The Income Tax Appellate Tribunal (ITAT), Mumbai bench, held that anonymous donations received by trusts carrying on religious and charitable activities, approved under Section 10(23C)(v) of the Income Tax Act, are eligible for the benefit of exclusion in Section 115BBC(2)(b) of the Income Tax Act, 1961. The assessee, Shree Sai Baba Sansthan Trust, is a public trust constituted in 1953 under the name ‘Shirdi Sansthan of Shri Sai Baba,’ registered under the Bombay Public Trust Act. The assessee filed a return of income for the assessment year 2015-16, declaring Nil total income, with supporting documents.

The case underwent regular scrutiny. During the assessment proceedings, the Assessing Officer (AO) noted that the trust had received aggregate donations of Rs. 228.25 crores, with Rs. 159.12 crores from hundi collections. The AO held that since anonymous donations exceeded 5% of the total donations, the trust was taxable under Section 115BBC(1) of the Income Tax Act. The AO, based on the 80G certificate, concluded that the trust was solely for charitable purposes, not entitled to the exclusion in Section 115BBC(2)(b) of the Income Tax Act. The CIT(A) later held that the trust existed for both charitable and religious purposes, allowing the benefit of Section 115BBC(2)(b) of the Income Tax Act.

The revenue filed a second appeal before the tribunal. During the proceedings, the Revenue’s counsel argued that the trust was solely charitable, not entitled to the exclusion in Section 115BBC(2)(b) of the Income Tax Act. The assessee’s counsel countered, citing approval under Section 10(23)(v) of the Income Tax Act, applicable to institutions for both religious and charitable purposes.

The tribunal, considering relevant case law, observed that the trust was existing for both charitable and religious purposes, exempting anonymous donations from tax under Section 115BBC(2)(b) of the Income Tax Act. The bench concluded that trusts with dual purposes, having religious expenditure below 5% of total expenses, could be eligible for Section 80G certification and exempt from tax on anonymous donations under Section 115BBC(2)(b) of the Income Tax Act.

The two-member bench held that the assessee was eligible for exclusion under Section 115BBC(2)(b) of the Income Tax Act, dismissing the appeal of the revenue. Keywords: Anonymous donations,  Trusts,  religious,  charitable activities,   Income Tax Act benefit , ITAT