2012 (12) TMI 489 - AT - Income Tax

Addition on account of anonymous donation u/s 115BBC - Assessee is a charitable trust in maintaining gaushalas and veterinary hospital for treatment of wounded and sick animals and birds - Donations are coming, are coming in small donations, which are put by public at large in donation boxes - known donations, which were duly taken care in the return and informed to the revenue Held that - The decision in the assessee s own case, wherein the Hon ble Bombay High Court has accepted that the assessee, was a public trust and donations were exempted u/s 52 of Bombay Trust Act. We also cannot ignore the fact that even the department has been accepting the status and service rendered to humanity and assessment results of the assessee till the preceding year. Also follow the decision in case Swastik Textile Trading Co. Ltd.,(1977 (7) TMI 30 - GUJARAT HIGH COURT) that supply of fodder to animals and cattle is a charitable object . Hence appeal decides in favour of assessee

Summary

Issues Involved:
1. Addition of Rs. 84,36,407/- under section 115BBC.
2. Definition of "Charitable" under section 2(15) of the Act.
3. Applicability of anonymous donations to the trust.

Detailed Analysis:

1. Addition of Rs. 84,36,407/- under section 115BBC:
The appeal was filed by the department against the order of CIT (A), which deleted the addition of Rs. 84,36,407/- made by the AO under section 115BBC. The AO had added the entire collections from the Dharmau box and part of the Dharmun collections, totaling Rs. 84,36,407/-. The CIT (A) held that the AO misunderstood the intention of the law while applying section 115BBC, which was not meant to tax small donations ranging from Rs. 10/- to Rs. 150/-. The CIT (A) concluded that the AO's action was unjustified and against the provisions of law, and thus, deleted the addition.

2. Definition of "Charitable" under section 2(15) of the Act:
The department argued that maintaining gaushalas and veterinary hospitals does not fall under the definition of "Charitable" as defined in section 2(15) of the Act and cannot be considered a charitable activity for "public good." However, the CIT (A) and the tribunal found that the trust's activities, including maintaining gaushalas and providing medical aid to animals, are charitable. The tribunal emphasized that the trust has been performing a public good and service to humanity for the last 176 years, which aligns with the charitable purpose.

3. Applicability of anonymous donations to the trust:
The CIT (A) and the tribunal agreed that the purpose of section 115BBC is to curb unaccounted money through anonymous donations to educational and religious trusts, not to penalize small donations made to charitable trusts. The tribunal highlighted that the trust's donations were mostly small amounts collected in donation boxes, which do not fall under the purview of section 115BBC. The tribunal also noted the consistent acceptance of the trust's status and activities by the department in previous assessments.

Conclusion:
The tribunal upheld the CIT (A)'s decision, agreeing that the AO's application of section 115BBC was incorrect and that the trust's activities are indeed charitable. The appeal filed by the department was dismissed, and the addition of Rs. 84,36,407/- was deleted.