Anonymous donations received by religious and charitable trust not taxable u/s 115BBC when no university/educational institutions was run by the trust
ABCAUS Case Law Citation:
ABCAUS 2757 (2019) (01) ITAT
The assessee had challenged the order of CIT(A) in confirming the addition made by the Assessing Officer (AO) on account of anonymous donation by invoking the provisions of section 115 BBC of the Income Tax Act, 1961 Act (the Act).
The assessee was a charitable Trust duly registered u/s. 12A of the Act. The main object of the Trust was to perform pooja, Viniyoga, worshiping deity, distributing annaprasadam (i.e., serving free meals) to devotees who visit the Math and also providing medical help to needy persons, conducting seminars in Sanskrit subject, etc.
The assessee filed its return of income for the relevant assessment year declaring NIL income as the same was claimed as exempt. The said return was processed u/s. 143(1) of the Act, and later the case was selected for scrutiny by the issue of notice u/s 143(2).
During the course of scrutiny proceedings, the AO noticed that the assessee has credited a sum as voluntary contributions (donations). The assessee was asked to produce complete details of such contributions.
The assessee produced the relevant ledger accounts containing details of contributions received. The assessee also certified that the said contributions consisted of anonymous donation received through box collections kept at main door, etc.
It was explained that at the time of performing poojas, special occasions, the devotees would generally opt to pay some amount in the box kept which would be usually in the denomination of Re.1/-, Rs.5/-, Rs.10/-, Rs. 100/- and above and the box is opened in the presence of Trust authorities.
It was submitted to the AO that though this was an anonymous collection yet the same are brought on record and spent on the objects of the Trust. It was also submitted that such contributions were not taxable as per provisions of section 115BBC of the Act.
The however AO opined that the assessee was not covered under the provisions sub-section (2) of section 115BBC. Since, the assessee did not furnish the details of persons who have contributed the donations the same was treated as anonymous donations and taxed accordingly, as per Section 115BBC of the Act.
The CIT(A) despite accepting the application of section 115BBC upheld the addition.
The Tribunal observed that the CIT(A) in his order had noted that as per the objects of the trust , it was created only for religious and charitable purpose and no university or educational institutions are run by the assessee and provisions of section 10(23)(c) do not apply to the assessee. The CIT(A) had held that Trust was totally religious charitable trust, hence, the provision of section 115BBC(1) shall not apply, still he had proceeded to invoke the provision of section 115BBC(1).
The Tribunal opined that the action of the CIT(A) was quite contradictory when the he had found that the assessee was falling under section 115BBC(2), then the provision of section 115BBC(1) were not applicable. Hence, the impugned amount cannot be subject to tax u/s. 115BBC.
The Tribunal set aside the orders of the authorities below and decided the issue in favour of the assessee.