charitable trust income

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Guest

Guest (Querist)

18 April 2010 section 11(1) provides that the income derived from a property held under trust for charitable or religious purpose is exempt if it applied it's 85% income derived from that property in charitable or religious purpose and charitable and religious purpose for the above also includes donation to a registered trust u/s12AA.
but on the other hand section 11(3) provides that no exemption is available to a trust held for religious or charitable purpose if it makes donation to any registered trust u/s 12AA.
which one to follow?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 April 2010 Donation paid to a registered trust is application of income of the donor trust under section 11(1) if not less than 85% of the donor trust's income is expensed during the year itself. If 85% is not expensed in the same year, section 11(2) can be opted to set apart the unutilized amount. In that case,out of the set apart amount any amount is paid or credited to another trust registered under section 12AA, that amount will not be treatd as income applied for charitable purpose of the donor trust.
In nut shell 11(1) and 11(2)read along with 11(3) has to be viewed separately the former for 85% application and the latter for less than 85% application.

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