TaxTMI 
TaxTMI 
2024 (10) TMI 546
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....al amounts, are liable to be taxed under Section 115BBC (1) of the Act? 3. Relevant to these appeals, the assessment years in question are assessment years 2015-16, 2017-18 and 2018-19 respectively. 4. The substantial questions of law as raised in the present proceedings, revolves around the applicability of the provisions of Section 115BBC (1) of the Act in respect of "anonymous donations" received by the respondent/assessee. Such donations were sought to be taxed primarily on the ground that the respondent is a charitable institution falling within the purview of Section 80G of the Act. The decision of the Assessing Officer to tax the anonymous donations under Section 115BBC (1) on the premise of the assessee also being registered under the provisions of Section 80G of the Act, was negatived by the CIT(A), which has been confirmed by the Tribunal, by the impugned order. Against such current findings of the appellate forums, the present appeal has been filed. 5. Before we refer to the questions of law as raised in the memo of appeal, the relevant facts can be noted: 6. The respondent/assessee is a public trust which was initially constituted in the year 1953 when it wa....
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....a solely for charitable purposes and which did not have any religious activities. This more particularly referring to Explanation 3 below Section 80G defining 'charitable purpose', to not include any purpose, the whole or substantially the whole of which, was religious in nature. The Assessing Officer also referring to sub-section (5) of Section 80G, stated that the eligible institution or trust cannot be for the benefit of any particular religious community or exists for any purpose other than charitable purposes. The Assessing Officer was of the view that as the assessee was a charitable organisation, registered under section 80G of the Act, having no religious purpose, hence the assessee was not entitled to avail the benefit of exclusion as set out in Section 115BBC (2) (b) of the Act. Accordingly, the Assessing Officer taxed the anonymous donations of Rs. 159.12 crores under the provisions of Section 115BBC of the Act. 10. It needs to be stated that the assessee in its several replies/explanations placed before the Assessing Officer, asserted that the assessee was both a religious as well as charitable trust, and hence it fell within the exception set out in Section 115BBC (....
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....ial showed that the assessee did not exist wholly or substantially for religious purposes and that the assessee was in compliance with the conditions as set out in Section 80G (5B) of the Act. According to the assessee, holding of a certificate under Section 80G of the Act was valid and at the same time, since it was existing both for charitable and religious purposes, the assessee was entitled to avail benefits of exclusion, set out in Section 115BBC (2) (b) of the Act. 12. In the assessment proceedings held on the above backdrop, the Assessing Officer did not agree with the case of the assessee in passing an assessment order. He was of the view that a trust can be registered under Section 80G of the Act only if it is purely charitable in nature and that even after incorporation of sub-section (5B) in the said provision, Section 80G applied only to charitable organisations, although some expenditure incurred on religious activities, was allowed. In the assessment order the Assessing Officer observed that the exclusion as set out in Section 115BBC (2) (b) of the Act, was meant for the trust established for both charitable and religious purposes, which would suggest that at least....
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....ions and the deletion of such amounts by the CIT(A), was invalid and contrary to the provisions of Section 115BBC (1) read with Section 80G of the Act. 15. The Tribunal, inter alia considering the trust deed as also the Act of the State Legislature, the 'Sai Baba Trust Act', confirmed the findings of the CIT(A) that the assessee was a charitable and religious trust. It is against such orders passed by the Tribunal, the Revenue is in appeal in the present proceedings. 16. The Revenue has raised for consideration of the Court the following questions of law:- "(a) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in holding that the assessee trust as an organization established for both charitable and religious purposes, when the facts of the case and the objects of the trust clearly show that the assessee is a charitable organization and therefore the anonymous donations received by it shall be taxed as per the provisions of section 115BBC of the Income-tax Act? b) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in interpreting that the charitable activities are a part of religio....
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.... be availed only by a charitable trust, registered under Section 80G, hence, once such registration under Section 80G subsisted, the provisions of Section 115 BBC (1) had became applicable and consequently anonymous donations were required to be brought to tax. 18. It is next submitted by Mr. Gulabani that the observations of the Assessing Officer insofar as the total expenses incurred by the assessee towards religious purposes were only 0.49% of the total receipts, itself was indicative of the fact that the assessee was not a religious trust and it was a charitable trust considering the ambit of Section 80G (5B) of the Act. It is next submitted that the Assessing Officer had correctly observed that these expenses were considered in view of the wide meaning, which was required to be attributed to "religion" as asserted by the assessee before the Assessing Officer. It is submitted that the expenses of the assessee on religious activities would have been definitely more than 5% and there were meager expenses for religious purposes as shown in the books of account of the assessee. The assessee thus could not satisfy the test that it was both a charitable and religious trust. In fac....
