Mumbai: hold on Shri Sai Baba Sunstein TrustShirdi, “Certainly a religious and charitable trust,” bombay high court said on tuesday Donate anonymously Funds received by the trust qualify for exemption Income Tax Act.
The trust received a total contribution of Rs 228 crore, of which Rs 159 crore were “anonymous contributions” during the assessment year 2015-16, which were taxed by the assessing officer.
The Commissioner of Income Tax (Exemption), Mumbai, is unhappy with the October 2023 order of the Income Tax Appellate Tribunal (ITAT) which held that Shri Sai Baba Sansthan Trust (Shirdi) is eligible for exemption from income tax on its anonymous donations as it is a Donate anonymously as it is a charitable and religious organization.
IT Specialist (Exempt) vs. ITAT order Appeal to the High Court. HC dismissed the appeal and upheld the ITAT order.
The question raised before the division bench by Justices Girish Kulkarni and Somashekhar Sundaresan was whether “anonymous donations” received in “Hundi” were taxable under Section 115BBC(1) of the IT Act.
The trust said it had dual religious and charitable obligations and was therefore eligible to pay under section 115 of the BBC any money received by “any trust or institution created or established solely for religious and charitable purposes”. Donations made anonymously are tax deductible. ”.
Donations were received in 2015-16 and 2017-19. The IT department said that as of 2019, the trust received a total of Rs 400 crore in donations and used only a very small amount for religious purposes and mostly for education and medical facilities.
The Assessing Officer sought to impose tax on the anonymous donation mainly on the ground that Shirdi Trust is a charity within the ambit of Section 80G of the Income Tax Act and has no religious purpose and is therefore not entitled to the excluded benefits under Section 80G of the Act Section 115BBC( 2)(b). Section 80G gives charities the benefit of deduction.
The HC held that “Section 80G implicitly recognizes trusts for carrying on religious activities.”
“The fact that a trust is both a religious trust and a charitable trust and vice versa is a widely accepted phenomenon. There are many examples of this combination. Therefore, a short-sighted reading of Section 80G is totally impermissible,” the HC said. .
The HC said that whether a trust is a charitable trust or a religious trust can only be determined based on the contents of the trust deed, articles of association, etc.
Shirdi Sansthan of Shri Sai Baba Trust was registered in 1950 under the Bombay Public Trusts Act.
The HC noted that earlier, it had handed over the management of the trust to a management committee constituted by the Charity Commissioner in view of “the substantial increase in the asset base and number of devotees visiting the assessee’s shrine and in view of the scale of religious and charitable undertakings” ”. Activities require financial pipelines as well as improvement and upliftment of devotees and society. “
“It would be too far-fetched to conclude that the assessee alone is registered under Section 80G of the Act and it cannot be a religious trustand thus does not fall within the jurisdiction of section 115BBC (2)(b) of the Act. This approach amounts to an improper interpretation of Section 80G and Section 115BBC(2)(b),” the HC held.
