2015 (7) TMI 989 - AT - Income Tax

Offerings at the Samadhi Shrine of Swami Muktanand and at the temple of Bhagwan Nityanand received in donation boxes- Taxing the amount invoking the provisions of section 115BBC - Held that - Reverting to the definition of anonymous donations under sub section (3) of section 115BBC, we find that it has been mentioned that anonymous donations means voluntary contributions where the person receiving such contributions does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed. In the case of a religious or charitable trust as in the case of the assessee as we have observed above, it is generally not only difficult but also not possible to maintain such type of record. A perusal of the entire section 115BBC shows that the provisions of said section are not applicable to the institutions like that of assessee trust as the same are meant to check the inflow of unaccounted/black money into the system with a modus operandi to make out as a part of the accounts of the institutions like university, medical institutions where the problem relating to the receipt of capitation fees, etc. is generally highlighted. Under such circumstances, we do not find any justification on the part of the Ld. CIT(A) in taxing the offerings received in the hundis/donation boxes as income of the assessee under section 115BBC. - Decided in favour of assessee.

Summary

Issues:
Taxation of offerings at religious shrines under section 115BBC of the Income Tax Act, 1961; Maintenance of records for donations; Applicability of section 115BBC to anonymous donations in religious and charitable trusts.

Analysis:
1. Taxation of Offerings at Religious Shrines: The assessee appealed against the tax on offerings at the Samadhi Shrine of Swami Muktanand and the temple of Bhagwan Nityanand under section 115BBC. The CIT(A) held that offerings not recorded were taxable but those with records were not. The ITAT noted that section 115BBC aims to prevent black money inflow and excludes donations to religious institutions. The tribunal found that donations made out of respect and devotion, without maintaining records, are not anonymous for illegal purposes. Therefore, the offerings in the donation boxes were not taxable under section 115BBC.

2. Maintenance of Records for Donations: The ITAT emphasized the difficulty for religious institutions to maintain records of all donors due to the nature of offerings made with reverence and selflessness. The tribunal highlighted that donors may wish to remain anonymous before the deity they pray to, believing the deity is the ultimate benefactor. Considering the definition of anonymous donations under section 115BBC, the tribunal concluded that it is generally impractical for religious trusts to maintain detailed records of all donors, especially when donations are made with spiritual intentions.

3. Applicability of Section 115BBC to Religious and Charitable Trusts: The ITAT interpreted section 115BBC in light of its purpose to curb unaccounted money in institutions like universities and medical facilities. The tribunal clarified that the provision does not apply to donations received by religious or charitable trusts, except those specifically directed for educational or medical purposes. By harmonizing clauses (a) and (b) of sub-section (2) of section 115BBC, the tribunal concluded that offerings made at religious shrines out of reverence and devotion do not fall under the purview of anonymous donations subject to taxation under section 115BBC.

4. Final Decision: The ITAT allowed the appeals of the assessee for both assessment years, 2007-08 and 2008-09, as the donations received at the religious shrines were not considered taxable under section 115BBC. The tribunal's decision was based on the understanding that offerings made with respect and devotion, without detailed records, do not qualify as anonymous donations aimed at preventing black money inflow into specific institutions.