The assessee, Shri Krishna Janmashtmi Mahotsav Samiti, is a public charitable trust duly registered under Section 12A and also approved under Section 80G of the Income-tax Act, 1961. The trust is primarily engaged in organizing religious and cultural activities, including the celebration of Janmashtami Mahotsav, establishment of ashrams, and publication of spiritual literature.

For Assessment Year 2014-15, the assessee filed its return declaring nil income after claiming exemption under Sections 11 and 12. The Assessing Officer completed the assessment under Section 143(3) and treated an amount of ₹50.54 lakh, received during the Janmashtami Mahotsav, as business income, alleging that the donations were in the nature of advertisement and promotion, taxable under Section 11(4A) at the maximum marginal rate.

The addition was primarily based on replies received from certain donors pursuant to notices issued under Section 133(6). The First Appellate Authority upheld the assessment, observing inconsistencies in the assessee’s submissions regarding the nature of donations.

On further appeal, the Income Tax Appellate Tribunal, Delhi Bench, examined the objects and activities of the trust and held that the assessee was engaged in religious and cultural activities, which are outside the ambit of the proviso to Section 2(15) relating to advancement of general public utility. The Tribunal further observed that even otherwise, the disputed receipts were well within the prescribed statutory threshold.

The Tribunal categorically held that the donations were received to further the religious objectives of the trust, such as organizing Janmashtami celebrations, conducting bhandaras, religious discourses, publicity for events, and construction of a dharamshala. Mere acknowledgment of donor names on banners or at event sites does not convert voluntary contributions into commercial or business receipts, as there was no profit motive involved.

Accordingly, the ITAT concluded that the receipts could not be treated as business income and that the assessee was rightly entitled to exemption under Sections 11 and 12.
The addition made by the Assessing Officer was deleted and the appeal of the assessee was allowed.

SOURCE LINK : https://itat.gov.in/public/files/upload/1765973667-HebYbQ-1-TO.pdf

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