Income Tax Act, 2025
Section 5: Ins. by Act 16 of 1972, s. 5 (w.e.f. 11973).
5. Ins. by Act 16 of 1972, s. 5 (w.e.f. 11973).
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1[(d) income in the form of voluntary contributions made with a specific direction that they shall
form part of the corpus of the trust or institution.
2[Explanation 3[1].—For the purposes of clauses (a) and (b),—
(1) in computing the 4[fifteen per cent.] of the income which may be accumulated or set apart,
any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the
income;
(2) if, in the previous year, the income applied to charitable or religious purposes in India falls
short of 5[eighty-five per cent.] of the income derived during that year from property held under trust,
or, as the case may be, held under trust in part, by any amount—
(i) for the reason that the whole or any part of the income has not been received during that
year, or
(ii) for any other reason,
then—
(a) in the case referred to in sub-clause (i), so much of the income applied to such purposes in
India during the previous year in which the income is received or during the previous year
immediately following as does not exceed the said amount, and
(b) in the case referred to in sub-clause (ii), so much of the income applied to such purposes
in India during the previous year immediately following the previous year in which the income
was derived as does not exceed the said amount,
may, at the option of the person in receipt of the income 6[(such option to be exercised before the expiry
of the time allowed under sub-section (1) of section 139 for furnishing the return of income, in such form
and manner as may be prescribed)] be deemed to be income applied to such purposes during the previous
year in which the income was derived; and the income so deemed to have been applied shall not be taken
into account in calculating the amount of income applied to such purposes, in the case referred to in subclause (i), during the previous year in which the income is received or during the previous year
immediately following, as the case may be, and, in the case referred to in sub-clause (ii), during the
previous year immediately following the previous year in which the income was derived.]
7[Explanation 2.—Any amount credited or paid, out of income referred to in clause (a) or clause (b)
read with Explanation 1, to any other trust or institution registered under section 12AA, being
contribution with a specific direction that they shall form part of the corpus of the trust or institution, shall
not be treated as application of income for charitable or religious purposes.]
8[Explanation 3.—For the purposes of determining the amount of application under clause (a) or
clause (b), the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of
section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the
head “Profits and gains of business or profession.]
9[(1A) For the purposes of sub-section (1),—
(a) where a capital asset, being property held under trust wholly for charitable or religious
purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring
another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to
have been applied to charitable or religious purposes to the extent specified hereunder, namely:—
(i) where the whole of the net consideration is utilised in acquiring the new capital asset, the
whole of such capital gain;
income in the form of voluntary contributions made with a specific direction that they shall
form part of the corpus of the trust or institution.
2[Explanation 3[1].—For the purposes of clauses
and
in computing the 4[fifteen per cent.] of the income which may be accumulated or set apart,
any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the
income;
if, in the previous year, the income applied to charitable or religious purposes in India falls
short of 5[eighty-five per cent.] of the income derived during that year from property held under trust,
or, as the case may be, held under trust in part, by any amount—
for the reason that the whole or any part of the income has not been received during that
year, or
for any other reason,
then—
in the case referred to in sub-clause
in the case referred to in sub-clause
of section 139 for furnishing the return of income, in such form
and manner as may be prescribed)] be deemed to be income applied to such purposes during the previous
year in which the income was derived; and the income so deemed to have been applied shall not be taken
into account in calculating the amount of income applied to such purposes, in the case referred to in subclause
or clause
read with Explanation 1, to any other trust or institution registered under section 12AA, being
contribution with a specific direction that they shall form part of the corpus of the trust or institution, shall
not be treated as application of income for charitable or religious purposes.]
8[Explanation 3.—For the purposes of determining the amount of application under clause
or
clause
of clause
of section 40 and sub-sections
and
of
section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the
head “Profits and gains of business or profession.]
9[
For the purposes of sub-section
where a capital asset, being property held under trust wholly for charitable or religious
purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring
another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to
have been applied to charitable or religious purposes to the extent specified hereunder, namely:—
where the whole of the net consideration is utilised in acquiring the new capital asset, the
whole of such capital gain;