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Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment year 1977-78 - Assessee-charitable institution made donation of some amounts to two trusts with condition that part of donated amount would form part of corpus of their trusts - Whether assessee-institution could be said to have applied within meaning of section 11(1)(a), to its specified charitable purposes, entire amount donated by assessee with specific direction that a part of donated amount was to form part of corpus of respective donee-trusts - Held, yes FACTS The assessee was a charitable trust registered as a society under the Societies Registration Act. During assessment year 1977-78, the assessee made donation of some amounts to two trusts for the purpose of meeting the current contingent expenses and with the condition that some of the amount donated would form part of the corpus of their trusts. The Assessing Officer held that amount which was given to two trusts to form a part of the corpus could not be considered to have been applied by the assessee-trust for charitable purposes within meaning of section 11(1)(a). When the matter came up before the Tribunal, the appeal was decided against the revenue. On reference : HELD In view of the decision of the Gujarat High Court in CIT v. Sarladevi Sarabhai Trust (No. 2) [1988] 172 ITR 698/ 40 Taxman 388, it was to be held that the assessee-institution could be said to have applied within the meaning of section 11(1)(a), to its specified charitable purposes, the entire amount gifted by the assessee to the two donee trusts with the specific direction that in each donee's case a part of said amount was to form part of the corpus of the respective donee trusts. [Para 5] CASE REVIEW CIT v. Sarladevi Sarabhai Trust (No. 2)[1988] 172 ITR 698 (Guj.) followed and relied upon. CASES REFERRED TO CIT v. Sarladevi Sarabhai Trust (No. 2) [1988] 172 ITR 698/ 40 Taxman 388 (Guj.) (para 4). R.D. Jolly and Ms. Prem Lata Bansal for the Petitioner. Devi Pal, S.K. Aggarwal and B.P. Gupta for the Respondent. JUDGMENT B.C. Patel, CJ. - The following two questions have been raised in ITR 396/85 which…

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