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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 ..... Section 80G? - HELD THAT:- 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. We are afraid to accept such contentions in as much as, the provisions of Section 80G cannot be intermixed, from what is provided by Section 115BBC (2) (b). Both the provisions stand compartmentalized and are independent of each other. The very foundation of the operation and effect of Section 115BBC (2) (b) is a conclusive ascertainment, and a factual determination of a trust being religious and charitable as ascertained from the contents of the trust deed. Once such requirement is satisfied, any anonymous donation received by such trust would be eligible / entitled to the benefit of an exemption from tax, by the applicability of sub-section 2(b) of Section 115BBC. On the other hand, Section 80G certainly lays down quantum test that is the amounts spent for its purposes to ascertain whether the charitable trust is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions 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 Baba trust under the Bombay Public Trusts Act, 1950. By an order dated 18 October, 1982 passed by this Court, the administration of the Trust was vested in the Board of Management , constituted by the Charity Commissioner, Government of Maharashtra. Thereafter in August, 2004, the State Legislature enacted Shri Sai Baba Sansthan Trust (Shirdi) Act, 2004 (for short Sai Baba Trust Act ) [Brought into effect from 17 August, 2004.] which reconstituted the public trust. Under such enactment, the assessee is designated/described as the Shri Sai Baba Sansthan Trust (Shirdi) (for short the assessee ). The assessee is also registered under Section 12A and 80G of the Income-tax Act, as approved in terms of Section 10 (23C) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 its registration under Section 10 (23C) (v) of the Act dated 17 March, 2008 granted by the Chief Commissioner of Income-tax, Mumbai. The assessee also referred to the objects set out in the Trust Deed and pointed out that there were several places of worship within its premises, which evidenced that the assessee was a trust with mixed objects i.e., both charitable and religious. Insofar as the certificate held by the assessee under Section 80G of the Act was concerned, the assessee contended that the term charitable purpose as defined in Explanation 3 below Section 80G, excluded only those entities whose purpose wholly or substantially was religious in nature. It was contended by the assessee that the entities having mixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (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 religious in nature. According to Assessing Officer, the bar set out in Explanation 3 to Section 80G of the Act would hit, such mixed trusts. The Assessing Officer observed that the contention of the assessee that it was both a charitable and religious trust was not acceptable, as according to him, the objects of the trust revealed that it was wholly or substantially a charitable trust. He concluded that the benefit of exclusion set out in Section 115BBC (2) (b) was not available to the assessee. The Assessing Officer accordingly taxed the anonymous donations, for the said assessment year which were amounting to Rs. 147,71,54,875/-. The amounts of such anonymous donation have differed for the subsequent assessment years, namely, A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 religious and charitable nature. c) Whether on the facts and circumstances of the case and in law, the Hon ble ITAT has erred in considering the assessee trust created or established wholly for religious and charitable purpose when the assessee has obtained certificate under section 80G (5B) of the Income-tax Act and whether the benefit of exclusion is available to the assessee trust under section 115BC(2) in light of the certificate under section 80G (5B) of the Income-tax Act so obtained? d) Whether on the facts and circumstances of the case and in law, the Hon ble ITAT has erred in relying upon the certificate under section 10 (23C) (v) of the Act issued by the learned CCIT, Mumbai to hold that the assessee Trust existed both for charitable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for the reason that the assessee continued to hold a registration under Section 80G, as also, as the assessee asserted benefit under Section 10 (23C) (v), necessarily the assessee was rightly held by the Assessing Officer to be a charitable trust and not a religious trust. It is submitted that such aspect of the matter was overlooked and / or misinterpreted by the CIT(A) and the Tribunal. It is hence submitted that the appeal deserves to be allowed on the aforesaid questions of law. 19. On the other hand, Mr. Ganesh, learned senior counsel for the assessee has submitted that the nature of the trust being essentially and predominantly a charitable and religious trust is purely a question of fact. Mr. Ganesh has drawn the Court s attention to the Trust D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such Act, shall have the meaning assigned to them in the Bombay Public Trusts, Act, 1950. It is submitted that the word temple is not defined under the Sai Baba Trust Act, but the same has been defined under Section 2 (17) of the Bombay Public Trusts Act, 1950. It is hence his submission that this coupled with the rituals, poojas, ceremonies which are being performed throughout the day for the devotees, was completely overlooked by the Assessing Officer, which was corrected by the Appellate Authority as also by the Tribunal. It is also his submission that the Sai Baba Trust is also regarded as a most visited religious place in the State of Maharashtra by tourists and the public at large, to submit that such religious attributes were overlooked by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 day of August, 1964; or .. (5B) 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 per cent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply. (5C) This section applies in relation to amounts referred to in clause (d) of sub-section (2) only if the trust or institution or fund is established in India for a charitable purpose and it fulfills the following conditions, namely : (i) it is approved in terms of clause (vi) of sub-section (5); (ii) it maintains separate accounts of income and expenditure for providing relief to the vic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 particulars as may be prescribed. (emphasis supplied) THE SHREE SAI BABA SANSTHAN TRUST (SHIRDI) ACT, 2004. An Act to re-constitute a public trust of Shri Shirdi Sai Baba Sansthan registered under the Bombay Public Trusts Act, 1950 under the name Shirdi Sansthan of Shri Sai Baba at Shirdi, District Ahmednagar, and to provide for better management, administration, governance and control of the Trust to enable it to undertake wider welfare activities for the public. WHEREAS the administration of the public trust of Shri Shirdi Sai Baba Sansthan registered under the Bombay Public Trusts Act, 1950, under the name Shirdi Sansthan of Shri Sai Baba at Shirdi, District Ahmednagar, popularly known as Shree Shirdi Sai Baba Sansthan Trust of Shirdi , vests in the Board of Management, under a scheme framed by the City Civil Court, Bombay, in Charity Suit No. 3457 of 1960 under its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income of the Trust to the objects and purposes for