The Bombay High Court has upheld the eligibility of the Saibaba Sanstha Trust for tax exemption on anonymous donations under the Income Tax Act.

A division bench comprising Justice G.S. Kulkarni and Justice Somsekhar Sundaresan ruled in favor of the Trust, dismissing an appeal filed by the Commissioner of Income Tax.

The case arose when the Commissioner sought to impose taxes on ₹159 crore in anonymous donations received through cash boxes by the Trust for the assessment years 2015-16, 2017-18, and 2018-19. While the Income Tax Act mandates taxation on anonymous donations, exemptions are granted for trusts engaged in religious or charitable activities.

The Saibaba Sanstha Trust argued that a substantial portion of the donations was utilized for religious purposes, with the remainder supporting charitable initiatives. The Trust emphasized that its primary function is the maintenance of the temple and providing services to devotees, activities that are considered charitable under the law.

The Commissioner initially challenged the Trust's claim, but both the Income Tax Appellate Tribunal (ITAT) and the Commissioner of Income Tax (Appeals) ruled in favor of the Trust. Unconvinced, the Revenue Department appealed the ITAT decision to the Bombay High Court.

In its judgment, the High Court dismissed the appeal, affirming that the interpretation of Section 80G of the Income Tax Act should not exclude entities that are both religious and charitable. The Court noted that such trusts can lawfully qualify for exemption, and a restrictive reading of the law would be impermissible.

The Court's decision reinforces the legal recognition of the dual nature of religious and charitable trusts, setting a significant precedent for similar organizations.