Our trust is religious and charitable and holds 80G approval. Can the officer tax our hundi collections under s.115BBC?
No. Section 115BBC(2)(b) takes a trust created or established wholly for religious and charitable purposes out of the charge, except for a donation given with a specific direction that it is for a university or other educational institution or a hospital or other medical institution run by the trust. The Court held that whether the trust is religious and charitable is determined from the trust deed, and that s.80G registration is a separate and independent question which cannot be used to deny that character. Rs 159.12 crores of hundi collections out of Rs 228.25 crores of donations stayed outside s.115BBC(1).
Decided by the High Court (Bombay High Court; G. S. Kulkarni and Somasekhar Sundaresan JJ) on 2024-10-08, reported as [2024] 167 taxmann.com 304 / (2025) 482 ITR 95 (Bom.)(HC); IT Appeal No. 598 of 2024 with IT Appeal (L) Nos. 14650 and 14652 of 2024; AYs 2015-16, 2017-18 and 2018-19. It bears on section 115BBC, section 115BBC(1), section 115BBC(2), section 11, section 12A, section 80G, section 10(23C) of the Income Tax Act 1961, in Charitable Trusts & Exemption and Capital Gains Exemptions matters.
The department's standard argument against every temple, dargah, gurudwara and math with donation boxes is that a trust which has taken 80G approval has represented itself as charitable and therefore cannot claim the religious limb of s.115BBC(2). This is a High Court answer to that argument, and it is the only reported route out of a hundi addition for a trust that cannot identify its donors. Expect the officer to fall back on the trust deed, so the deed and the objects clause become the whole case.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee is a public trust registered as the Shirdi Sansthan of Shri Sai Baba under the Bombay Public Trusts Act, 1950, registered under s.12A, holding approval under s.80G and approved under s.10(23C)(v) by the Chief Commissioner. It returned nil taxable income. For the years in question the Assessing Officer found aggregate donations of Rs 228.25 crores, of which Rs 159.12 crores came through hundi collections and were anonymous, and took the view that as the trust was a charitable organisation registered under s.80G with no religious purpose it could not claim the exclusion in s.115BBC(2)(b); the anonymous donations exceeding five per cent of total donations were therefore charged under s.115BBC(1). The Commissioner (Appeals), after examining the trust deed and the objects, held that the trust existed wholly for public, religious and charitable purposes and deleted the addition. The Tribunal, by order dated 25 October 2023, confirmed that finding. The department appealed under s.260A. The assessment years are 2015-16, 2017-18 and 2018-19.
The appeals were rejected and no substantial question of law was found to arise (para 36). The Court held that the operation of s.115BBC(2)(b) rests on a factual determination that the trust is religious and charitable, ascertained from the contents of the trust deed, and that once that is satisfied any anonymous donation received by such a trust is entitled to the benefit of the exclusion (para 33). Registration under s.80G could not be used to conclude that the trust was not religious: the two provisions are compartmentalised and independent of each other, and to hold otherwise would be an inappropriate reading of both (para 33). The decisive step, however, was one of jurisdiction rather than construction. The Commissioner (Appeals) and the Tribunal had concurrently found as a fact that the trust is religious and charitable, and the revenue was not in a position to dislodge that finding (para 32); on the authority of K. Ravindranathan Nair v. CIT the Tribunal is the final fact-finding authority and its findings of fact cannot be gone into by the High Court unless perversity is raised (para 34). The Court then held on its own view that, reading the objects with the Sai Baba Trust Act and the Bombay Public Trusts Act, the trust certainly is religious and charitable (para 35). The appeals were the Revenue's, under s.260A, against a common order of the Tribunal dated 25 October 2023 (para 1); the Court held that the view taken by the Commissioner (Appeals) and confirmed by the Tribunal is correct in law and on the facts, that no substantial question of law arose, and rejected the appeals with no order as to costs (para 36).
