Section 11—Charitable Trusts—Income required to be applied for charitable purposes—Instructions Regarding

Board's Circular No. 5-P(LXX-6) of 1968, dated 19-6-1968 from CBDT Bulletin No. XIV/II/75, page 369.


It would be incorrect to assign to the word "income" used in section 11(1)(a), the same meaning as has been specifically assigned to the expression "total income" vide section 2(45).

In the case of a business undertaking held under trust, its 'income' disclosed by the account will be eligible for exemption under section 11(1). The permitted accumulation of 25 per cent will also be calculated with reference to this income.

Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word 'income' should be understood in its commercial sense i.e. book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent of the latter, if the trust is to get the full benefit of the exemption under section 11(1).

[Board's Circular No. 5-P(LXX-6) of 1968, dated 19-6-1968 from CBDT Bulletin No. XIV/II/75, page 369.]