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2018 (12) TMI 222 - HC - Income TaxExemption u/s 11 - donations being made out of its corpus by the Trust - diversion of income involving infringement of provisions of Section 13 of the Act was made out - Held that:- Gujarat High Court in CIT Vs. Sarladevi Sarabhia Trust No.2 (1988 (3) TMI 53 - GUJARAT HIGH COURT) where on almost identical facts, by relying upon the CBDT instruction No.1132 dated 5th January, 1978 issued by the CBDT that utilization of the funds by making donations to another Trust would amount to application of income within the meaning of Section 11 of the Act. No case of diversion of income involving infringement of provisions of Section 13 of the Act was made out. The grievance of the Revenue is that the donations are being made out of its corpus by the Trust. Thus, the allowance on account of donation should be restricted only to the income for the subject assessment year i.e. ₹ 52.70 lakhs. There is no dispute that the donation made to other Charitable Trust would be an application of income within the meaning of Section 11 of the Act. The only grievance of the Revenue is that the donation has come out of its corpus. CIT(A) found that the corpus itself was accumulation of 15% income from year to year. This view has been upheld by the Tribunal. No statutory provision is shown to us which prohibits the Trust from donating a part of its corpus to another Trust having similar objects for utilization to fulfill its charitable objects.
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