The Court began with s.80G. Sub-section (5B) provides that an institution incurring expenditure of a religious nature not exceeding five per cent of its total income in a previous year is still deemed to be one to which s.80G applies, so implicit in s.80G is the recognition of a trust that has religious activities (para 25 of the judgment as reported). The objects and purposes of a trust must be gathered from its deed, memorandum or bye-laws; a pedantic approach ignoring those documents would be destructive of the purpose of a trust formed for dual purposes, so the officer's premise that the assessee was purely charitable was not an appropriate view (para 26). Turning to s.115BBC, whether a trust is charitable or religious can only be determined from the trust deed and bye-laws, and recording a finding on those documents is necessarily a finding of fact (para 29 area). The Tribunal had examined the trust deed and the Sai Baba Trust Act, noting objects concerned with worship of Shri Sai Baba, spreading spirituality and teachings, offering prayers, celebrating religious festivals and caring for devotees, and s.21 of that Act providing for maintenance of the temple, performance of rituals and facilities for darshan (para 29). The revenue's whole case rested on s.80G, and the Court held that s.80G and s.115BBC(2)(b) cannot be intermixed, being compartmentalised and independent, s.80G laying down a quantum test while s.115BBC(2)(b) turns on the character of the trust (para 33). Finally it applied K. Ravindranathan Nair v. CIT [2000] 114 Taxman 53 / 247 ITR 178 (SC) on the High Court's inability, in an appeal, to disturb the Tribunal's findings of fact absent a plea of perversity (para 34).
The very foundation of the operation and effect of Section 115BBC(2)(b) is a conclusive ascertainment, and a factual determination of a trust being religious and charitable as ascertained from the contents of the trust deed.
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Handle my notice → Ask a CA on WhatsAppNo. Section 115BBC(2)(b) takes a trust created or established wholly for religious and charitable purposes out of the charge, except for a donation given with a specific direction that it is for a university or other educational institution or a hospital or other medical institution run by the trust. The Court held that whether the trust is religious and charitable is determined from the trust deed, and that s.80G registration is a separate and independent question which cannot be used to deny that character. Rs 159.12 crores of hundi collections out of Rs 228.25 crores of donations stayed outside s.115BBC(1). This was decided by the High Court (Bombay High Court; G. S. Kulkarni and Somasekhar Sundaresan JJ) and bears on section 115BBC, section 115BBC(1), section 115BBC(2), section 11, section 12A, section 80G, section 10(23C) of the Income Tax Act 1961. It is reported as [2024] 167 taxmann.com 304 / (2025) 482 ITR 95 (Bom.)(HC); IT Appeal No. 598 of 2024 with IT Appeal (L) Nos. 14650 and 14652 of 2024; AYs 2015-16, 2017-18 and 2018-19. The department's standard argument against every temple, dargah, gurudwara and math with donation boxes is that a trust which has taken 80G approval has represented itself as charitable and therefore cannot claim the religious limb of s.115BBC(2). This is a High Court answer to that argument, and it is the only reported route out of a hundi addition for a trust that cannot identify its donors. Expect the officer to fall back on the trust deed, so the deed and the objects clause become the whole case. If it applies to you, the first step is this: Put the trust deed on the record first: s.115BBC(2)(b) turns on a factual determination of the trust being religious and charitable made from the contents of the deed, not on how the return was filed.
The assessee is a public trust registered as the Shirdi Sansthan of Shri Sai Baba under the Bombay Public Trusts Act, 1950, registered under s.12A, holding approval under s.80G and approved under s.10(23C)(v) by the Chief Commissioner. It returned nil taxable income. For the years in question the Assessing Officer found aggregate donations of Rs 228.25 crores, of which Rs 159.12 crores came through hundi collections and were anonymous, and took the view that as the trust was a charitable organisation registered under s.80G with no religious purpose it could not claim the exclusion in s.115BBC(2)(b); the anonymous donations exceeding five per cent of total donations were therefore charged under s.115BBC(1). The Commissioner (Appeals), after examining the trust deed and the objects, held that the trust existed wholly for public, religious and charitable purposes and deleted the addition. The Tribunal, by order dated 25 October 2023, confirmed that finding. The department appealed under s.260A. The assessment years are 2015-16, 2017-18 and 2018-19. The matter was decided on 2024-10-08 by the High Court (Bombay High Court; G. S. Kulkarni and Somasekhar Sundaresan JJ). On those facts the High Court held as follows. The appeals were rejected and no substantial question of law was found to arise (para 36). The Court held that the operation of s.115BBC(2)(b) rests on a factual determination that the trust is religious and charitable, ascertained from the contents of the trust deed, and that once that is satisfied any anonymous donation received by such a trust is entitled to the benefit of the exclusion (para 33). Registration under s.80G could not be used to conclude that the trust was not religious: the two provisions are compartmentalised and independent of each other, and to hold otherwise would be an inappropriate reading of both (para 33). The decisive step, however, was one of jurisdiction rather than construction. The Commissioner (Appeals) and the Tribunal had concurrently found as a fact that the trust is religious and charitable, and the revenue was not in a position to dislodge that finding (para 32); on the authority of K. Ravindranathan Nair v. CIT the Tribunal is the final fact-finding authority and its findings of fact cannot be gone into by the High Court unless perversity is raised (para 34). The Court then held on its own view that, reading the objects with the Sai Baba Trust Act and the Bombay Public Trusts Act, the trust certainly is religious and charitable (para 35). The appeals were the Revenue's, under s.260A, against a common order of the Tribunal dated 25 October 2023 (para 1); the Court held that the view taken by the Commissioner (Appeals) and confirmed by the Tribunal is correct in law and on the facts, that no substantial question of law arose, and rejected the appeals with no order as to costs (para 36).
