If a registered charitable trust gives donation to another charitable trust which is not registered u/s 12 of the Income Tax Act wouldl it be regarded as application of income for the donor trust ?
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Exemption U/S 11
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Hi pankaj
It has been held in various cases that donation made by one Charitable Organisation to another shall be considered as application of income for the objectives of the organisation provided the donee organisation also has objects similar to the object donor organisation. (trust may be registered or unregistered)
Donation should be made out of current income and not out of accumulated funds. The Finance Act, 2003 has inserted another proviso to sub-section (3A) of section 11 which provides that inter-charity donation out of accumulated funds will be permissible in case of dissolution of a Charitable Organisation. This amendment has been made to reduce the hardship of Charitable Organisations on the brink of dissolution.
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