Anonymous donation received by trust running Gaushala not taxable u/s 115BBC, it being a religious activity covered under the exception contained in Section 115BBC
ABCAUS Case Law Citation:
ABCAUS 2636 (2018) (11) ITAT
Important Case Laws Cited/relied upon:
Pat. Ram Chandra Shukla Vs. Shree Mhahdeoji, Mahabir Ji and Harrat Ali, Kanpur (1969) 3 SCC 700
Director of Income Tax (Exemption) vs. Bombay Panjrapole Trust, 232 Taxman 821 (Bom)
Vallabh Das Karson Das Natha vs. CIT 15 ITR 32 (Bom.)
DCIT Vs. All India Pingalwara Charitable Society’, (2016) 67 Taxmann.com 338
CIT vs. Swastik Textile Trading Co. Pvt. Ltd. 113 ITR 852 (Guj.)
The Revenue had filed the instant appeal challenging the order passed by the Commissioner of Income Tax (Appeals) in deleting the addition made by the Assessing Officer (AO) on account of anonymous donations u/s 115BBC of the Income Tax Act, 1961 (the Act) ignoring the fact that the assessee could not submit the name, full postal address and PAN/other Id during the assessment proceeding.
The respondent assessee society was registered u/s 12AA of the Act and was running a Gaushala. The AO noted that out of fonations received by the assessee, certain donations did not mention the complete addresses of the donees.
The AO observed that the complete records of identity indicating the names and addresses of persons who had made donations to the assessee, was not maintained by the assessee society as provided under sub section 3 of Section 115BBC of the Act.
The AO noticed that the office copy of the receipts issued by the society contained name of the donor and the city. Also, the notices issued u/s 133(6) of the Act at the addresses of the some of the donor were received back unserved due to incomplete address.
Accordingly, the AO treated such donations as anonymous donations and made the addition.
However, by the impugned order, the CIT(A) deleted the addition.
The Tribunal observed that Section 115 BBC(1) of the Act provides for the taxation of anonymous donations received by an assessee on behalf of any university or other educational institution, or any hospital or other institution, or any fund or institution, as referred to in the said section. Section 115BBC(2)(b) of the Act mandates that the provisions of Section 115BB(1) shall not apply to any anonymous donation received by 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 other educational institution, or any hospital or other medical institution run by such trust or institution.
The Tribunal firther noted that it was not disputed that the assessee was neither any university nor other educational institution, or any hospital or other institution, or any fund or institution, or any trust or institution, as referred to in Section 115BBC(1) of the Act. It was also not disputed that the assessee was a trust created and established wholly for religious and charitable purposes. It was again not disputed that no anonymous donation was received by the assessee with a specific direction that such donation was for any university or other educational institution or any hospital or other medical institution run by the assessee society.
The Tribunal opined that from the relevant provisions of the Act itself, it was clear that it was not the provisions of Section 115BBC(1), but those of Section 115BBC(2), which were applicable to the present case.
The Tribunal opined that at the very outset, the AO had erred in making the addition by invoking the provisions of Section 115BB(1). The assessee’s activity of running of a Gaushala was a religious activity, as held in various judgments that anonymous donation received by a trust running a Gaushala, which is a religious activity, is covered under the exception contained in Section 115BBC and accordingly, it is not taxable.
The Tribunal ovserved that the Hon’ble Supreme Court had held that there is no line of demarcation in the Hindu system between religion and charity and thus, religious purpose also includes such type of activity.
With respect to the grievance raised that the CIT(A) ignored the fact that the assessee could not submit the name, full postal address and PAN/ other I.D. of the donors, the Tribunal opined that the argument was of no consequence. The donations being anonymous donations, providing these details would have amounted to an impossibility for the assessee and it is well settled that the law does not compel anyone to do that which they cannot possibly perform. Lex non cogit ad impossibilia.
The Tribunal held that Section 115BBC(1) taxes anonymous donations, whereas Section 115BBC(2) provides the exceptions to such taxation. The assessee’s case, was correctly held by the CIT(A), as falling under Section 115BBC(2).
The appeal was dismissed.
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Also Read:
Provisions Related to Anonymous Donations u/s 115BBC not relevant for Grant of approval u/s 80G Click Here >>