The Court began with s.80G. Sub-section (5B) provides that an institution incurring expenditure of a religious nature not exceeding five per cent of its total income in a previous year is still deemed to be one to which s.80G applies, so implicit in s.80G is the recognition of a trust that has religious activities (para 25 of the judgment as reported). The objects and purposes of a trust must be gathered from its deed, memorandum or bye-laws; a pedantic approach ignoring those documents would be destructive of the purpose of a trust formed for dual purposes, so the officer's premise that the assessee was purely charitable was not an appropriate view (para 26). Turning to s.115BBC, whether a trust is charitable or religious can only be determined from the trust deed and bye-laws, and recording a finding on those documents is necessarily a finding of fact (para 29 area). The Tribunal had examined the trust deed and the Sai Baba Trust Act, noting objects concerned with worship of Shri Sai Baba, spreading spirituality and teachings, offering prayers, celebrating religious festivals and caring for devotees, and s.21 of that Act providing for maintenance of the temple, performance of rituals and facilities for darshan (para 29). The revenue's whole case rested on s.80G, and the Court held that s.80G and s.115BBC(2)(b) cannot be intermixed, being compartmentalised and independent, s.80G laying down a quantum test while s.115BBC(2)(b) turns on the character of the trust (para 33). Finally it applied K. Ravindranathan Nair v. CIT [2000] 114 Taxman 53 / 247 ITR 178 (SC) on the High Court's inability, in an appeal, to disturb the Tribunal's findings of fact absent a plea of perversity (para 34). In the words reproduced by the source cited on this page: "The very foundation of the operation and effect of Section 115BBC(2)(b) is a conclusive ascertainment, and a factual determination of a trust being religious and charitable as ascertained from the contents of the trust deed."
It was decided by the High Court on 2024-10-08 and is reported as [2024] 167 taxmann.com 304 / (2025) 482 ITR 95 (Bom.)(HC); IT Appeal No. 598 of 2024 with IT Appeal (L) Nos. 14650 and 14652 of 2024; AYs 2015-16, 2017-18 and 2018-19. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 115BBC, section 115BBC(1), section 115BBC(2), section 11, section 12A, section 80G, section 10(23C), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were rejected and no substantial question of law was found to arise (para 36). The Court held that the operation of s.115BBC(2)(b) rests on a factual determination that the trust is religious and charitable, ascertained from the contents of the trust deed, and that once that is satisfied any anonymous donation received by such a trust is entitled to the benefit of the exclusion (para 33). Registration under s.80G could not be used to conclude that the trust was not religious: the two provisions are compartmentalised and independent of each other, and to hold otherwise would be an inappropriate reading of both (para 33). The decisive step, however, was one of jurisdiction rather than construction. The Commissioner (Appeals) and the Tribunal had concurrently found as a fact that the trust is religious and charitable, and the revenue was not in a position to dislodge that finding (para 32); on the authority of K. Ravindranathan Nair v. CIT the Tribunal is the final fact-finding authority and its findings of fact cannot be gone into by the High Court unless perversity is raised (para 34). The Court then held on its own view that, reading the objects with the Sai Baba Trust Act and the Bombay Public Trusts Act, the trust certainly is religious and charitable (para 35). The appeals were the Revenue's, under s.260A, against a common order of the Tribunal dated 25 October 2023 (para 1); the Court held that the view taken by the Commissioner (Appeals) and confirmed by the Tribunal is correct in law and on the facts, that no substantial question of law arose, and rejected the appeals with no order as to costs (para 36). It arises in Charitable Trusts & Exemption and Capital Gains Exemptions matters, on section 115BBC, section 115BBC(1), section 115BBC(2), section 11, section 12A, section 80G, section 10(23C) of the Income Tax Act 1961, and was decided by Bombay High Court; G. S. Kulkarni and Somasekhar Sundaresan JJ. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not let the officer argue backwards from 80G — this judgment holds the two provisions are compartmentalised and independent of each other. Segregate any donation received with a specific direction that it is for an educational or medical institution run by the trust, because that class is expressly carved out of the exclusion and remains chargeable. Check whether the trust falls in the wholly-religious limb of s.115BBC(2)(a) instead, which is unconditional and does not carry the educational or medical carve-out. Keep the donation register anyway: s.115BBC(3) turns on the record of name and address, and the exclusion in sub-section (2) is a fallback, not a substitute.
