Bombay High Court Upholds Sai Baba Sansthan Trust’s Religious Character
The Bombay High Court has announced its decision to close an appeal filed by the Income Tax Department against Shri Sai Baba Sansthan Trust (Shirdi), underscoring that the department cannot control the sentiments of devotees making anonymous donations to the shrine. The 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 appeal was lodged in response to an October 25, 2023 order of the Income Tax Appellate Tribunal (ITAT), which affirmed the Trust’s eligibility for exemption from income tax on its anonymous donations, recognizing it as both a charitable and religious entity. The IT Department, however, contested this decision, asserting that the Trust was solely charitable and not religious. Advocate Dinesh Gulabani representing the department argued that the majority of the Trust’s funds were allocated to charitable causes rather than religious purposes, thus contesting its religious characterization.
In response, the judges highlighted the faith-based nature of the donations, emphasizing the worship of Sai Baba as an incarnation of God Dattatreya. They also referenced a prior judgment by former Chief Justice Ramesh Dhanuka, supporting the religious nature of the Trust and affirming that the State should refrain from intervening with religious trusts. The bench further asserted that attempts to control the sentiments of devotees, especially concerning anonymous donations, were unwarranted.
Despite vigorous opposition from Advocate Gulabani, the bench indicated that the Trust’s religious identity was well-established. Senior Advocate S Ganesh, representing the Trust, emphasized that the institution had both charitable and religious obligations and had consistently contributed to charitable causes.
The Trust has been at the center of a dispute with the assessing officer, who contended that the substantial anonymous donations received should not be exempt from taxation. The department argued that while the trust is registered under section 80G of the Income Tax Act and receives exemption as a charitable trust, it must ensure that its religious expenses do not exceed five percent to retain this benefit. The department asserted that the Trust was understating its religious expenses to avoid flouting the provisions of section 80G.
In light of these arguments, the Bombay High Court’s decision to uphold the religious characterization of Shri Sai Baba Sansthan Trust signals a crucial outcome with far-reaching implications for religious and charitable institutions in India.
This ruling reinforces the significance of religious freedom and the autonomy of religious trusts, highlighting the court’s stance on preserving the sentiments and faith-driven contributions of devotees. The Trust’s dual role as a charitable and religious entity has been reaffirmed, and this judgment is anticipated to have a lasting impact on similar cases involving religious and charitable institutions.
