Donations received by a wholly religious trust cannot be taxed u/s 115BBC merely because trust also involved in charitable/Spiritual activity

Brief of the Case

Delhi High Court held In the case of CIT (Exemption) vs. Bhagwan Shree Laxmi Nariandham Trust that anonymous donations received by a wholly religious trust are exempt u/s 115BBC. Mere the trust deed have clauses related to charitable activities along with organizing spiritual seminars or trust also involved in charitable activities, will not make any difference to be qualify as a religious trust if trust is involved in religious activities while examing in overall prospective. Religious activities need to be examined in the context of overall actual activities conducted by the trust. In the given case, activities done by the assessee can be included in the broad concept of Hindu religious activity when viewed in the context of the objects of the Trust and its activities in general.

Facts of the Case

The Assessee was applied registration under Section 12A on 20th May 2005. The Assessee -Trust was set up on 30th December 2002 to carry out various charitable, spiritual and religious objects as set out in the trust deed. The Assessee filed its return of income and the case of the Assessee was picked up for scrutiny. It was found by the AO that for the AY in question, the Assessee had received Rs.5,28,84,204 by way of donations. While the details of the names and addresses of the donors to the extent of Rs.5,01,588,98 was furnished, the details of donors to the extent of Rs.27,25,306 were not explained. The Assessee explained that during the AY in question it was mainly involved in imparting of spiritual education through the lectures/samagam and in distribution of medicines and clothes to the needy and destitute. The AO, therefore, proceeded to invoke Section 115BBC which deal with anonymous donations, on the ground that the assessee is not a public religious trust but a spiritual organization and add this sum to the income of the Assessee. Also penalty proceedings under Section 271 (1) (c) were initiated separately.

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