PAYYANUR SREE SUBRAHMANYA SWAMI TEMPLE V. INCOME TAX OFFICER,

WP(C)/8524/2019

AI Insights

The case revolves around the Payyanur Sree Subrahmanya Swami Temple, which sought judicial relief against the Income Tax Department's demand for tax payments for the assessment years 2014-15 and 2015-16. The temple, represented by its Executive Officer, argued that it is entitled to an unconditional exemption from income tax under Section 10(23BBA) of the Income Tax Act, 1961, as it is an institution governed by the Madras Hindu Religious & Charitable Endowments Act, 1951. The Income Tax Department, however, processed the temple's tax returns and demanded payments, treating the temple's receipts as taxable income, due to the absence of a Section 12A registration, which the temple contested. The court found that the temple was entitled to the statutory exemption and that the tax demands were improperly made.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 758587 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-07-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Madras Hindu Religious & Charitable Endowments Act, 1951, Societies Registration Act, 1860
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: B RAMACHANDRAN; P K RADHIKA; M SASINDRAN; CHRISTOPHER ABRAHAM
• Assessee Lawyers: MAHESH RAMAKRISHNAN; K PRAMOD
• Keywords: Income tax exemption; Refund of Tax; Tax demand; Religious Endowments; Administrative Body; Statutory Exemption
• Section: 143(1); 12A; 264; 10(23BBA)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI MONDAY, THE 01ST DAY OF JULY 2019 / 10TH ASHADHA, 1941 WP(C).No.8524 of 2019 PETITIONER/S: PAYYANUR SREE SUBRAHMANYA SWAMI TEMPLE REPRESENTED BY ITS EXECUTIVE OFFICER, SS TEMPLE, PAYYANUR-670307. BY ADVS. SRI.MAHESH V RAMAKRISHNAN SRI.K.PRAMOD RESPONDENT/S: 1 INCOME TAX OFFICER, INCOME TAX DEPARTMENT, WARD-4, KANNUR, AAYAKAR BHAVAN, CHOVVA POST, KANNOTHUMCHAL, KANNUR-670006. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, KOZHIKODE-673001. 3 THE CENTRALIZED PROCESSING CENTRE, REPRESENTED BY ITS AUTHORISED OFFICER, INCOME TAX DEPARTMENT, POST BAG NO.2, ELECTRONIC CITY POST OFFICE, BANGALORE-560100. 4 UNION OF INDIA, REPRESENTED BY ITS SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, NEW DELHI-110001. 5 THE MALABAR DEVASWAM BOARD, REPRESENTED BY ITS SECRETARY, HOUSEFED COMPLEX, P.O.ERANHIPALAM, KOZHIKODE-673006. W.P.(C) No.8524/2019 -2- 6 THE SENIOR MANAGER, THE KANNUR DISTRICT CO-OPERATIVE BANK, PAYYANUR BRANCH, PAYYANUR, KANNUR-670307. BY ADVS. SRI.B.RAMACHANDRAN, CGC SMT.P.K.RADHIKA, SC, MALABAR DEVASWOM BOARD SRI.M.SASINDRAN, SC, KANNUR DISTRICT CO.OP. BANK SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01.07.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T Payyanur Sree Subrahmanya Swami Temple, represented by its Executive Officer, is the petitioner. The petitioner prays for the following reliefs: “i) To issue a Writ of Certiorari or any other appropriate Writ, order or direction to call for the entire documents culminated in Exts.P5, P6 & P9 and to quash the same; ii) To declare that the petitioner, being the administrative body of the religious endowments attached to the deity of Sree Payyanur Subrahmanya Swami and constituted under the Madras Hindu Religious & Charitable Endowments Act, 1951, the income of the petitioner is entitled for unconditional exemption from the levy of income tax, U/Sec-10(23BBA) of the Income Tax Act, 1961. W.P.(C) No.8524/2019 -3- iii) To issue a Writ of Mandamus or any other appropriate Writ, order or direction, directing the 1st Respondent to repay the entire amount recovered from the petitioner through the 6th Respondent Bank, along with interest and costs forthwith; iv) Award cost of these proceedings to the petitioner; and v) Pass such other or further orders as this Hon'ble Court may deem fit and proper in the circumstances of the case.” 2. The issue arises under Section 10(23BBA) of the Income Tax Act,1961 (for short 'the Act'). The section reads as follows: “(23BBA) Any income of any body or authority (whether or not a body corporate