The Assessee is a registered trust incorporated for educational and other anciliary objects. The trust for FY 20-21 has accumulated 85% of the income and intends to apply the same in the subsequent years within a period of 5 years.

Now, in FY 21-22, the Assessee Trust intends to incur expenditure on repairs and maintenance of a school that forms part of another Trust.

The payment will be made by the Assessee trust to the contractor directly, no amount shall be paid by the Assessee trust to the other Trust. The invoice will be raised by the contractor in the name of the Assessee Trust.

The question that arises now is whether this transaction falls under the ambit of application of accumulated income? And whether the provisions of explanation to sections 11(2) will be applicable?

As per the explanation to sections 11(2) any amount credited or paid to any fund/trust shall not be treated as application of income for charitable or religious purposes.

Therfeore, in the instant case since, the Assessee Trust has not paid/credited any amount to any Trust/Fund can it be concluded that the payment made by the Assessee Trust to the contractor for repair and maintenace of a school belonging to other trust, be claimed as application of accumulated income ?