The Bombay High Court has affirmed the tax exemption status for anonymous donations received by the Shri Saibaba Sansthan Trust in Shirdi, Maharashtra, ruling that the trust qualifies as both a religious and charitable organization. This decision came on Tuesday, dismissing an appeal by the Income Tax Department against an earlier ruling by the Income Tax Appellate Tribunal (ITAT) in October 2023.
Justices Girish Kulkarni and Somasekhar Sunderesan upheld the ITAT’s determination that the Sansthan, which oversees the Shree Saibaba’s Samadhi Temple and other temples at its premises, should be exempt from income tax on its anonymous donations under the dual status.
Under Section 115BBC(1) of the Income Tax Act, charitable institutions are typically liable to pay tax on anonymous donations unless they meet certain criteria. The court’s ruling supports the Sansthan’s position that it operates with both religious and charitable aims, thus entitling it to the exemption.
The Income Tax Department had challenged the trust’s status, pointing out that while the trust had received over Rs 400 crore in total donations up until 2019, only a small portion, Rs 2.30 crore, was allocated directly for religious activities. The majority of the funds were reportedly used for operating educational institutions, hospitals, and medical facilities, which led the department to categorize it primarily as a charitable trust.
However, the Sansthan defended its dual role, arguing that its activities span both religious and charitable domains, and therefore it should not be restricted to being labeled merely as a charitable trust. The court agreed with this perspective, emphasizing that the Sansthan’s broad scope of operations justifies its claim to the tax exemption.
