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During assessment of charitable institutions ( other than religious institutions) the assessee is expected to prove the identity, creditworthiness, genuineness of the donors. If he fails then such amounts could be added to assessee’s income under section 68, read with section 115BBC.


The Delhi High Court in 278ITR152 held that section 68 has no place once the assessee has himself shown the amount of donations as its income and also applied the prescribed percentage therefore for charitable purpose. In this case the assessee failed to provide complete information on the donors as well as failed to produce some leading to a misjudged action u/s 68. The Delhi High Court went with the dictum that the donation sum was applied for charitable purposes therefore it could not be added under section 68.


At that point in time none of the two serious sections 115BBC and 115BBE existed.


Section 115BBC refer to anonymous donations meaning any voluntary contribution of which no record is maintained indicating name and address of contributor and further particulars as shall be prescribed. Till date nothing further is prescribed. The Delhi ITAT in 177ITD184 held that the simple requirement under the law is maintenance record of the name and address of the donors. In the absence of such record such amounts are taxable at flat 30%. No concession whatsoever is available for having applied such sums for charitable purposes as is the argument which went well with the Delhi High Court then.


In 42ITR (Trib) 43 and 42ITR (Trib) 393 the assessee having declared donations as income also furnished complete details of the donors along with PAN and other details escaped s. 115BBC application even after when a large number of donors failed to respond to AO against notices issued to them.


Section 115BBE is harsher when it seeks to tax amounts of additions under section 68 either when so offered by the assessee himself like in the case before Delhi High Court and even otherwise when they are so determined by the AO at higher rate of 60%.


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