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THE INCOME TAX ACT, 2025
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Section 338 - Income not to be inc... Section 339 - Corpus donation... Section 340 - Deemed corpus donati...

Section 341 - Application of incom...

Section 342 - Accumulated income... Section 343 - Deemed accumulated i... Section 344 - Business undertaking... Section 345 - Restriction on comme... Section 346 - Restriction on comme... Section 347 - Books of account... Section 348 - Audit... Section 349 - Return of income... Section 350 - Permitted modes of i... Section 351 - Specified violation... Section 352 - Tax on accreted inco... Section 353 - Other violations... Section 354 - Application for appr... Section 355 - Interpretation... Section 356 - Appealable orders be... Section 357 - Appealable orders be... Section 358 - Form of appeal and l... Section 359 - Procedure in appeal... Section 360 - Powers of Joint Comm... Section 361 - Appellate Tribunal... Section 362 - Appeals to Appellate... Section 363 - Orders of Appellate ... Section 364 - Procedure of Appella... Section 365 - Appeal to High Court... Section 366 - Case before High Cou... Section 367 - Appeal to Supreme Co... Section 368 - Hearing before Supre... Section 369 - Tax to be paid irres... Section 370 - Execution for costs ... Section 371 - Amendment of assessm... Section 372 - Exclusion of time ta... Section 373 - Filing of appeal by ... ... Section 375 - Procedure when asses... Section 376 - Procedure where an i... Section 377 - Revision of orders p... Section 378 - Revision of other or... Section 379 - Dispute Resolution C... Section 380 - Interpretation... Section 381 - Board for Advance Ru... Section 382 - Vacancies, etc, not ... Section 383 - Application for adva... Section 384 - Procedure on receipt... Section 385 - Appellate authority ... Section 386 - Advance ruling to be... Section 387 - Powers of the Board ... Section 388 - Procedure of Board f... Section 389 - Appeal... Section 390 - Deduction or collect... Section 391 - Direct payment... Section 392 - Salary and accumulat... Section 393 - Tax to be deducted a... Section 394 - Collection of tax at... Section 395 - Certificates... Section 396 - Tax deducted is inco... Section 397 - Compliance and repor... Section 398 - Consequences of fail... Section 399 - Processing... Section 400 - Power of Central Gov... Section 401 - Bar against direct d... Section 402 - Interpretation... Section 403 - Liability for paymen... Section 404 - Conditions of liabil... Section 405 - Computation of advan... Section 406 - Payment of advance t... Section 407 - Payment of advance t... Section 408 - Instalments of advan... Section 409 - When assessee is dee... Section 410 - Credit for advance t... Section 411 - When tax payable and... Section 412 - Penalty payable when... Section 413 - Certificate by Tax R... Section 414 - Tax Recovery Officer... Section 415 - Stay of proceedings ... Section 416 - Other modes of recov... Section 417 - Recovery through Sta... Section 418 - Recovery of tax in p... Section 419 - Recovery of penaltie... Section 420 - Tax clearance certif... Section 421 of Income Tax Act - Re... Section 422 of Income Tax Act - Re... 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SCHEDULE XVI of Income Tax Act - P...

Section 341 - Application of income

341. Application of income.

(1) The following sums shall be allowed as application of income to a registered non-profit organisation:––

(a) any sum, other than the sum referred to in clause (b), applied by it for charitable or religious purpose in India for which it is registered where such sum is paid during the tax year provided that the provisions of section 35(b)(i) and section 36(4), (5), (6), and (7) shall apply in respect of such sum; and

(b) 85% of the sum paid by way of donation made to any other registered non-profit organisation.

(2) The application of income under sub-section (1) shall include the following:–

(a) the amount invested or deposited back during the tax year, in the modes permitted under section 350 maintained specifically for such corpus, if–

(i) such investment or depositing back is made within five years from the end of the tax year in which such application of income was made from the corpus; and

(ii) the application of income from the corpus is made after the 31st March, 2021 and there was no violation of any provision of this Part, or any corresponding provision of the Income-tax Act, 1961 with respect to such application;

(b) the amount repaid, during the tax year, towards any loan or borrowing where,–

(i) such repayment is within five years from the end of the tax year in which such application of income was made from the loan or borrowing; and

(ii) the application of income from the loan or borrowing is made after the 31st March, 2021 and there was no violation of any provision of this Part, or any corresponding provision of the Income-tax Act, 1961 with respect to such application.

(3) The following claims shall not be allowed as application of income under  sub-sections (1) and (2):–

(a) the deduction or allowance by way of depreciation or otherwise claimed in respect of an asset acquisition of which has been claimed as an application of income in the same or any other tax year under this Part or under any corresponding provision of the Income-tax Act, 1961; or

(b) a claim of set off or deduction or allowance of any excess application of any of the years preceding the tax year; or

(c) any sum paid as a corpus donation to any other registered non-profit organisation.

(4) An application from corpus, loan or borrowing, accumulated income, specified income or deemed accumulated income shall not be considered as application for the purpose of sub-sections (1) and (2).

(5) Where, in a tax year, the regular income applied by a registered non-profit organisation towards charitable or religious purposes in India, as per the provisions of sub-sections (1) to (4), is less than 85% of regular income, the shortfall, or any part thereof, at the option of the registered non-profit organisation, may be treated as deemed application.

(6) Any deemed application under sub-section (5) shall be applied by the registered non-profit organisation for its objects in India,—

(a) during the tax year in which the income is received or in the tax year immediately succeeding such tax year, where such shortfall is for the reason that the whole or any part of the income has not been received during that tax year;

(b) in the tax year immediately succeeding the tax year in which the income was derived, where such shortfall is for any other reason.

(7) The option under sub-section (5) shall be exercised on or before the due date specified in section 263(1) for furnishing the return of income for such tax year, in such form and manner, as may be prescribed.

(8) The application of income under sub-section (1) shall include deemed application under sub-section (5).

(9) Following income from capital gains shall be deemed as application of income—

(a) the capital gain from transfer of a capital asset, being property held under trust wholly for charitable or religious purposes, where the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held,—

(i) if the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain;

(ii) if only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset;

(b) the appropriate fraction of the capital gain arising from the transfer of a capital asset, being property held under trust in part for charitable or religious purposes, where the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held,—

(i) if the cost of acquisition of the new capital asset acquired is not less than the net consideration in respect of the capital asset transferred, the whole of appropriate fraction of such capital gain;

(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.

(10) For the purposes of sub-section (9),—

(a) “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 purpose;

(b) “cost of transferred asset” means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 72 and 73) of the capital asset which is subject of the transfer and the cost of any improvement thereto within the  meaning assigned to that expression in section 90(1)(b);

(c) “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.

GST Gyaan | https://gstgyaan.in | CA Rajesh Ritolia - 9350171263

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