HC says Shree Sai Baba Trust religious, charitable body, junks tax dept plea
This story was originally published at 14:56 IST on 9 October 2024
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NEW DELHI - The Bombay High Court has rejected Commissioner of Income Tax (Exemptions), Mumbai's taxation on Shree Sai Baba Sansthan Trust – Shirdi, saying it is a religious and charitable trust, and hence rightly and legitimately claimed an entitlement. The Trust has claimed an entitlement under sub-section 2(b) of Section 115BBC of the Income Tax Act, 1961.
The high court was hearing a case to decide whether the anonymous donations received by the Trust were liable to be taxed under Section 115BBC(1) of the Act. The case pertains to assessment years 2015-16, 2017-18 and 2018-19, respectively. The court, referring to facts for assessment year 2015-16, noted that the Trust had filed its return of income on Dec. 1, 2015, declaring "nil" total taxable income. The Trust's case was selected for regular scrutiny. Accordingly, notices under section 143(2) and 142(1) of the Act were issued by the Deputy Commissioner of Income Tax (Exemptions), Mumbai, to the Trust.
The assessing officer noted that during the financial year, the assessee Trust had received aggregate donations of INR 2.28 billion, out of which INR 1.59 billion were by way of "hundi collections", which were 'anonymous donations'. The assessing officer, hence, called upon the assessee to explain as to why the provisions of Section 115BBC of the Act should not be applied.
The officer said that Shree Sai Baba Trust being a charitable Trust, and as the anonymous donations exceeded 5% of the total donations, the same were taxable under section 115BBC(1) of the Act. The assessing officer was also of the view that the status of Shree Sai Baba Trust as a Trust existed solely for charitable purposes, which was evident from the certificate obtained under section 80G of the Act. Accordingly, the Assessing Officer taxed the anonymous donations of INR 1.59 billion under the provisions of Section 115BBC of the Act.
Challenging the taxation, Shree Sai Baba Trust said its objects and activities were predominantly charitable and it also served religious purposes, which overlapped the charitable purpose. The Trust said that since it was existing both for charitable and religious purposes, it was entitled to avail benefits of exclusion, set out in Section 115BBC(2)(b) of the Act.
The Commissioner of Income-tax (Appeals) and the Income Tax Appellate Authority agreed with Shree Sai Baba Trust and rejected the Commissioner of Income Tax (Exemptions)'s taxation. Challenging this, the Commissioner of Income Tax (Exemptions) moved the high court. End
Reported by Surya Tripathi
Edited by Vandana Hingorani
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