Shree Sai Baba Sansthan Trust Eligible For Income Tax Exemption On Anonymous Donations: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that Shree Sai Baba Sansthan Trust is eligible for income tax exemption on anonymous donations.

The bench of Aby T. Varkey (Judicial Member) and Om Prakash Kant (Accountant Member) has observed that there may be instances where a trust, which exists both for charitable and religious purposes, has incurred religious expenditure that is less than 5% of the total expenses of the trust. In such a case, the trust may be eligible for a certificate under Section 80G of the Income Tax Act and, at the same time, would not be liable to be taxed for the anonymous donations received by virtue of Section 115BBC(2)(b).

The assessee/respondent is a public trust that was constituted in 1953 under the name and style of ‘ShirdiSansthan of Shri Sai Baba’, registered under the Bombay Public Trust Act. The assessee is also registered under Sections 12A and 80G of the Income-tax Act, 1961.

The AO was of the view that the assessee was a charitable trust, and since the anonymous donations exceeded 5% of the total donations, they were taxable under Section 115BBC(1).

The assessee appealed before the CIT (A). The CIT(A) deleted the addition of Rs. 159,12,82,169/- made by the AO under Section 115BBC in relation to anonymous donations received by the assessee trust.

The assessee argued that its holding of a certificate under Section 80G was valid, and at the same time, since it existed both for charitable and religious purposes, it was also entitled to the benefit of exclusion set out in Section 115BBC(2)(b).

The department contended that AO had rightly held that the assessee was only a charitable organization and not both a charitable and religious organization and therefore not entitled to avail the benefit of exclusion set out in Section 115BBC(2)(b) to the assessee. The assessee trust, whose primary object was to propagate the teachings of Shri Sai Baba, did not have any religious purposes whatsoever.

The court held that the exclusion set out in Section 115BBC(2)(b) can co-exist with Section 80G. Hence, the proposition put forth by the department placing reliance on 80G registration to ipso facto deny the exclusion set out in Section 115BBC(2)(b) is held to be untenable.

Counsel For Appellant: Kishor Dhule

Counsel For Respondent: S. Ganesh

Case Title: Shree Sai Baba Sansthan Trust (Shridi) Versus DCIT (Exemptions)

Case No.: I.T.A. No.3049/Mum/2022

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