"Income Tax Dept Can't Control Sentiments Of Devotees": Bombay HC Reserves Order In Appeal Against Anonymous Donations To Shirdi Sai Baba

A division bench of Justices Girish Kulkarni and Somashekhar Sundaresan reserved orders in the income tax appeal filed by the Commissioner of Income Tax (Exemptions).

The IT Department has challenged October 25, 2023 order of an Income Tax Appellate Tribunal (ITAT) which held that the Trust is both a charitable and also a religious one and thus was eligible to exemption from income tax on its anonymous donations.

However, the department challenged the decision arguing through Advocate Dinesh Gulabani that the trust was only a charitable one and not religious.

"The donations (overall) received till 2019 was Rs 400 crores of which only a miniscule amount of Rs 2.30 crores was spent for religious purposes. Major expenses are for educational institutions, hospitals and medical facilities etc. This shows that the Trust is only a charitable trust and not a religious one," Gulabani argued.

However, the judges pointed out that it is said that Sai Baba was an incarnation of God Dattatreya and thus people worshipped him.

"I have read somewhere that Sai Baba was the incarnation of God Dattatreya and thus people worship him. So all these donations, be it anonymous or not, but yes, all these donations are because of the faith," Justice Kulkarni observed.

Further, the bench pointed out a judgment of former Chief Justice Ramesh Dhanuka, who dealt with an issue related to the management of the Trust and had said specifically that "State should at least spare the religious trusts..."

Referring to this, the bench said, "See there is also a judicial pronouncement that this Trust is a religious one so how the Department can now argue this isn't? Daily so many people keep visiting the temple and donate money. How can you control their sentiments? What if a donor, who is a devotee, says he does not want to be identified because he's doing some religious work by donating some amount. Even so many businessmen donate some amounts annually to various shrines including the present one. You cannot control the sentiments of the devotees."

However, Gulabani continued with his submissions, trying to convince the bench that the trust isn't a religious one. He stressed on the fact that despite receiving over Rs 400 crores as donations (including anonymous) how can the trust, which has numerous employees, function by only paying Rs 2 crores.

However, Senior Advocate S Ganesh, representing the Trust argued, "We have a charitable obligations as well as a religious obligation. We cannot say no we are only charitable and not religious or the other way. We are both charitable and religious and thus we have been doing so much of charity," the senior counsel submitted.

Further, Ganesh pointed out that the department has erred in assessing its character as only charitable trust.

"There are contentions made that it is a Hindu god or a Muslim one. We can only say, both Hindus and Muslims come to the temple daily. There is a temple, a deity in it, daily puja is performed and rituals are followed along with ceremonies. It's incorrect to say we aren't a religious trust," Ganesh submitted.

Hearing the brief submissions, the bench closed the matter for orders.

Background

According to the assessing officer, who assessed the income of the trust from 2015 to 2019, the trust received huge amounts as anonymous donations. This amount, the officer contended cannot be exempted from being taxed.

The department has contended that since the trust is registered under section 80G of the Income Tax (IT) Act, it gets exemption on the ground that it is a charitable trust, however, the same benefit can be availed only when its religious expenses do not exceed five percent.

It is the case of the department that to avoid flouting the provisions of 80G, the Trust is underplaying the expenses on religious purposes.