Capital gains deemed to be applied for charitable/religious purposes - Section 11(1A) - Income Tax - Ready Reckoner - Income Tax

Capital gains deemed to be applied for charitable/religious purposes - Section 11(1A) Transfer of a capital assets held under the trust wholly for charitable or religious purposes [ Section 11(1A)(a) ] Where a capital asset, is transferred and the whole or any part of the net consideration is utilized for acquiring another capital asset then following capital gain shall be exempt: i. where the whole of the net consideration is utilized in acquiring the new capital asset, the whole of such capital gain; ii. where only a part of the net consideration is utilized for acquiring the new capital asset, then the following capital gains is exempt. Cost of the new asset minus Cost of the transferred asset Transfer of a capital asset held under trust in part only for charitable and religious purposes [ Section 11(1A)(b) ] Where a capital asset has been transferred, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes. ( i ) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain will be deemed to have been so applied ( ii ) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset. Meaning of specified term Appropriate fraction means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes. Cost of the transferred asset means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any improvement thereto within the meaning assigned to that expression in sub-clause ( b ) of clause ( 1 ) of section 55. Net consideration means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.