Donations to Unregistered Trust Not Exempt Under Section 11(1)(a), But Various Expenses Allowed as Valid Application of Income

The ITAT dismissed the assessee's appeal regarding donations made to an unregistered trust under section 12A, affirming that exemption under section 11(1)(a) requires the recipient entity to be registered. The assessee failed to provide evidence that expenditures were for charitable purposes. However, the Tribunal allowed various expenses as valid application of income, including interest on TDS, statutory penalties, gifts, cultural expenditures, and ITC write-offs, considering them incidental to charitable activities based on precedents including CIT v. Trustee of H.E.H. the Nizam's Supplemental Religious Endowment Trust and CIT v. Surat Art Silk Cloth Manufacturers Association. The ITAT also permitted accumulation of income under section 11(2), ruling that bank deposits and lien-free FDRs qualify as investments under section 11(5). .....

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