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The Commissioner of Income Tax (Appeals) ruled in favour of the Trust. However, the Revenue Department filed an appeal before the Income Tax Appellate Tribunal (ITAT), which was rejected. Following this, the Commissioner approached the high court
The Bombay High Court recently held that the Saibaba Sanstha Trust is eligible for exemption on anonymous donations under the Income Tax Act.
A division bench of the High Court, comprising Justice GS Kulkarni and Justice Somsekhar Sundaresan, was hearing an appeal filed by the Commissioner of Income Tax against the Income Tax Appellate Tribunal order.
According to the Act, anonymous donations are to be taxed in certain cases. However, the Act provides for exemption if the trust operates for religious or charitable purposes.
The Commissioner sought to levy tax on Rs. 159 crore received through cash box donations for the assessment years 2015-16, 2017-18, and 2018-19.
The Saibaba Sanstha Trust contended that part of the income was spent on religious activities, while the rest was used for charitable purposes. The Trust also argued that its primary activity was to maintain the temple and provide facilities to devotees, which is considered charitable.
The Commissioner of Income Tax (Appeals) ruled in favour of the Trust. However, the Revenue Department filed an appeal before the Income Tax Appellate Tribunal (ITAT), which was rejected. Following this, the Commissioner approached the high court.
The high court in its order upheld the order of ITAT while noting that the reading of Section 80G it would exclude religious and charitable entities, would not be the correct reading of the said provision.
“In any event, in our opinion, such reading of Section 80G that it would exclude religious and charitable entities, would not be the correct reading of the said provision. As fairly stated on behalf of the Revenue, there is no bar for a charitable trust also to be a religious trust. In fact, a trust being both religious or charitable or vise-versa is well-accepted phenomena. There can be many examples of such combination. For such reason, a myopic reading of Section 80G would be wholly impermissible,” the order reads.
Case title: Commissioner of Income Tax vs Shree Sai Baba Sansthan Trust
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