or corporation sole) established, constituted or appointed by or under any Central, State or Provincial Act which provides for the administration of any one or more of the following, that is to say, public religious or charitable trusts or endowments (including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or other places of public religious worships) or societies for religious or charitable purposes registered as such under the Societies Registration Act, 1860 (21 of 1860) or any other law for the time being in force: Provided that nothing in this clause shall be construed to exempt from tax the income of any trust, endowment or society referred to therein.” W.P.(C) No.8524/2019 -4- 3. The petitioner is an institution coming within the definition of Madras Hindu Religious & Charitable Endowments Act, 1951 (for short ‘HR&CE Act’) and for administration and overseeing the function of the institution, Board of Trustees is constituted under the provisions of HR&CE Act. The case of petitioner is that the petitioner is conforming to the mandate of HR&CE Act and enjoys statutory exemption from the Act under Section 10(23BBA) of the Act. The petitioner temple, for the assessment year 2014-15, on the advise given by internal auditor, e-filed its returns under acknowledgment No.953303230150216 dated 15.02.2016. The third respondent processed the return Ext.P1 and determined the net tax payable by the petitioner and demanded a sum of Rs.29,69,290/- payable for the said assessment year. The petitioner repeated the same procedure for the assessment year 2015-16 and the third respondent determined the net tax payable by the petitioner W.P.(C) No.8524/2019 -5- and demanded a sum of Rs.28,44,340/-. The first respondent through Ext.P4 summoned the petitioner to attend enquiry together with books, accounts etc. 4. The case of petitioner is that the petitioner is a registered temple coming under the scope of HR&CE Act and is entitled to statutory exemption under Section 10(23BBA) of the Act as the petitioner satisfies the requirements of Section 10(23BBA). The erroneous filing of returns ought not to have been processed and likewise by referring to these assessment years and the tax determined, withdrawing a sum of Rs.10 lakh from the account of the petitioner-temple, is illegal, arbitrary, beyond the Act and unconstitutional. 5. The respondents filed statement. The statement of respondents inter alia does not dispute the scope, purport and ambit of Section 10(23BBA) of Act and the application thereof to the case on hand. The statement of respondents, on the W.P.(C) No.8524/2019 -6- contrary, shifts the error in this behalf on to petitioner by stating as follows: “However the petitioner chose to file the returns in form no.ITR 7 based on erroneous advice even when the petitioner was not having registration under Section 12A of the Income Tax Act. In the absence of registration u/s. 12A, the CPC while processing the returns did not take into account the application of income claimed in the return and thereby treating the entire receipts of the petitioner as the total income and raised the impugned demands. In the above backdrop, the entire blame for creation of the tax demand falls on the petitioner. (emphasis applied) 6. The admission on the statutory exemption which the petitioner is entitled to is stated thus: “As regards the petitioner’s prayer for a declaration by the Hon’ble Court that the petitioner is entitled for exemption u/s. 10(23BBA), it is submitted that such a declaration is not necessary as the Income Tax Act itself grants exemption under section 10(23BBA) to the entities of the nature coming within the ambit of that provision. As for the prayer of the petitioner for a direction to refund the amount already collected, it is submitted that in so far as the demands are outstanding against the petitioner in the records of the department, it is not possible to do so before these demands are wiped out by resort to W.P.(C) No.8524/2019 -7- appropriate remedies.” 7. Heard Sri Mahesh V. Ramakrishnan and Sri Christopher Abraham, the learned counsel appearing for the parties. 