Gupt donation/donation received in small boxes can not be held anonymous donation- ITAT
In a recent judgment, ITAT Jodhpur held that gupt donation/donation in small boxes can not held anonymous donation. Even if such donations are not considered as corpus donations the trust was otherwise get deduction on account of spendings for charitable activities.
ABCAUS Case Law Citation:
4526 (2025) (04) abcaus.in ITAT
In the instant case, the appellant assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), in treating the donations received as taxable under section 115BBC at the rate 30 percent.
The assessee was a religious and charitable trust, registered under Section 12AA of the Income Tax Act, 1961 (the Act). The trust was engaged in the work of imparting education of related to Vedas etc. Besides, the trust also looked after a temple.
The assessee filed its return of income for the relevant Assessment Year declaring total income Rs. Nil which was processed under section 143(1) of the Act. The accounts of the trust are audited and audit report in Form 10B had been filed electronically.
The case of the assessee was selected for scrutiny through CASS and notice under section 143(2) was issued electronically by Assessing Officer.
The Assessing Officer noted that the Trust had also received corpus donations. The AO observed that a more than 85 per cent of these corpus donations were anonymous. The AO, therefore, called upon the Trust to explain why the anonymous donations should not be taxed under section 115BBC(1) of the Act. The AO was of the view that since the anonymous donations exceeded 5% of the total donations received by the Trust, they were liable to be taxed under the provisions of section 115BBC(1), which governs the taxability of anonymous donations.
The AO further noted that the Trust was registered under section 80G of the Act, which applies to charitable institutions, therefore the Trust’s registration under this section disqualified it from the exemption under section 115BBC(2)(b) of the Act, which provides an exclusion of religious institutions from the tax on anonymous donations.
Not satisified with the submissions of the assessee, the AO he AO, assessed the total income to be taxed @ MMR which includes income taxable @ 30% i.e. u/s 115BBC as against Rs. Nil declared in the return of income.
The Tribunal observed that as per the AO corpus donation were not corpus but was revenue in nature and out of this sum the AO considered a substantial part as anonymous for which the appellant did not have any details about the identity of the payer and he taxed the same in terms of section 115BBC of the Income Tax Act, 1961 at MMR.
The assessee submitted that donations from gadi and gupt donations were towards corpus as many people pay donation on Gadi and this type of donation is collected in boxes for specific purpose for which Identity of donor is not at all verifiable. It is collection like any other temple such as sanwaliya ji or charbhuja ji.
It was contended that these donations were corpus donations as these boxes were specifically made for corpus like Gaushala or Building and accordingly funds are being treated. The assesee also explained the procedure for opening collection boxes.
The Tribunal observed that all such donations were received by the assessee institution through Gadi and Gupt which are normally given by the donors for some specific purposes. Normally the voluntary donations of revenue nature are given in small amounts but substantial amounts are given by the donors for some specific purpose. Even if such donations are not considered as corpus donations the appellant was otherwise going to get deduction on account of spendings for charitable activities as mentioned in below part of our order.
The Tribunal held that the provisions of section 115BBC of the Act cannot be applied in the instant case as the assessee institution existed for both charitable as well as religious purposes and was covered in exception as carved out in sub section 2(b) of section 115BBC of the Act.
Accordingly, the ground of appeal was allowed.
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