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....clusion, that the case of the assessee would fall within the provisions of Section 115BBC (1) of the Act, as there was no scope for the Assessing Officer to intermix the applicability of these provisions which were in fact required to be independently construed. Mr. Ganesh would next submit that considering the clear purport of sub-section (2) (b) of Section 115BBC, what has correctly weighed with the CIT(A) and the Tribunal is to the effect that an exception to sub-section (1) is clearly carved out, to any trust or institution "created or established" wholly for religious and charitable purposes, which would take within its ambit anonymous donations, as it would not fall under the remaining part of sub-section (2) (b) of Section 115BBC. It is hence his submission that there is no error of law, whatsoever, in the Tribunal reaching to a conclusion that the case of the assessee fell under sub-section (2) (b) of Section 115BBC and the anonymous donation cannot be taxed under sub-section (1) of the said provision. It is submitted that the provisions of Section 115BBC is required to be considered as an object oriented provision and not expenditure oriented provision. It is next submitte....
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....e where the aggregate of the sums specified in sub-section (2) includes any sum or sums of the nature specified in sub-clause (i) or in sub-clause (iiia) or in sub-clause (iiiaa) or in sub-clause (iiiab) or in sub-clause (iiib) or in sub-clause (iiie) or in sub-clause (iiif) or in sub-clause (iiig) or in sub-clause (iiiga) or sub-clause (iiih) or sub-clause (iiiha) or sub-clause (iiihb) or sub-clause (iiihc) or sub-clause (iiihd) or sub-clause (iiihe) or sub-clause (iiihf) or sub-clause (iiihg) or sub-clause (iiihh) or sub-clause (iiihi) or sub-clause (iiihj) or sub-clause (iiihk) or sub-clause (iiihl) or sub-clause (iiihm) or in sub-clause (vii) of clause (a) or in clause (c) or in clause (d) thereof, an amount equal to the whole of the sum or, as the case may be, sums of such nature plus fifty per cent of the balance of such aggregate; and (ii) in any other case, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2). (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) any sums paid by the assessee in the previous year as donations to- (i) the National Defence Fund set up by the ....
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....s any income by way of any anonymous donation, the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated at the rate of thirty per cent. on the aggregate of anonymous donations received in excess of the higher of the following, namely:- (A) five per cent of the total donations received by the assessee; or (B) one lakh rupees, and (ii) 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) or sub-clause (B) of clause (i), as the case may be. (2) The provisions of sub-section (1) shall not apply to any anonymous donation received by- (a) any trust or institution created or established wholly for religious purposes; (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution. (3....
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....hould be a separate law to re-constitute the said Trust and to provide for the efficient management of the same by a Committee directly under the supervision and control of the State Government to enable the Trust to carry out its charitable activities more effectively and efficiently and to be able to give more facilities for its devotees and to undertake wider welfare activities from its surplus funds for the general public ; it is hereby enacted in the Fifty-fifth Year of the Republic of India as follows :- 1. ..... 2. .... (a) .... (b) .... (c) "Bhakta Mandal" means the Shree Sai Baba Bhakta Mandal referred and recognised under section 19 ; ....... (j) "Sansthan" means Shree Shirdi Sai Baba Sansthan belonging to the Shirdi Sai Baba Temple Trust and popularly known as the Shree Shirdi Sai Baba Sansthan Trust of Shirdi ; (k) "Sansthan Trust" or "Trust" means the Shri Sai Baba Sansthan Trust (Shirdi) constituted under section 3 ; (m) words or expressions used in this Act, but not defined, shall have the meanings, respectively assigned to them in the "Bombay Public Trusts Act, 1950". Section 1....
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.... for the matters connected therewith including provisions for payment of sitting fees, and travelling and daily allowances to the members of such sub-committee who are other than the Committee members, and may also appoint a Chartered Accountant as recommended by the Scrutiny Committee to assist it in its functions ; and may also appoint a sub-committee of not less than five of its members from the field of specialized or professional knowledge to monitor and report to the Committee the proper, full and timely utilization of the financial assistance granted by the Sansthan Trust to any Trust under sub-section (2) of section 21, and report any misutilisation of financial assistance by such trust to the Charity Commissioner, for necessary disciplinary or penal action under the *Bombay Public Trusts Act, 1950 ; (k) acquire or purchases lands or buildings required for the purpose of development and carrying out schemes of the Trust and to carry out the objectives or purposes of the Trust ; (l) disseminate and propagate useful knowledge about the life, activities, Leelas and teachings of Shri Sai Baba, and maintain and expand the library of Shri Sai literature ; ....
