2015 (3) TMI 718 - HC - Income Tax

Entitlement to exemption under Section 11 - anonymous donations amounting to ₹ 84,36,407/- received in violation of the provisions of Section 115BBC - Tribunal allowed the claim - Held that - The Trust was declared by Sir Jamsetjee Jeejeebhoy, Knight by a Trust Deed dated October 18, 1834 for the keep of stray cattle and other animals with a view to protect their lives. This shows that the Trust was created / established for charitable purposes. Thereafter, the Commissioner of Income Tax (Appeals) as well as the Tribunal have decided the appeal before them by placing reliance upon the binding decision of this Court in the case Vallabhdas Karsondas Natha (1946 (9) TMI 1 - BOMBAY HIGH COURT) wherein the Court inter alia considered the issue whether supply of fodder to animals and cattle would amount to a charitable and / or religious purpose. In the above context, the Court observed that that to a Hindu nothing can be of greater religious merit than to relieve suffering of dumb cattle and animals by giving them fodder. It is hardly necessary to emphasize that, according to Hindu religion and philosophy, animals have the same soul as human beings have and the spark of divinity is as much present in them as in human beings. Thereafter, concluded by holding that supply of fodder to cattle and animals is not only a good religious trust but it is also a good charitable trust. Therefore, the submissions of the Revenue is in the face of the decision of this Court in Vallabhdas Karsondas Natha (supra) wherein taking care of animals is considered to be a charitable as well as religious activity. We may also refer to the decision of Gujarat High Court in the case of C.I.T. Gujarat Vs. Swastik Textile Trading Co.Pvt.Ltd. (1977 (7) TMI 30 - GUJARAT High Court) wherein the issue for consideration was whether establishing, maintaining, running and helping gaushalas, panjarapoles and other similar institutions for animals, would be considered to be a charitable and religious purpose. - Decided against revenue.

Summary

Issues:
1. Applicability of exemption under Section 11 of the Income Tax Act for anonymous donations received by a Trust.
2. Interpretation of Section 115BBC of the Income Tax Act in relation to anonymous donations.
3. Justification for allowing exemption under Section 11 for anonymous donations based on services rendered by the Trust.

Issue 1: Applicability of Exemption under Section 11:

The case involved a charitable Trust receiving anonymous donations alongside identified donations. The Assessing Officer taxed the anonymous donations under Section 115BBC of the Act. However, the Commissioner of Income Tax (Appeals) concluded that the Trust was established for charitable and religious purposes, citing relevant legal precedents. The Tribunal upheld this decision, emphasizing that taking care of weak animals is both a charitable and religious purpose, based on previous court rulings. The Trust's history of caring for animals and birds for over 176 years was crucial in establishing its charitable nature.

Issue 2: Interpretation of Section 115BBC:

The Revenue contended that Section 115BBC applied to the Trust's anonymous donations since it did not meet the exclusion criteria for religious Trusts. The Trust was argued to be solely for charitable purposes, making the donations taxable under Section 115BBC. However, the Commissioner of Income Tax (Appeals) and the Tribunal relied on past judgments to determine that the Trust's activities, including providing food and shelter to animals, aligned with charitable and religious objectives. The Tribunal dismissed the Revenue's appeal, emphasizing the religious and charitable aspects of the Trust's work in line with legal precedents.

Issue 3: Justification for Exemption under Section 11:

The Tribunal's decision to allow exemption under Section 11 for anonymous donations was based on the Trust's long-standing commitment to caring for animals and birds, which was deemed a charitable and religious purpose. The Tribunal's reliance on the precedent set by the Court in the case of "Vallabhdas Karsondas Natha" reinforced the view that animal welfare activities could be considered both charitable and religious. The Tribunal's dismissal of the Revenue's appeal was grounded in the established legal principles that compassion for living creatures is a profound religious motivation, aligning with the Trust's objectives.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the charitable and religious nature of the Trust's activities as crucial in determining the tax treatment of anonymous donations. The Court found no substantial questions of law warranting further consideration, leading to the dismissal of the Revenue's appeal.