Q. Treatment of donation receipt for contruction of Class rooms

Question

Section 8 Company has received contribution of CSR from company of Rs.25 lacs. This funds are utlised by section 8 Company for construction of Class rooms in rural area.

Will this funds will be considered as Corpus Fund and Corresponding Class rooms as Assets in books of Section 8 Company.

or

It will be considered as voluntary contribution and expensed out for charitable purpose relfecting in Income and Expenditure account.

Answer 1

It would be through income & expenses, no capital asset to be recognised.