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Mumbai: The Bombay High Court has upheld the Income Tax Appellate Tribunal (ITAT) order that Shirdi's Shri Saibaba Sansthan Trust is both a charitable and religious organisation, making non-profit donations by devotees exempt from income tax.
In the previous hearing, the Bombay High Court had reserved the order on an appeal filed by the Income Tax Department, saying that the Income Tax Department cannot control the sentiment of the devotees to donate the name in the temple.
Mrs. Kulkarni and Justice. The Sundaresan bench passed the order in an appeal filed by the Commissioner of Income Tax (Exemptions). In the appeal, the IT department challenged the order passed by the Income Tax Appellate Tribunal (ITAT) on October 25, 2023. In the order, the tribunal said that the trust is both charitable and religious and hence the trust is entitled to exemption from income tax on secret donations received by it.
The High Court has ruled that a sum of Rs. 159.1 Undisclosed donation of Rs 2 crore is not taxable under section 115BBC(2)(b) of the Income Tax Act.
As per section 115BBC(1) of the Income Tax Act, secret donations to a trust may be taxable in certain cases. Whereas as per section 115BBC (2)(b) if the trust is established only for religious or charitable purpose then such tax is not applicable. The decision of the Appellate Tribunal is correct in law. Saibaba Trust is formed under a special Act of the State Legislature and is both religious and charitable.
The IT department, in its petition challenging the order, argued that the trust is charitable in nature and not a religious trust. The total donations received till 2019 was Rs 400 crore, of which only Rs. A nominal amount of Rs 2.30 crore has been used for religious purposes. Most of the amount has been used in educational institutions, hospitals, medical facilities etc. The lawyer on behalf of the department argued that this shows that the trust is charitable and not religious.
However, the judge said that it was said that Saibaba was the incarnation of Lord Dattatreya and hence people worshiped him. Therefore, all donations received by the Trust are given in good faith, Ms. Kulkarni saw.
The bench further drew attention to the judgment of former Chief Justice Ranesh Dhanuka, which, while dealing with the issue of management of trusts, had made it clear that at least the state government should leave religious trusts to themselves.
If the court itself has made the trust religious, then how can the department argue against it? Thousands of people visit the temple every day and donate. How can you control their beliefs? What can you do if a donor does not want to reveal his identity because he is donating for a religious cause? Many businessmen donate to pilgrimage sites including Shirdi every year. You cannot control the emotions of the devotees.
The Trust argued through the lawyer that we have charitable as well as religious duties. We cannot say that we are charitable or religious or vice versa. We both are there, that's why we donate so much. There are also arguments whether it is a Hindu god or a Muslim god. We can say that both Hindus and Muslims visit the temple daily. There is a temple here in which the Lord is worshiped daily and then rituals are performed. Therefore, it is wrong to say that we are not a religious trust.
According to the assessing officer, the trust received huge amount of undeclared donations. This amount cannot be excluded from taxation. It was further argued that the Trust is registered under the Income Tax Act and therefore, being charitable, enjoys the benefit of tax exemption, however this benefit can be availed only if its religious expenditure does not exceed five per cent. The case pertains to violation of the IT Act and alleged low expenditure on religious ceremonies.
