Deputy Commissioner of Income-tax, (Exemptions), Aurangabad V. Vishwatmak Jangli Maharaj Ashram Trust, Ahmednagar

ITA 861/PUN/2019

AI Insights

The case revolves around the taxation of anonymous donations received by the Vishwatmak Jangli Maharaj Ashram Trust during the assessment year 2015-16. The Deputy Commissioner of Income Tax (Exemptions), Aurangabad, treated a significant portion of the donations as anonymous and taxable under section 115BBC of the Income Tax Act. However, the CIT(A) reversed this decision, viewing the donations as voluntary contributions exempt from tax under the said section. The Revenue appealed against this decision, which was upheld by the Tribunal based on various judicial precedents and the specific activities of the Trust.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133025 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-06-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 02-06-2019
• Other Referred Cases: Commissioner, Hindu Religious Endowments, Madras Vs. Shri Lakshmindra Thirtha Swamiar, Ratilal Panachand Gandhi Vs. The State of Bombay, Shashtri Yaganapurushadji Vs. Muldas Bhudardas Vaishya, Bhagwan Shri Laxmi Narayan Dham Trust Vs. ITA No. 269/2015, Director of Income Tax: (Exemption) Vs. Bombay Pinjarapur Trust, Vallabh Das Karson Das Natha Vs. CIT, CIT Vs. Swastik Textile Trading CO. Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption
• Section: 11; 80G; 12A; 113; 13