which the Trust is to be administered under this Act. (2) In particular and without prejudice to the generally of the provisions contained in sub-section (1), the Committee shall, (a) prepare the annual budget estimating the income and expenditure of the Trust and send a copy of it to the State Government and the Charity Commissioner ; (b) maintain proper accounts and records of the properties and the income and expenditure of the Trust ; (c) cause the accounts of the Trust to be audited annually by such person and by such date in the next succeeding year as the State Government may direct ; (d) make regular payment of salaries, honorarium, fees and allowances and other sums payable to the members, Executive Officer and other officers and employees of the Committee from the Management Fund ; (e) take measures for the recovery of lost property or any sums due to the Trust ; (f) inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieving 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 the previous sanction in writing of the State Government. (4) No jewelleries, ornaments and other valuable movable property vested in the Trust, the value of which is more than fifty thousand rupees, shall be sold, pledged or otherwise alienated by the Committee, except with the previous sanction in writing of the State Government. (5) The Committees shall have no power to borrow money from any person or party, except with the previous sanction in writing of the State Government. (6) Subject to the provisions of this Act, the Committee shall have all the power necessary for performing its duties and functions under this Act. Section 21. Inquiry into working of the Board. (1) The Trust Fund shall, subject to the provisions of the Income Tax Act, 1961, be utilised or expended by the Committee for all or any of the following purposes, namely : (a) the maintenance, management and administration of the Temple and the properties of the Trust ; (b) the conduct and perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 resulting in improvement of the facilities to the Sansthan : Provided that , there shall be a Security Committee constituted by the State Government for the purposes of this sub-section, comprising of three members under the Chairmanship of a retired Judge of the Bombay High Court, appointed with the prior approval of the Bombay High Court, and two other members selected by the members of the Committee from amongst themselves ; and the term of the Scrutiny Committee shall be co-terminus with the term of the Committee : Provided further that, the Scrutiny Committee shall frame regulations for holding and conducting of its meetings and also discharging its functions under this Act, and shall also frame and publish guidelines in consonance with the directions and guidelines issued by the Bombay High Court in Writ Petition No. 2764 of 2003, in the matter of Kewal R. Semlani, laying down the norms for recommendation of the applications received by the Committee from various registered public charitable trusts under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 per cent of its total income, in the previous year shall be deemed to be an institution or fund to which the provisions of Section 80G apply. Thus, implicit in Section 80G is the recognition of a trust which has religious activities. This to the effect that insofar as the religious activities of such trust are concerned, if such trust incurs expenditure during any previous year, of an amount not exceeding five percent of its total income, such institution would be regarded as an institution to which the provisions of Section 80G apply. Sub-section (5B) was inserted by the Finance Act, 1999 with effect from 01 April 2000, since then it has held the field. It is for such reason, it would not be acceptable that Revenue takes a position that Section 80G would exclude religious trust and/or Section 80G applies only to charitable institutions. In any event, in our opinion, such reading of Section 80G that it would exclude religious and charitable entities, would not be the correct reading of the said provision. As fairly stated on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not apply to any anonymous donation received by any trust or institution created or established wholly for religious purposes. Firstly, in clause (a) by any trust or institution and secondly, in clause (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 educational institution or any hospital or other medical institution run by such trust or institution. Sub-section (3) defines anonymous donation for the purposes of Section 115BBC to mean any voluntary contribution referred to in sub-clause (ii-a) 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 particulars as may be prescribed. 28. A trust whether is charitable or religious can only be determined from the ingredients of the trust deed, bye-laws, etc., and by examining these docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and equality among the devotees of Shri Sai Baba and with that in view: i) to hold conference, seminars, lectures, competitions among the devotees and members. ii) to feed the poor from the fund established for the purpose. iii) to perform such other functions and festivals as may be decided by the Board of Management. iv) to give aids to the poor and deserving at Shirdi provided donations are received Specifically in that behalf (and for no other purpose) and also to give necessary assistance inclusive of financial help to the poor and deserving institute at Shirdi Elsewhere. 29. The Tribunal observed that amongst the several objects of the assessee, one of the object has been associated with the activities of worship of Shri Sai Baba, spreading spirituality, teachings, offering prayers, celebrating religious festivals and ceremonies, taking care of devotee s, etc. The Tribunal noted that section 21 of the Sai Baba Trust Act also provided for maintenance of temple, conduct and performance of rituals and ceremonies therein and providing facilities for darshan of devotee, offering of prayers and performing the religious festivals. 30. In regard to the applicability of the statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aritable institution and would fall outside the provision of sub-section 2 (b) of Section 115BBC of the Act. We are afraid to accept such contentions in as much as, the provisions of Section 80G cannot be intermixed, from what is provided by Section 115BBC (2) (b) of the Act. Both the provisions stand compartmentalized and are independent of each other. It would be too far-fetch to reach to a conclusion that merely the assessee being registered under Section 80G of the Act, it cannot be a religious trust, so as to fall outside the purview of Section 115BBC (2) (b) of the Act. Such an approach would amount to an inappropriate reading of the provisions of Section 80G as also Section 115BBC (2) (b). The very foundation of the operation and effect of Section 115BBC (2) (b) is a conclusive ascertainment, and a factual determination of a trust being religious and charitable as ascertained from the contents of the trust deed. Once such requirement is satisfied, any anonymous donation received by such trust would be eligible / entitled to the benefit of an exemption from tax, by the applicability of sub-section 2(b) of Section 115BBC. On the other hand, Section 80G certainly lays down quan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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