Still good law. Followed. In Venkateswara Swamy Devasthanam v. ITO (Exemption) [2025] 176 taxmann.com 183 (Hyd.)(Trib.), IT Appeal Nos. 1002 and 1003 (Hyd.) of 2024 for assessment years 2013-14 and 2016-17, decided 3 July 2025, the Hyderabad Bench applied this judgment to hold that a trust established wholly for religious and charitable purposes falls within s.115BBC(2) so that s.115BBC(1) does not apply to its hundi donations; Taxmann's case review for that decision records this judgment as followed. That Bench added a qualification worth carrying: s.115BBC(1) prescribes only the rate, so where sub-section (2) takes the donation out of it, the receipt is not exempt but falls to be assessed under the normal provisions on a commercial basis, only the surplus after deducting expenditure being taxed. The report of this judgment carries no citator entry recording a special leave petition, and none was traced, so nothing is known either way about an appeal by the department. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The decision is an appeal under s.260A and it was rejected on the footing that no substantial question of law arose. That matters for how far it can be pushed: the Court agreed on the construction of s.115BBC(2)(b), but what disposed of the appeal was that the Commissioner (Appeals) and the Tribunal had concurrently found as a fact that the trust is religious and charitable, and that a High Court cannot disturb such a finding without a plea of perversity. The construction point that survives is that s.80G and s.115BBC(2)(b) are compartmentalised and independent, so registration under the one says nothing about the character of the trust for the other. The earlier uncertainties in this entry are now settled from the report: the citation is [2024] 167 taxmann.com 304 / (2025) 482 ITR 95 (Bom.), previously removed as uncorroborated; the date is 8 October 2024; and the assessment years are 2015-16, 2017-18 and 2018-19, which resolves the conflict between the two secondary sources in favour of the later set. The (2024) 341 CTR 201 reference previously carried is still not on the report's citation line and remains uncorroborated. The trust also holds approval under s.10(23C)(v), which the entry did not record. The judgment does not decide what happens to a trust whose deed is charitable only, which is the more common case and where s.115BBC(2) gives no relief. It does not say how a donation given with a specific direction for a trust's school or hospital is to be identified within a hundi collection. Because it was dismissed at the threshold under s.260A, it lays down no test of general application beyond the compartmentalisation of s.80G and s.115BBC(2)(b). And it does not address what happens to hundi receipts once s.115BBC(1) is disapplied - the Hyderabad Bench in Venkateswara Swamy Devasthanam has since held that they are then assessed under the normal provisions on a surplus basis, which is not the same as exemption. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were rejected and no substantial question of law was found to arise (para 36). The Court held that the operation of s.115BBC(2)(b) rests on a factual determination that the trust is religious and charitable, ascertained from the contents of the trust deed, and that once that is satisfied any anonymous donation received by such a trust is entitled to the benefit of the exclusion (para 33). Registration under s.80G could not be used to conclude that the trust was not religious: the two provisions are compartmentalised and independent of each other, and to hold otherwise would be an inappropriate reading of both (para 33). The decisive step, however, was one of jurisdiction rather than construction. The Commissioner (Appeals) and the Tribunal had concurrently found as a fact that the trust is religious and charitable, and the revenue was not in a position to dislodge that finding (para 32); on the authority of K. Ravindranathan Nair v. CIT the Tribunal is the final fact-finding authority and its findings of fact cannot be gone into by the High Court unless perversity is raised (para 34). The Court then held on its own view that, reading the objects with the Sai Baba Trust Act and the Bombay Public Trusts Act, the trust certainly is religious and charitable (para 35). The appeals were the Revenue's, under s.260A, against a common order of the Tribunal dated 25 October 2023 (para 1); the Court held that the view taken by the Commissioner (Appeals) and confirmed by the Tribunal is correct in law and on the facts, that no substantial question of law arose, and rejected the appeals with no order as to costs (para 36).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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