The Bombay High Court on Thursday granted exemption under the Income Tax Act to the Shri Sai Baba Sansthan Trust in Shirdi, in a case of anonymous donations to its “Hundis”.
The ‘Hundi’ is a donation box at the Shree Saibaba Sansthan Trust in Shirdi, where people can donate anonymously to the shrine.
The Commissioner of Income Tax (Exemption), Mumbai, has filed an appeal challenging the 25 October 2023 decision of the Income Tax Appellate Tribunal (ITAT). The ITAT ruled that the huge unknown contributions received by the Trust were not subject to tax.
The Income Tax Department’s case focuses on the assessment years 2015-16, 2017-18, and 2018-19, highlighting that the Trust has accumulated contributions of Rs 400 crore in 2019, of which only Rs 2.3 crore has been earmarked for the purposes of religion.
Most of the funds were reportedly directed to educational institutions, hospitals and medical facilities.
After reviewing the provisions of the Sai Baba Trust Act and the Bombay Public Trusts Act, a bench of Justices GS Kulkarni and Somsekhar Sundaresan upheld the Tribunal’s findings, declaring the Trust to be a religious and charitable organisation.
“We are of the clear opinion that the assessee is certainly a religious and charitable organization; hence, the assessee rightfully and legally claimed that it is entitled,” the court said.
The Assessing Officer was of the opinion that the findings showed that the assessee was a charitable trust with no religious purpose, and since the anonymous donations exceeded 5 percent of the total donations, the same was taxable.
The Trust contested the claim and argued before the department that it is both a religious and a charitable organization as there are places of worship inside its premises, and therefore it is different.
The Trust has argued that its objects and activities are mainly charitable, and also serve religious purposes, which go beyond charitable purposes.
The Tribunal observed that among several activities of the assessee, one of these activities was associated with the activities of worshiping Shri Sai Baba, spreading spirituality, teachings, prayers, celebrating religious festivals and festivals, taking care of devotees, etc. .
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