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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

Under section 337 of the Income-tax Act, 2025, a registered non-profit organisation holds an asset acquired in tax year 2027-28 that is not held in the forms or modes specified in Schedule XVI even after one year from the end of that tax year. Which statement is correct?

The fair market value of the asset is specified income in the tax year immediately following expiry of the one-year period from the end of the acquisition year. Neither cost nor the acquisition year applies, and holding it for objects does not exempt it.

  1. AFair market value is specified income in the tax year immediately following expiry of that one-year periodCorrect
  2. BFair market value is specified income in 2027-28, the year of acquisition
  3. COnly the cost of acquisition is specified income, in 2027-28
  4. DNo amount is taxed if the asset is retained for its objects

Explanation

Item 12 treats the fair market value of such an asset as specified income in the tax year immediately following expiry of the limitation period (one year from the end of the acquisition year). It is neither cost nor the acquisition year.

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