IN THE appeals by the Commissioner of Income Tax (Exemptions), Mumbai against Shree Sai Baba Sansthan Trust, Shirdi, decided on October 8, 2024, Justice G S Kulkarni and Justice Somasekhar Sundresan, at the Bombay High Court in Mumbai , have held that the HC is of the clear opinion that that the assessee Trust certainly is a religious and charitable trust, hence the assessee has rightly and legitimately claimed an entitlement under sub-section 2(b) of Section 115 BBC of the Income Tax Act, 1961. Such entitlement of the assessee is rightly recognised by the CIT (Appeals) and the Income-Tax Appellate Tribunal.

 

The HC has stated further, that in its view that the finding reached by the CIT(A) and as confirmed by the Tribunal is correct in law and facts. Thus, no substantial question of law has arisen for consideration in these appeals. There is no merit in these appeals, hence being rejected. Through these appeals, the Revenue had assailed a common order of October 25, 2023 passed by the Tribunal whereby the Tribunal had rejected the Revenue’s appeals against the order passed by the CIT(A). The issue which fell for consideration in these appeals was whether the “anonymous donations” received in the “Hundi”, which are substantial amounts, are liable to be taxed under section 115BBC(1) of the Act.

 

The substantial question of law as raised in these proceedings revolves around the applicability of the provisions of section 115 BBC (1) of the Act? Relevant to these appeals are the assessment years 2015-16, 2017-18 and 2018-19 respectively. Section 115BBC of the Income Tax Act is applied by the Revenue to tax the anonymous donations received by the assessee. Sub-section (1) of section 115BBC ordains that where the total income of an assessee being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iii-ad) or sub-clause (vi) or any hospital or other institution referred to the sub-clause (iii-ae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-section (v) of clause (23-C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any ‘anonymous donation’, the Income Tax payable shall be the aggregate of the amount of Income Tax calculated at the rate of 30% on the calculated anonymous donations received in excess of the higher of 5% of the total donations received by the assessee or Rs one Lakh. It further provides that the amount of Income Tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received in excess of the amount referred to in sub-clause (A)of sub-clause (B) of clause (i), as the case may be. Further, sub-section (2) of section 115BBC is an exception to sub-section (1) which provides that sub-section (1)shall not apply to any anonymous donation received by any trust or institution created or established wholly for religious purposes. A trust whether is charitable or religious can only be determined from the ingredients of trust deed, bye-laws etc., and by examining these documents and recording a finding on such documents, a finding of fact, it is necessarily an exercise to record a finding of fact. Thus, the court felt substance in the contention as urged on behalf of the assessee that to draw a conclusion on the nature and the activities of the Trust, would purely be a question of fact. Insofar as the assessee/trust is concerned, it claimed an exemption under sub-section (2)(b) of section 115BBC on the ground that it is a trust established for religious and charitable purposes. In this context, the Tribunal has examined the relevant documents namely, the trust deed as also the Sai Baba Trust Act. The Tribunal has recorded that initially, the Shirdi Sansthan of Shri Sai Baba Trust was registered under the Bombay Public Trust Act in the year 1950.

 

Further having regard to the enormous increase in the assets’ base and number of devotees visiting the assessee’s Shrine and considering the magnitude of the religious and charitable activities so as to necessitate the channelisation of funds and for betterment and upliftment of devotees and society. The HC vested the management of the Trust in the Board of Management constituted by the Charity Commissioner, Government of Maharashtra. The Scheme for management and administration of the assessee/Trust was framed in Suit No. 3457 of 1960 which mentions that the trust shall be essentially a public religious institution, with charitable basis enabling the Trust to set apart funds for different charitable purposes. The Tribunal has also recorded that State legislation Sai Baba Trust Act was promulgated on August 17, 2004 and a public trust of Shirdi Sansthan of “Shri Sai Baba” was reconstituted as “Shri Sai Baba Sansthan Trust, namely the assessee.

 

The Tribunal has observed that amongst the several objects of the assessee, one of the objects has been associated with the activities of worship of Shri Sai Baba, spreading spirituality, teachings, offering prayers, celebrating religious festivals and ceremonies, taking care of devotees etc. The Tribunal has noted that section 21 of the Sai Baba Trust Act has also provided for maintenance of temple, conduct and performance of rituals and ceremonies therein and facilities for providing ‘darshan’ of devotee, offering of prayers and performing the religious festivals. In regard to the applicability of the statutory provisions as discussed to the facts of this case, it is the assertion of the Revenue that section 115BBC(1) read with section 80G of the Act is applicable, and a contrary assertion on the part of the assessee is to the effect that sub-section 2(b) of section 115BBC is applicable whereby the provisions of sub-section(1) of section 115BBC would not apply to the anonymous donations received by the assessee. The HC was required to note the applicability of these provisions in the context of the object and purpose of the trust along with the statutory recognition of such objects in the legislation-Sai Baba Trust Act as promulgated by the State Legislature. The Tribunal, on appreciation of materials has recorded a finding that the assessee trust is regarded as a religious place in Maharashtra for tourists and public at large.

 

The assessee is a religious and charitable trust. The Tribunal’s finding is that the exclusion set out in section 115BBC (2) can co-exist with section 80G of the Act. Hence, the proposition put forth by the Revenue placing reliance on 80G registration to ipso facto deny the exclusion set out in section 115BBC(2)(b) of the Act has been held to be untenable. Once a requirement of a trust being religious and charitable 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. In this respect the Tribunal is the final fact-finding authority.