8. The case of the petitioner is that returns for two assessment years, namely 2014-15 and 2015-16, were filed on an erroneous advice given by the internal auditor. The petitioner firstly is an institution under HR&CE Act. Secondly, the petitioner satisfies the requirement of Section 10(23BBA) of the Act. Therefore, is not under obligation to file return under the Act. Even if the tax is paid erroneously, the respondents, de hors the statutory exemption, firstly could not have determined the total receipts received from the petitioner as income for the particular year and demand tax. Such determination of demand of income tax is contrary to Article 265 of Constitution and Section 10(23BBA) of Act. The said position remains W.P.(C) No.8524/2019 -8- undisputed. The entitlement of petitioner in fact and law is not disputed by the respondents. On the other hand, without joining the issue with the petitioner, for the sake of resolving an issue, the factual and statutory position are fairly stated by the respondents. Therefore, the petitioner prays for appropriate orders. 9. With the above observations and by accepting the stand taken in the statement filed by the respondents, the writ petition could have been disposed of. Such course keeps alive the issue of refund of tax collected without authority from the petitioner. Therefore, this Court by keeping in view the character, scope and admission of the petitioner vis-à-vis HR&CE Act and exemption in Section 10(23BBA) of the Act declares that the determination of income of petitioner for the assessment years 2014-15 and 2015-16 is illegal, contrary to the statutory exemption and violation of Article 265 of Constitution W.P.(C) No.8524/2019 -9- of India. Consequent thereto the petitioner is entitled for refund of the tax already collected from the petitioner institution. For the said purpose of securing refund of tax collected, the petitioner is given liberty, by enclosing a copy of this judgment, within two months from today to apply to second respondent under Section 264 of the Act for passing a consequential order keeping in view the above declaration, including refund of income tax recovered from the petitioner. The second respondent considers and disposes of the application filed by the petitioner in terms of this order within two months and ensures refund within the said period. The writ petition ordered as indicated above. Sd/- S.V.BHATTI JUDGE jjj W.P.(C) No.8524/2019 -10- APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE ASSESSMENT YEAR 2014-15 IN FORM ITR-7. EXHIBIT P2 TRUE COPY OF THE INTIMATION DATED 22.10.2016 U/SEC.143(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2014-15. EXHIBIT P3 TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE ASSESSMENT YEAR 2015-16 IN FORM ITR-7. EXHIBIT P4 TRUE COPY OF THE INTIMATION DATED 27.3.2017 U/SEC-143(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2015-16. EXHIBIT P5 TRUE COPY OF THE ORDER DATED 6.4.2018 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 21.1.2019 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXHIBIT P7 TRUE COPY OF THE PETITION DATED 18.2.2019 U/SEC.154 OF THE INCOME TAX ACT SUBMITTED BY THE PETITIONER (FOR THE YEAR 2014-15) BEFORE THE 1ST RESPONDENT. EXHIBIT P8 TRUE COPY OF THE PETITION DATED 18.2.2019 U/SEC- 154 OF THE INCOME TAX ACT SUBMITTED BY THE PETITIONER (FOR THE YEAR 2015-16) BEFORE THE 1ST RESPONDENT. EXHIBIT P9 TRUE COPY OF THE NOTICE DATED 6.2.2019 ISSUED BY THE 1ST RESPONDENT TO THE 6TH RESPONDENT. W.P.(C) No.8524/2019 -11- EXHIBIT P10 TRUE COPY OF THE PETITION DATED 8.3.2019 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2014-15. EXHIBIT P11 TRUE COPY OF THE PETITION DATED 8.3.2019 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2015-16. EXHIBIT P12 TRUE COPY OF THE LETTER DATED 24.10.2015 ISSUED BY THE PETITIONER TO THE 6TH RESPONDENT. EXHIBIT P13 TRUE COPY OF THE DEBIT VOUCHER FOR RUPEES 10 LAKHS ISSUED BY THE 6TH RESPONDENT EXHIBIT P14 TRUE COPY OF THE CREDIT VOUCHER FOR RUPEES 10 LAKHS ISSUED BY THE 6TH RESPONDENT "