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Income-tax Officer (Exemption) Versus Sri Shirdi Sai Samaj

2016 (5) TMI 1034 - ITAT BANGALORE

Applicability of section 115BBC to the donations received by the appellant trust by way of pooja and hundi collections - Held that:- Anonymous donations made to the wholly charitable and religious trust, institution with a specific direction that donations is for any university or educational institution or any hospital or other medical institution run by them can only be treated as anonymous donations. Anonymous donations made to religious trust will not come within the purview of the provision .....

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Ashok A Kulkarni, Advocate ORDER Per Inturi Rama Rao, AM This is an appeal filed by the revenue directed against the order of the CIT(A)-V, Bangalore, dated 10/09/2014 for the assessment year 2010-11. 2. The revenue raised the following grounds of appeal: 1. The learned CIT(A) erred in holding that 115BBC is not attracted to the donations received by the appellant trust by way of pooja and hundi collections. 2. The learned CIT(A) erred in holding that assessee trust falls in the exceptional cate .....

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BBC is attracted. 3. Briefly, facts of the case are that the respondent-assessee is a charitable society. It was set up with the mixed objects of religious and charitable activities. Return of income for the assessment year 2010-11 was filed on 18/10/2010 declaring nil income. After processing the return of income under the provisions of sec.143(1) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] the case was selected for scrutiny assessment and finally the as .....

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ous donations within the meaning and ambit of the provisions of sec.115BBC of the Act, as the case of the respondent-assessee-society fell within exceptions carved out by sub-sec.(2) of the said section and granted relief. The order of the CIT(A) reads as under: 10. In case where the trust is created or established for religious and charitable purposes and/or is engaged in both religious and charitable activities as per the objects memorandum of association, for the purpose of application of sec .....

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hat such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution." 10.2 A plain reading of clause (a) of sub-section (2) reproduced above, clearly shows that in case of the trust or institution with wholly religious purpose, person can receive anonymous donations on behalf of such trust or institution and such donations will not attract taxation under sub-section (1) of section 115BBC. This is irrespective .....

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religious and charitable purpose i.e. mixed purposes, the anonymous donation received by such trust or institution shall also be excluded from taxation. It is only such anonymous donation which is made by the donor with a specific direction that such donation is for a university or for other educational institution or any hospital or other medical institution run by such trust or institution, receiving the donation, that the exemption or exclusion from taxation u/s.115BBC(1) shall not be availa .....

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BBC to tax anonymous donations by charitable trust has been explained in CBDT circular no. 14/2006 dated 28/12/06. Relevant paragraph of the memorandum explaining the amendments brought in by Finance Act 2006 is reproduced below: "25. Taxation of anonymous donations received by wholly charitable trusts or institutions including nonprofit educational or medical institutions. 25.1 Income of wholly charitable or religious trusts or institutions as well as partly charitable or religious trusts .....

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ferred to in sub-clause (v) of clause (23C) of section 10, is exempt from income-tax subject to the fulfilment of conditions specified in the said clause. 25.2 With a view to prevent channelisation of unaccounted money to these institutions by way of anonymous donations, a new section 115BBC has been inserted to provide that any income of a wholly charitable trust or institution by way of anonymous donation shall be included in its total income and taxed at the rate of 30 per cent. Anonymous don .....

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ors and devotees of Shri Sal Baba Temple at Halasuru Bengaluru has been made with any direction, that such donation is for any University or other educational institution or medical institution run by the appellant trust. In fact, during the relevant year the appellant trust did not run any educational institution or hospital or medical institution, and no such facts have been recorded by the Assessing Officer. 11. In view of the above discussion, it is held that section 115BBC is not attracted .....

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n of the Assessing Officer of taxing ₹ 166,31,213/- treated it as anonymous donation u/s 115BBC and taxing @30%, is held to be unsustainable, and hence cancelled. Grounds of appeal on this issue are allowed. 5. Being aggrieved, revenue is in appeal before us and the assessee-society has come up in cross objections contending that the CIT(A) ought to have held the assessee-society as charitable organization. 6. We heard the rival submissions and perused material on record. The issue in the .....

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rred to in subclause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) 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- (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 .....

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r 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) For the purposes of this section, "anonymous donation" means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain .....

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usts or institutions is exempt from income-tax under sections 11 and 12, subject to the fulfilment, inter alia, of certain conditions, of application of income and investment in specified modes. Similarly, income of any university or other educational institution referred to in sub-clause (iliad) or sub- clause (via) or any hospital or other medical institution referred to in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institut .....

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