The Bombay High Court set to rule on whether the Shirdi temple trust qualifies for income tax exemptions on anonymous donations. The Income Tax department argues that although the trust received over Rs 400 crore in donations by 2019, only Rs 2.30 crore allocated for religious activities.
Mumbai: The Bombay High Court set to rule on whether the Shri Sai Baba Sansthan Trust, located in Shirdi and functioning as both a charitable and religious organization, qualifies for an exemption from income tax on anonymous donations.
A division bench comprising Justices Girish Kulkarni and Somasekhar Sunderesan concluded their deliberations on an appeal lodged by the Income Tax department.
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This appeal contests the October 2023 decision made by the Income Tax Appellate Tribunal (ITAT), which determined that the trust is eligible for tax exemption on anonymous donations due to its dual status as a charitable and religious entity.
The Income Tax department‘s contention is based on the trust’s financial activities up to 2019. According to their data, the trust received donations totalling over Rs 400 crore, out of which a mere Rs 2.30 crore was allocated for religious purposes.
The majority of the funds utilized for educational institutions, hospitals, and medical facilities. This pattern of expenditure, the department argues, indicates that the trust operates primarily as a charitable organization.
During the proceedings, the court observed that the trust receives donations largely because of the devotees’ faith, suggesting a significant religious aspect to its operations. The trust maintained that it fulfils both charitable and religious roles, making it inappropriate to classify it strictly as either one.
The Income Tax department‘s assessment officer pointed out that from 2015 to 2019, the trust amassed substantial anonymous donations, which they argue should not be exempt from taxation.
The court has now reserved its decision on this matter.
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The assessing officer, who evaluated the trust’s income from 2015 to 2019, reported that the Shri Sai Baba Sansthan Trust received substantial anonymous donations. The officer argued that these donations should not be exempt from taxation. The Income Tax department asserted that the trust, registered under section 80G of the Income Tax (IT) Act, enjoys tax exemptions as a charitable organization. However, this exemption is contingent upon the trust’s religious expenses not exceeding five percent of its total expenditures.
The department further claimed that to comply with the provisions of section 80G, the trust has been downplaying its expenses on religious activities.
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