Mumbai: The Bombay High Court will decide whether Shri Sai Baba Sansthan Trust at Shirdi, which is both a charitable and a religious trust, is eligible for exemption from income tax on its anonymous donations.
The issue came before the high court after the Income Tax (I-T) Department challenged the October 25, 2023 order of an Income Tax Appellate Tribunal (ITAT) which held that since the trust is both charitable and religious, it is eligible for exemption from income tax on its anonymous donations.
A bench of Justices Girish Kulkarni and Somasekhar Sunderesan reserved the order in I-T’s appeal on Wednesday.
I-T Department’s advocate submitted 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.
The judges, however, remarked that the trust was receiving donations because of the faith of the devotees. “I have read somewhere that Sai Baba was the incarnation of God Dattatreya and thus people worship him. So all these donations, be it anonymous or not, but yes, all these donations are because of the faith,” Justice Kulkarni observed.
The court also pointed out an earlier order of the HC which dealt with an issue related to the management of the Trust and had said specifically that “State should at least spare the religious trusts…”
Justice Kulkarni said: “See there is also a judicial pronouncement that this Trust is a religious one so how the Department can now argue this isn't? Daily so many people keep visiting the temple and donate money. How can you control their sentiments? What if a donor, who is a devotee, says he does not want to be identified because he's doing some religious work by donating some amount. Even so many businessmen donate some amounts annually to various shrines including the present one. You cannot control the sentiments of the devotees.”
The trust’s advocate on the other hand 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.
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, the I-T contended. 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.