Judgement Text

आयकर अपीलीय अधिकरण “बी” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.861/PUN/2019 धििधारण वर्ा / Assessment Year : 2015-16 Dy. Commissioner of Income Tax (Exemptions), Aurangabad .......अपीलार्थी / Appellant बनाम / V/s. Vishwatmak Jangli Maharaj Ashram Trust, Chaitanyapuri, Shirdi-Kopargaon Road, At Kokmathan, Post-Jeur Kumbhari, Taluka-Kopargaon, Dist.-Ahmednagar – 423601 PAN : AAATV1688B ......प्रत्यर्थी / Respondent Assessee by : Shri Abhay Shastri Revenue by : Shri M.G. Jasnani सुनवाई की तारीख / Date of Hearing : 09-06-2023 घोषणा की तारीख / Date of Pronouncement : 31-07-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the Revenue against the order dated 29-03-2019 passed by the Commissioner of Income Tax (Appeals)-10, Pune [‘CIT(A)’] for assessment year 2015-16. 2. The appellant-revenue raised four grounds of appeal amongst which the two issues emanates for our consideration is as to whether the CIT(A) justified in holding anonymous donations received as box collection and an 2 ITA No. 861/PUN/2019, A.Y. 2015-16 amount of Rs.2,30,71,171/- received from unidentifiable persons as taxable u/s. 115BBC(1) of the Act in the facts and circumstances of the case. 3. The brief facts relating to the case are that the assessee is a trust registered under the Bombay Trust Act, 1950. The assessee also got registration as a charitable trust u/s. 12A of the Act and also u/s. 80G of the Act vide its order dated 12-03-1992 and 23-07-2009, respectively. During the course of scrutiny assessment proceedings, the AO treated Rs.1,85,07,719/- from hundi collection and an amount of Rs.2,30,71,171/- as anonymous donation without name and address of the donors. It was explained that the hundi collection is as expression of gratitude due to reverence of the devotees are not in the nature of anonymous donations. Further, regarding an amount of Rs.2,76,92,756/-, the assessee furnished list of donors. After examination of the same, the AO found satisfied for an amount of Rs.46,21,585/- and held the balance donation of Rs.2,30,71,171/- as anonymous donation (Rs.2,76,92,756/- - Rs.46,21,585/-). The AO charged the above said two amounts u/s. 115BBC of the Act. The CIT(A) held that the AO was not justified in treating box or hundi collection and amount received from unidentifiable persons as taxable u/s. 115BBC of the Act and directed the AO to treat the said donations as voluntary within the meaning of section 24(2)(iia) of the Act, consequently allowed benefit of expression u/s. 11(1)(a) of the Act. Aggrieved with the same, now, the Revenue is before us challenging the action of CIT(A) vide ground Nos. 1 to 4 as mentioned above. 3 ITA No. 861/PUN/2019, A.Y. 2015-16 4. The ld. DR, Shri M.G. Jasnani relied on the order of AO and prayed to restore the same. The ld. AR, Shri Abhay Shastri supported the order of CIT(A) and prayed to dismiss the grounds raised by the Revenue. 5. Heard both the parties and perused the material available on record. We find no dispute with regard to facts emanating at para 3 of of the impugned order. Further, we find the CIT(A) considering the written submissions of the assessee as well as the assessment order proceeded to discuss the issues in detail from para 3.1 of the impugned order. We note that the assessee as a trust is carrying on both religious and charitable activities, incurred expenditure for an amount of Rs.2,81,25,722/- towards religious activity and an amount of Rs.4,05,92,533/- towards charitable activity. The details of religious as well as charitable activities are discussed in the said para 3.1 of the impugned order. The CIT(A) referred to the decision of Hon’ble Supreme Court in the case of Commissioner, Hindu Religious Endowments, Madras Vs. Shri Lakshmindra Thirtha Swamiar reported in (1954) AIR 282 (SC) for the proposition that a religious denomination or organization enjoys complete autonomy in the matter of deciding as to what rights and ceremonies and essential according to the tenets of the religion they hold and no outside authority has any jurisdiction to interfere with their decision in such matters. Further, the decision in the case of Ratilal Panachand Gandhi Vs. The State of Bombay reported in (1954) AIR 388 (SC) and also in the case of Shashtri Yaganapurushadji Vs. Muldas Bhudardas Vaishya reported in (1966) AIR 1119 (SC) to hold that religious activities under the hindu faith is very broad in the nature, we find these decisions were relied on by the assessee before the AO, but however, we find the AO not rejected the submissions of the assessee during the course of assessment proceedings. 4 ITA No. 861/PUN/2019, A.Y. 2015-16 It is observed from paras 3.2 and 3.3 of the impugned order that the CIT(A) discussed various expenditure incurred as against the gross receipts and we find no dispute with regard to the same as the ld. AR filed audited financials before us. 6. We note that the contention of the assessee before the CIT(A) as well as before us that the provisions u/s. 115BBC of the Act is not applicable to any trust which was created wholly for religious and charitable purposes, to that effect the assessee referred to various religious and charitable activities which were reproduced by the CIT(A) at pages 12 and 13 of the impugned order. We note that the expenditure incurred by the assessee trust on religious and educational activities to an extent of Rs.2,81,25,722/- and Rs.4,05,92,533/-, respectively. We note that the religious activities includes Gurupurnima Utsav, Chaudas Utsav, Meditation Camp, Yoga Shibir and Pilgrim Yatra, likewise, education at concessional and subsidized rate, charity to poor and needy people, medical facility by way of free check up and medicines to needy people around the village. We note that the appellant-revenue accepted the above said activities as religious as well as charitable for the A.Y. 2011-12. The AO doubted contention of the assessee that the registration granted under FCRA for the purpose of charitable and religious as the Charity Commissioner registered the assessee as charitable. It is observed from the impugned order that the assessee submitted copy of registration issued by the Foreigners Division (FCRA Wing), Ministry of Home Affairs, Government of India, wherein, the CIT(A) satisfied that the nature of trust being mentioned in such certificate as religious, educational, social trust. 