Whether this contribution would amount to the Application of Income?

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This discussion examines whether a corpus donation made by a trust registered under Section 12AA to an unregistered trust constitutes an 'application of income'. While donations to other registered trusts with specific corpus instructions are explicitly excluded from being treated as application of income, the situation with unregistered trusts is less clear. The current interpretation suggests that if the donation is to an unregistered entity, it might still be considered an application of income, and expert opinions are sought.

Harsh Chaudhary

Harsh Chaudhary (Querist)

20 September 2021 A Trust Registered under Section 12AA makes a corpus donation to an Unregistered Trust. Whether this contribution would amount to the Application of Income?

Explanation— Any amount credited or paid, out of income derived from property held under trust, to any other trust or institution registered under section 12AA or under section 10(23C)(iv)/(v)/(vi)/(via), being contribution with a specific direction that they shall form part of the corpus of the trust or institution, shall not be treated as application of income for charitable or religious purposes.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 September 2021 It will not be considered as application of income.

ND (Expert)

21 September 2021 I think that the exception is given to an entity registered u/s 12AA or 12 AB. Since donation has been given to an unregistered trust, it should be allowed as application of income.
Let expert also deliberate on this matter.

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