2025 (11) TMI 1584

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.... A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal: "1. The Learned Assessing Officer has erred in law as well as on the facts of the case of the Appellant by disallowing legitimate claim, rightly and validly allowable as application of income towards the object of the Appellant Trust for deduction of Rs. 1,17,80,300/- being donation to other charitable Trusts having similar objects as claimed in the return of income filed by the Appellant. The learned CIT(Appeals) erred in confirming the same. 2. The Learned Assessing Officer has erred in law as well as on the facts of the case by holding that the deduction of Rs. 1,17,80,300/- is not allowable as the same has not been incurred in accordance with....

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....ection 11 of the Act clearly state that any income applied outside the approved objects or credited to another trust in the absence of such enabling object cannot be treated as having been applied for charitable purposes. The assessee submitted that despite the object being struck off, the donation served the broader charitable purposes of the trust and the assessee placed reliance on several judicial precedents to support its claim. However, the Commissioner (Appeals) was of the view that the case laws cited by the appellant were distinguishable and not applicable to the assessee's set of facts, as none of them dealt with the issue of application of income outside the authorized objects of the trust. Moreover, CIT(Appeals) observed that th....

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.... the objects of the trust and therefore could not qualify as application of income under Section 11 of the Act. Having considered the rival submissions and on examination of the assessment record, we are unable to sustain the view taken by the lower authorities. The crux of the dispute lies in whether the donation made by the appellant to other charitable institutions, which are also registered under Section 12AA, constitutes valid application of income under Section 11(1)(a) of the Act. We note that the Hon'ble Delhi High Court in DIT (Exemption) v. Bagri Foundation [(2012) 344 ITR 193 (Delhi)] has held that a donation made by a registered charitable trust to another registered charitable trust constitutes application of income for charita....

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....AA (now 12AB) or to other specified entities under section 10(23C) of the Act. If such a payment is made, it will not be considered as application of income for charitable or religious purposes, whether during the period of accumulation or after it. However, there is no such prohibition on inter-charity donations made from the current year's income or from accumulations up to 15% under section 11(1)(a) of the Act. It is also well settled that a charitable trust is entitled to apply its income by way of donation to other trusts carrying on similar charitable activities, so long as the receiving trust is duly registered under Section 12AA of the Act. Even assuming that the specific object of donation to other institutions was omitted from the....