Do Provisions Of S.68 Of Income-Tax Act, 1961 Apply To Donations Received By A Charitable Trust?

ISSUE FOR CONSIDERATION

Charitable or religious trusts are generally funded by donations (voluntary contributions) received from donors. Such donations are taxable as income (subject to exemption in respect of application and accumulation), as they fall within the definition of income under s.2(24)(iia) of the Income Tax Act, 1961 (“the Act”), which reads as under:

“voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) or by any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) of clause (23C) of section 10 or by an electoral trust.”

Such donations are also regarded as income from property held for charitable or religious purposes by virtue of the provisions of section 12(1). Section 12(1) reads as under:

“Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholl