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Sponsered trust

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Querist : Anonymous

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Querist : Anonymous (Querist)
17 September 2011
A company opens a trust. Expenses of such trust is borne by the company. Such trust is meant for promoting the industry , of which such company is a part.

Can such trust apply for 12A/80G. If it gets it anyway, does the expenses borne by company of such trust suddenly reduce to 50% allowable? Also is payment to such trust is revenue expenditure?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
21 September 2011 1. Yes, the trust can apply for registration u/s 12A & 80G.

2. The expenses borne by company will be treated as donation in the books of the trust.

The company can claim the same as deduction u/s 80G. However, only 50% will be allowed as deduction.

3. For income tax purpose such expense is not allowed while computing business income but allowed as deduction from total income.
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