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.... force ; (i) development of the properties of the Trust and acquisition of movable or immovable properties for the purposes of the Trust ; (j) construction and maintenance of rest houses for the accommodation and use of the devotees ; and (k) for fulfilling the duties specified in sub-section (2) of section 17. (1A) Subject to the provisions of sub-section (1), the Trust may, with the previous sanction of the State Government, and subject to such maximum limit and such terms and conditions, as may be specified by the State Government by an order published in the Official Gazette, give grant-in-aid to the Government Departments, Government Corporations, Government Companies or Government undertakings for providing or augmenting infrastructural facilities such as bus terminals, railway station, airport and similar infrastructural facilities, for the convenience of the devotees. (2) After making adequate provisions for the purposes referred to in sub-sections (1) and (1A), if there is a surplus in the Trust Fund, a portion of the surplus being not more than thirty per cent. of the distributable income of the trust, may be utilised and expen....
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....er designation known and used as a place of public religious worship and dedicated to or for the benefit of or used as of right by the Hindu Community or any section thereof as a place of public religious worship. (emphasis supplied) 24. At the outset, it needs to be observed that the basis, on which the Assessing Officer proceeded to tax the anonymous donations received by the assessee, is by applying the provisions of Section 80G of the Act which pertains to deduction in respect of donations to certain funds, charitable institutions, etc. It is not in dispute that the assessee is registered for the donors to be benefited under Section 80G qua the donations which would be made to the assessee. Section 80G confers a benefit of deduction being allowed in respect of donations inter alia to charitable institutions. Thus, the assessee by virtue of its establishment/registration as a public trust, which also provides for charitable objects, has obtained registration under Section 80G of the Act. The object of Section 80G is not only to provide a benefit to tax payers in availing deduction of the charity they would make, by offering donations to charitable institutions, but a....
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....ts and purpose of existence of such trusts. Any pedantic approach de hors such basic considerations would be destructive of the object and purpose of such trust formed for such dual purposes. Such approach would also be against the basic canons of interpretation of such documents. In this view of the matter, when the Assessing Officer proceeded purely on the premise on the assessee being purely a charitable trust, it was certainly not an appropriate view. 27. Now coming to the next provision namely Section 115BBC of the Income Tax Act providing for anonymous donations to be taxed in certain cases, such provision is applied by the Revenue to tax the anonymous donations received by the assessee. It is seen that sub-section (1) of Section 115BBC ordains that where the total income of an assesssee, 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 in 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 ....
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....t 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 channelization of funds and for betterment and upliftment of devotees and society, this Court 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 legislature Sai Baba Trust Act was promulgated on 17 August 2004 and a public trust of Shirdi Sansthan of "Shri Sai Baba" was reconstituted as "Shri Sai Baba Sansthan Trust" (Shirdi), namely, the assessee. The aims and objects of the assessee ....
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....ability 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 namely Sai Baba Trust Act as promulgated by the State Legislature as noted hereinabove. 31. We may observe that the Tribunal on appreciation of the materials has recorded a finding that the assessee-trust is regarded as a religious place in Maharashtra for tourist and public at large. It is observed that the assessee is a religious and charitable trust. The findings as recorded in paragraph 36 of the orders passed by the Tribunal is required to be noted which reads thus: "36. In view of the above, the position which emerges it that, there may be instances where a trust which is existing both for charitable and religious purpose, has incurred religious expenditure which is less than 5% of the total expenses of the Trust. In such a case, the trust may be eligible for certificate u/s 80G of the Act and at the same time would not be liable to be taxed for the anonymous donations received by virtue of Section 115BBC (2) (b) of the Act. We thus find merit in the submission of the Ld. Sr. Counsel for assessee that, the exclus....
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....verlooked the cardinal principle, that it is, the Tribunal which is the final fact finding authority and a decision on facts which fell for consideration of the Tribunal, cannot be gone into by the High Court, except when a question has been referred to it that the finding of the Tribunal on facts is perverse, in the sense that it is such, which could not reasonably have been arrived at on the material placed before the Tribunal. The following observations of the Supreme Court are required to be noted which read thus:- "7. The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact....