S. 115BBC : Anonymous donations – Determination of tax in certain cases-Charitable Trust – Anonymous donations received in the Hundi cannot be taxed under Section 115BBC(1) of the Act – Order of Tribunal is affirmed – No substantial question of law. [S. 10(23C)(v), 11, 12, 12A , 80G (5), 115BBC(2)(b), 260A]
The Assessing Officer held that the assessee trust had received aggregate donations of Rs.228.25 crores, out of which, Rs.159.12 crores were by way of “hundi collections”, which were ‘anonymous donations’. The Assessing Officer held that the assessee 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. On appeal the CIT(A) deleted the addition. Tribunal also affirmed the order of the CIT(A). On appeal by the Revenue, the Court held that the provisions of Section 80G cannot be intermixed, from what is provided by Section 115BBC(2)(b) of the Act. Both the provisions stand compartmentalized and are independent of each other. It would be too far-fetch to reach to a conclusion that merely the assessee being registered under Section 80G of the Act, it cannot be a religious trust, so as to fall outside the purview of Section 115BBC (2)(b) of the Act. Such an approach would amount to an inappropriate reading of the provisions of Section 80G as also Section 115BBC(2)(b). The very foundation of the operation and effect of Section 115BBC(2)(b) is a conclusive ascertainment, and a factual determination of a trust being religious and charitable as ascertained from the contents of the trust deed. Once such requirement is satisfied, any anonymous donation received by such trust would be eligible / entitled to the benefit of an exemption from tax, by the applicability of sub-section 2(b) of Section 115BBC. On the other hand, Section 80G certainly lays down quantum test that is the amounts spent for its purposes to ascertain whether the charitable trust is eligible for registration or not, which is clear from the provisions of Section 80G (5B) of the Act. Honourable Court relied on the decision in K. Ravindranathan Nair v. CIT (2001) 1 SCC 135 and affirmed the order of the Tribunal as there is no substantial question of law. (ITA NO. 598 of 2024 / ITA (L) NO. 14650 of 2024/ ITA (L) NO. 14652of 20024 dt. 9-10-2024) (AY. 2015-16, 2016-17, 2017-18)
CIT(E) v. Shree Sai Baba Sansthan Trust – Shirdi (Bom)(HC) www.itatonline.org
[Coram : Hon’ble Shri Justice G. S. Kulkarni & Hon’ble Shri Justice Somasekhar Sundaresan]