ITAT Grants Tax Exemption to Shree Sai Baba Sansthan Trust on Anonymous Donations

ITAT Grants Tax Exemption to Shree Sai Baba Sansthan Trust on Anonymous Donations

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has ruled that the Shree Sai Baba Sansthan Trust qualifies for income tax exemption on donations received anonymously.

The Aby T. Varkey (Judicial Member) and Om Prakash Kant (Accountant Member) bench has noted that there could be situations where a trust, serving both charitable and religious objectives, has religious expenses amounting to less than 5 per cent of the total trust expenditures. In such instances, the trust may qualify for a Section 80G certificate under the Income Tax Act, while also remaining exempt from taxation on anonymous donations as per Section 115BBC(2)(b).

The entity under consideration, referred to as the assessee or respondent, is a public trust that was established in 1953 under the name 'Shirdi Sansthan of Shri Sai Baba' and is duly registered under the Bombay Public Trust Act. Furthermore, the assessee has obtained registrations under Sections 12A and 80G of the Income-tax Act, 1961.

The Assessment Officer held the opinion that the assessee operated as a charitable trust, and because the anonymous donations surpassed 5 per cent of the total donations, they were subject to taxation in accordance with Section 115BBC(1).

The assessee subsequently appealed to the Commissioner of Income Tax (Appeals) [CIT (A)], who decided to eliminate the inclusion of ₹159,12,82,169 that the Assessing Officer (AO) had imposed under Section 115BBC concerning the anonymous donations received by the trust.

The assessee put forth the argument that its possession of a valid certificate under Section 80G justified its position. Furthermore, as the trust served both charitable and religious purposes, it contended that it qualified for the exclusion benefit as outlined in Section 115BBC(2)(b).

The department maintained that the Assessing Officer had correctly determined that the assessee was solely a charitable organisation and did not qualify as both a charitable and religious organisation. Consequently, they argued that the trust was not eligible to avail of the exclusion benefit specified in Section 115BBC(2)(b). According to their perspective, the assessee trust, whose primary objective was to disseminate the teachings of Shri Sai Baba, did not include any religious objectives.

The ITAT Bench concluded that the exclusion specified in Section 115BBC(2)(b) can coexist with Section 80G. Therefore, the department's argument, which relied solely on the 80G registration to automatically reject the exclusion mentioned in Section 115BBC(2)(b), was deemed unsustainable.