5 ITA No. 861/PUN/2019, A.Y. 2015-16 7. We note that the CIT(A) by placing reliance in the case of Bhagwan Shri Laxmi Narayan Dham Trust in ITA No. 269/2015 of High Court of Delhi which held that if the objectives are in the nature of charitable, anonymous donations received by the assessee would qualify for deduction and it cannot be included in its assessable income. Further, he referred to the decision in the case of Ratilal Panachand Gandhi (supra), wherein, the Hon’ble Supreme Court dismissed the appeal of Revenue and confirmed the conclusion arrived by the ITAT, held anonymous donations received by the assessee would qualify for deduction for the purpose of section 115BBC(2) (a) of the Act and it cannot be included in the total income. The relevant portion is reproduced hereunder for ready reference : “15. It might well be that a Hindu religious institution like the Assessee is also engaged in charitable activities which are very much part of religious activity. In carrying on charitable activities along with organizing of spiritual lectures, the Assessee by no means ceased to be a religious institution. The activities described by the Assessee as having been undertaken by it during the AY in question can be included in the broad conspectus of Hindu religious activity when viewed in the context of the object of the Trust and its activities in general. 16. For the aforementioned reasons the Court finds no legal infirmity in the conclusion of the ITAT that for the purpose of section 115 BBC (2)(a) anonymous donations received by the assessee would qualify for deduction and it cannot be included in its assessable income.” 5.2.7.1 In the above mentioned order the Hon'ble Delhi High Court has even treated the said trust within the provisions of section 115BBC(2) (a) of the Act as trust or institution created or established wholly for religious purposes, despite the facts of having it's a number of charitable objectives. Therefore, if the said decision is followed, the appellant is entitled to be considered within the provisions of section 115BBC (2)(a) of the Act as well. I have already held that the appellant is entitled to the benefit of the exclusionary clause 115BBC(2)(b) of the Act. However, the appellant can also claim the benefit u/s. 115BBC(2)(a) of the Act as well in pursuance to the aforesaid decision. 5.2.8 The appellant has also cited a recent judgment of the Hon’ble Lucknow ITAT in ITA no. 809/LKW/2017 dated 12/11/2018 for A.Y. 2012- 13, wherein the Hon'ble ITAT held in the said order that the running of a Goushala is a religious activity following the decision in the case of Director of Income Tax: (Exemption) Vs. Bombay Pinjarapur Trust 232, tax:man 821 (Born) following its own decision in the case of Vallabh Das Karson Das Natha Vs. CIT, 15 ITR 32 (Born) and also the decision of the Hon’ble Gujrat High Court in the case of CIT Vs. Swastik Textile Trading CO. Pvt. Ltd., 113 ITR 852 (Guj.). It was held that anonymous donation received by a trust running a Goushala, which is a religious activity covered under the exception 6 ITA No. 861/PUN/2019, A.Y. 2015-16 contained in section 115BBC and accordingly is not taxable. In paras 8 and 9 of the said order it was held as below : “8. In Pat. Ramchandra Shukla Vs. Shri Mahadeoji, Mahaveerji and Harratali, Kanpur [1969] 3SCC 700 it has been held by the Hon'ble Supreme Court 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. 9. Then again, in DCIT Vs. All India Pingalwara Charitable Society, [2016] 67 taxmann.com, 338 (Amr. Bench), authored by one oj us, the vice president, it has been held that anonymous donation to fully religious and charitable trusts, without any specific direction having been given for any hospital/institution run by the trust cannot be taxed." 5.2.8.1. The Hon’ble ITAT in para 10 of the said order further inter-alia held as below : “..................... The donations in question being anonymous donations, providing these details (i.e. Name, full postal address and PAN/ other ID oj the donors) 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 perJorm. Lex non cogit ad impossibilia [LIC Vs. CIT, 219 ITR 410 (SC)]. Section 115BBC(1) taxes anonymous donations, whereas section 115BBC(2) provides the exceptions to such taxation. The assessee's case as correctly held by the Ld. CIT (A), clearly falls under section 115BBC (2)" 5.2.8.2. I find the above decision of the Hon’ble Lucknow Tribunal is applicable on the facts of the case of the appellant and in pursuance to the said decision, the anonymous donation received by the appellant cannot be taxed u/s. 115BBC (1) of the Act due to the exclusionary section 115BBC (2)(a) / (b) of the Act. 5.2.9. In view of foregoing discussions and various judicial decisions cited above, I hold that AO was not justified in treating the anonymous donations of Rs.1,85,07,719/- as received in box collection and Rs.2,30,71,171/- as received from unidentifiable persons as taxable u/s. 115BBC(I) of the Act. The AO is directed to treat the said donations as voluntary donations within the provisions of section 2(24)(iia) of the Act and also allow the appellant on the same the benefit of exemption u/s. 11(1)(a) of the Act thereby computing the total income within the provisions of section 11 and 12 of the Act allowing application of income and statutory deduction/ accumulation allowable under the said section as per law. Ground nos 1 and 2 raised by the appellant are accordingly allowed.” 8. On an examination of the above finding of CIT(A), we note that the assessee is benefited from exclusion provided under clause (b) of sub- section (2) of section 115BBC of the Act and therefore, in our opinion, charging the anonymous donation under sub-section (1) of section 115BBC does not arrive at all. Thus, we find no infirmity in the order of CIT(A) and 7 ITA No. 861/PUN/2019, A.Y. 2015-16 it is justified. Therefore, ground Nos. 1 to 4 raised by the Revenue are dismissed. 9. In the result, the appeal of Revenue is dismissed. Order pronounced in the open court on 31 st July, 2023. Sd/- Sd/- (G.D. Padmahshali) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ददनाांक / Dated : 31 st July, 2023. रवि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-10, Pune. 4. The CIT(Exemptions), Pune. 4. ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गार्ड फ़ाइल / Guard File. //सत्यावपत प्रवत// True Copy// आदेशानुसार / BY ORDER, िररष्ठ वनजी सविि / Sr. Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune