, post office saving , banks and PSU etc.