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Donation given by a trust to another trust

Gautam Kumar (ipcc student) (67 Points)

19 June 2014

If a trust can give donations to other trusts? If yes, can the donee and the donor trust get exemption on that amount? Please note- Both the trusts have made themselves registered under 12A and 80G of Income tax

Please refer sections/circulars/rules etc to support your answer

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3 Replies

Arpit Pachisia (CA) (734 Points)
Replied 21 June 2014

Hello Gautam,

Yes a trust can donate to another trust. Provided:

i) Donation to another charity with similar objects is considered as an application of income for charitable or religious purposes.

ii) CBDT Instruction No.1132 (1978), has clarified that if the donee organisation does not utilise in the year of receipt, then the exemption to donor will not be affected.

iii) The Assessing Officer should be satisfied that the donation is a bonafide initiative and would be used by the donee for charitable purposes only. In other words, unqualified benefit to the donor is not available.

iv) High Courts have held that even inter-charity donations towards corpus is a valid application. But this contention may require re-consideration.

v) After 01.04.2002, inter-charity donation out of accumulated funds is not possible except in the case of dissolution of the donor organisation.

vi) Organisations receiving funds towards the end of the year can still make inter-charity donations by applying the option under Explanation to section 11.

Thanking you