Section 342 — Accumulated income

(1) A registered non-profit organisation may accumulate or set apart any part
of its regular income during any tax year by furnishing a statement to the
Assessing Officer in such form and manner, as may be prescribed, on or before the
due date specified in section 263(1) for furnishing the return of income for such tax
year stating therein the purpose and period, not exceeding five years, for which the
income is being accumulated or set apart.
(2) The amount credited or paid by a registered non-profit organisation to any other
registered non-profit organisation out of its income accumulated or set apart, shall
not be treated as application of income.
(3) The period during which the income is not applied for the purpose for which
it is so accumulated or set apart pursuant to an order or injunction of any court,
shall be excluded from the said period of five years.
(4) The income accumulated or set apart under sub-section (1) shall be invested
or deposited in any of the modes permitted under section 350, or applied for the
purposes as stated in the prescribed form referred to in sub-section (1).
(5) The registered non-profit organisation may, for the change of purpose for which
income has been accumulated or set apart, make an application to the Assessing
Officer, in such form and manner, as may be prescribed.
(6) The Assessing Officer may, on an application made under sub-section (5) and
subject to sub-section (2), allow the registered non-profit organisation to apply its
income for such other charitable or religious purposes in India which are in con -
formity with its objects.
(7) Where a registered non-profit organisation is dissolved, the Assessing Officer
may, on an application made by such registered non-profit organisation in such form
and manner, as may be prescribed, allow application of such income to be made
to any other registered non-profit organisation for the year in which it is dissolved.