Ketto Donation Taxability – ITAT Upholds Tax u/s 56(2)(x)

Case Details: Ms. Rana Ayyub Shaikh vs. Deputy Commissioner of Income-tax - [2025] 174 taxmann.com 277 (Mumbai-Trib.)

Judiciary and Counsel Details

• Saktijit Dey, Vice President & Narendra Kumar Billaiya, Accountant Member
• P.J. Pardiwala & Ms Ritu Punjabi, AR’s for the Appellant.
• Ashok Kumar Ambastha, Sr. DR for the Respondent.

Facts of the Case

The assessee, a journalist and columnist for The Washington Post newspaper, raised donations from three campaigns on the Ketto platform. The assessee withdrew the said donation in her or her family member’s account. A substantial amount of donations was transferred from her father’s and sister’s accounts to the assessee’s account.

The Assessing Officer found that despite the time spent of more than one year from the first campaign, the assessee had unutilised funds of approximately Rs. ? 2.4 crores, for which no separate accounts were maintained, making it impossible to segregate the funds used for each campaign. The account in which the assessee or her family members withdrew the money was a personal savings account. Moreover, instead of engaging in relief work, the assessee opened a new account and invested in a fixed deposit in her own name. She also incurred personal expenditure from the same savings account in which the funds were received.

Assessing Officer (AO) further held that the donations allegedly received for Covid relief were taxable as the income of the assessee under section 56(2)(x). On appeal, the CIT(A) confirmed the view of the AO. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the assessee had raised donations from three campaigns on the Ketto platform without maintaining a separate account. The sums exceeded Rs. 50,000, and all the money received was without any consideration. Receipts of such donations received in a personal account, with no liability to return, made them taxable under Section 56(2)(x).

The claim that the end use of these funds was initiated for charitable activities remained unproven. The assessee made a representation before the CBDT in connection with the taxability of funds received as a donation for Covid relief. However, the facts on record showed that this action of the assessee was taken only after the revenue sent her a summons under Section 131 for an enquiry in this matter. Based on the given facts, the donations collected by the assessee were rightly taxable under Section 56(2)(x).

List of Cases Referred to

• CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60 (SC) (para 13)
• CIT v. Tollygunge Club Ltd. [1977] 107 ITR 776 (SC) (para 13)
• Six Continents Hotels, Inc. v. Dy. CIT (International Taxation) [2024] 159 taxmann.com 533 (Mumbai – Trib.) (para 13)
• Chandrakant H. Shah v. ITO [2010] 124 ITD 177 (Mumbai) (para 13).