Tax implication on demolished capital assets, which created out of corpus funds in Charitable Trust

[PRIYAM KHAMBHATA]

Respected Sir

Charitable Trust has created capital asset of Rs.10,00,000/- from the corpus fund of Rs.10,00,000/-, both are standing in balance sheet. During the year 2024-25, charitable trust has demolished the capital assets. Now, there is no physical assets. But corpus funds and capital assets are shown in balance sheet. What would be the tax implication after demolished the capital assets, vis-à-vis corpus funds stand under liability in the balance sheet.

The Charitable Trust will plan create new asset out of regular fund received in future.

What will be the taken care by charitable trust, while filing the return of income of FY 2024-25 on demolishing the capital assets, created out of the corpus funds.

Please guide me

AI Summary

Corpus fund treatment after asset demolition: no taxable income if no proceeds realized, ensure accounting and audit disclosure.
Demolition of a capital asset funded from a corpus fund does not generate taxable income where no proceeds are realised; the asset should be written off in the accounts, corpus should continue to be shown as a liability unless formally reclassified, and audit schedules and notes must disclose the demolition and absence of realisation while future assets created from regular income will be treated as application of income under the charitable trust provisions.