Mumbai: Shri Sai Baba Sansthan Trust at Shirdi is eligible for tax exemption on anonymous donations as it is both a religious and charitable trust, the Bombay High Court ruled on Tuesday.
The court dismissed an appeal filed by the Commissioner of Income Tax (Exemptions) challenging the decision of the Income Tax Appellate Tribunal (ITAT), which held in October 2023 that the tempt trust is charitable and religious, and hence eligible for exemption from income tax on its anonymous donations.
A bench of Justices Girish Kulkarni and Somasekhar Sunderesan said: “We are of the clear opinion that the assessee certainly is a religious and charitable trust, hence, the assessee rightly and legitimately claimed an entitlement under sub-section 2(b) of Section 115BBC of the Act.”
Under Section 115BBC(1) of the Income Tax Act, a charitable institution was liable to pay tax on anonymous donations.
I-T Department contended that till 2019, the trust received overall donations of over Rs400 crore, and a miniscule of it, Rs2.30 crore, was spent for religious purpose. Whereas major expenses are for educational institutions, hospitals and medical facilities, which shows it is only a charitable trust.
As per the assessing officer of the I-T department, between the years 2015 and 2019, the trust received huge amounts as anonymous donations. This amount cannot be exempted from being taxed. Since the trust is registered under section 80G of the Income Tax Act, it gets exemption on the ground that it is a charitable trust.
However, the tax department contended that the same benefit can be availed only when its religious expenses do not exceed 5%. The I-T has claimed that the trust is underplaying the expenses on religious purposes to avoid the flouting of 80G.
However, the trust’s advocate contended that it has charitable and religious obligations, hence it cannot be said that it is either charitable or religious trust only. Finding fault with the tax department’s assessment of terming it only as a charitable trust, the trust said that devotees from different communities visit its temple and they perform all the rituals along with daily puja. Hence, it was incorrect to say that it was not a religious trust, it contended.
