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TMI Blog2024 (10) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 was registered as the "Shirdi Sansthan of Shri Sai Bab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 (2) (b) of the Act. In such context, the assessee relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally 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 one of the objects of the trust was wholly or substantially rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 religious activities and thus some of the objects of the trust qualify to be of both religiou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 fact, in this regard the assessee was taking contradictory stand. It is submitted that for such reasons as also fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submitted that Section 2 (m) of the Sai Baba Trust Act, postulates that any words or expression, not expressly defined in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) 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 Central Government; or (ii) the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted by the National Committee at its meeting held on the 17th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 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 a record of the identity indicating the name and address of the person making such contribution and such other particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 17. Duties and powers of Committee. (1) Subject to any general or special orders of the State Government, it shall be the duty of the Committee to manage the properties and affairs of the Sansthan Trust, efficiently, to make proper arrangement for the conduct and performance of rituals, worship ceremonies and festivals in the Temple according to the custom and usages, to provide necessary facilities and amenities to the devotees and to apply the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial 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 ; (m) organise or undertake activities or programmes aimed at promoting the feelings of brotherhood, unity, faith and equality among the devotees of Shri Sai Baba ; (n) promote or help secular education of all types and establish educational institutions at Shirdi, or other places ; (o) promote any other noble cause aimed at achieving human well being or, to help human beings in calamities. (3) No immovable property vested in the Trust shall be leased for more than a year, or mortgaged, sold or otherwise alienated, by the Committee, except with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment 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 expended by the committee, from time to time for all or any of the following purposes, namely :- (i) with the previous sanction of the State Government for the establishment and maintenance, by a registered public trust or registered society, of any educational institution, sports academy or institute, public library, hospital, dispensary, home for destitutes or physically disabled persons or other charitable or religious institution, or any other non-commercial cultural organisation set up by a registered public trust or registered society involved in the field of art or literature ; or (ii) to Shirdi Nagar Panchayat for the improvement and augmentation of local civic services and amenities result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect 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 also to enable the charitable trust/entity to implement/carry out their objects of welfare and well being of the society at large. A charitable institution may achieve several objects which are intended for collective benefit of the society, and it is with such purpose charitable institutions receive donations to advance charitable and philanthropic purposes. This has been legislatively recognized in terms of Section 80G of the Act. 25. In the context of the present proceedings, sub-section (5B) of Section 80G is relevant which provides that notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a "religious nature" for an amount not exceeding five p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 thirty per cent on the aggregate of anonymous donations received in excess of the higher of 5% of the total donations received by the assessee or Rs. 1,00,000/-. 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 trust, reads thus: "a. To ensure the perpetuation of the traditional forms of worship of Shri, Sai Baba at Samadhi Mandir, Dwakamai, Guru Padukas, Chavadi and Lendi Baugh at Shirdi. b. To celebrate the conventional festivals and fairs of Shri Ram navmi, Guru Pournima, Gokul Ashtami and Punyatihi of Sai Baba at Shirdi in accordance with the established practice. c. To disseminate useful knowledge about life, activities, leelas and teaching of Shri Sai Baba. d. To maintain and expand a library of Shri Sai Literature and other religious and philosophical books. e. To organize and promote the feelings of brotherhood, unity, faith, service and equality among the devotees of Shri Sai Baba and with that in view: i) to hold conference, seminars, lectures, competitions amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exclusion set out in Section 115BBC (2) (b) of the Act 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 is held to be untenable." 32. It may be observed that the Revenue is not in a position to dislodge the factual position as concurrently recorded by the CIT(A) as also by the Tribunal that the assessee is a religious and charitable trust. 33. The entire thrust of the submissions on behalf of the Revenue is referring to the provisions of Section 80G, as applied by the Assessing Officer to contend that once the respondent / assesssee is registered under Section 80G, it would only be a charitable institution and would fall outside the provision of sub-section 2 (b) of Section 115BBC of the Act. We are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reached by the Tribunal and to give an answer in law to the question of law that is before it. 8. The only jurisdiction of the High Court in a reference application is to answer the questions of law that are placed before it. It is only when a finding of the Tribunal on fact is challenged as being perverse, in the sense set out above, that a question of law can be said to arise." 35. From a cumulative reading of the objects of the assessee, read with the provisions of the Sai Baba Trust Act which is a special legislation promulgated by the State Legislature reflecting the objects and activities of the assessee, as also, considering the provisions of the Bombay Public Trusts Act, we are of the clear opinion that the assessee certainly is a religious and charitable trust, hence, the assessee rightly and legitimately claimed an entitlement under sub-section 2 (b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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