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TMI Blog2021 (2) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court set aside the appointment of the Executive Officer confirming the scheme as framed originally. Thus, the temples, endowments and charities comprising the Vaithiyanathaswamy or Velur Devasthanam continue to be administered and managed till date by a Kattalai Thambiran appointed periodically by the Pandarasannathi in his capacity as trustee under a scheme of administration framed in a scheme suit filed under Section 92 of the Civil Procedure Code 1908 in line with the provisions of the Madras Hindu Religious Charitable Endowment Act, 1951 ( 1951 Act ) and its precursor enactments, in the year 1919. In light of the above facts, the requirements of Section 10(23BBA) appear to be satisfied in this case (i) the body or authority being the Devasthanam, (ii) the required enactments being the Civil Procedure Code 1909 (Central) and the Madras Hindu Religious Charitable Endowment Act, 1951 (State) and precursor State enactments (iii) the devasthanam holding within its fold several constituent temples as detailed in paragraph 2 of this order. The argument of the Sri Amirthakadeswaraswamy Devasthanam to the effect that it should be deemed to have been constituted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anam is dismissed. - W.P. Nos.29312 & 29315 of 2019 And WMP.Nos.29115 & 29111 of 2019 & 2325 of 2020 - - - Dated:- 18-2-2021 - Honourable Dr. Justice Anita Sumanth For the Petitioners : Mr.Satyanarayanan (W.P.No.29312 of 2019), Mr.R.Sivaraman (W.P.No.29315 of 2019) Speaking Amicus curie for the HR CE Department : Mr.Karthikeyan, Special Government Pleader Mr.Sriram For the Respondents : Mrs.Hema Muralikrishnan Senior Standing Counsel COMMON ORDER These writ petitions have been filed by the Sri Vaithiyanathaswamy and Sri Amirthakadeswaraswamy Devasthanams and raise important issues on the interpretation of Section 10(23BBA) of the Income Tax Act, 1961 (IT Act). 2. The impugned notice and order in W.P.No.29315 of 2019 have been issued to Sri Vaithiyanathaswamy Devasthanam, also known as the Velur Devasthanam, comprising the Vaitheeswaran Koil at Sirkazhi Taluk, Thanjavur, Sri Veeratteswara Swami Temple, Korkkai, Mayiladuthurai Taluk, Sri Kutramporutheeswarar Temple, Thalaignayiru, Mayiladuthurai Taluk, Sri Lakshmipureeswarar Temple, Thirunandriyur, Mayiladuthurai Taluk, Sri Maruthapureeswarar Temple, Maruvatthur, Sirkazhi Taluk, Sri Mariyamman Temple, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asthanams to file returns of income. The notices were followed up with reminders to which also, there was no compliance by the devasthanams. Thus, a communication dated 09.03.2018 came to be issued by the Principal Commissioner of Income Tax bringing to the notice of the devasthanams the extension of due date for filing of a ROI for AY 2017-18, upto 31.03.2018. He urged that the opportunity be utilised and returns of income filed within the extended period. In response, the devasthanams, setting out the history of their constitution, explained that the deposits comprise voluntary donations made in specified bank notes (SBN) in their hundis. They claimed an exemption in terms of Section 10(23BBA) of the IT Act and prayed that the proposed proceedings for assessment be dropped. The petitioners also requested the refund of any amounts deducted as tax at source. 6. Communication dated 05.08.2019 was thereafter issued by R2, the Income Tax Officer (Exemption Ward), putting the petitioners to notice that the cash deposits made were proposed to be brought to tax as unaccounted cash credits in terms of Section 115 BBE of the IT Act and inviting the petitioners to submit objections to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors. (1972 3 CTCOL 909). 9. The impugned orders in the case of Sri Vaithyanathaswamy Devasthanam are extracted hereinbelow as being illustrative of the orders passed in both cases, for completion and clarity: 27.11.2017 Notice Under Clause(i), Sub-Section (1) of Section 142 of the Income-Tax Act, 1961 Sir/Madam, In connection with assessment for assessment year 2017- 18, you are required to prepare a true and correct return of your income in respect of which you are assessable under the Income-tax Act, 1961 (Act), during the previous year relevant to the assessment year, mentioned above. The said return of income should be in appropriate form as prescribed in Rule 12 of the Income Tax Rules, 1962 and duly verified in accordance with provisions of section 140 of the Act. The said return of income is required to be furnished as per the conditions and manner prescribed in Rule 12 of Income-tax Rules, 1962, on or before 27/12/2017. P.VIJAIDEEPAN CIRCLE 1 KUMBAKONAM -------- GOVERNMENT OF INDIA INCOME TAX DEPARTMENT OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX (EXEMPTIONS) Room no.308, 3rd Floor,Aannexue Builidng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is only being managed by the Tamilnadu State Body, HR CE. 7. In the absence of the return of income for AY 2017-18, Audit report in form 10-B even it has registration u/s 12AA of the Act, the assessee trust is not entitled to claim exemption under Section 11 of the IT Act as per clause (b) to sub section (1) of Sec 12A and therefore the trust has to be treated under AOP Status. 8. The AO is directed to verify the total cash credits reflected in the bank accounts with regular books of accounts to verify an unexplained cash credits u/s 68 or unexplained money u/s. 69A of the IT Act, 1961, and also verify any inadmissible under AOP status for finalizing the assessment in the lines as per SOPs issued by the CBDT time to time (as mentioned under reference). Necessary penalty proceedings may be initiated. Draft Assessment order may be sent to this office. 10. The counter filed by the respondents adopts the stand that the provisions of Section 10(23BBA) are not attracted to the facts and circumstances of the petitioner devasthanams as, according to them, the constituent temples function under the aegis of the HR CE Act and the body or authority as referred to in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Wakfs for each State for the general superintendence of all wakfs in that State. Section 8A of the Wakfs Act provides for the establishment of the Central Wakf Council for the purpose of advising the Central Government on matters concerning the working of State Wakf Boards and due administration of the wakfs. In the cases of public religious or charitable trusts or endowments of other communities, there are similar bodies set up under enactments in force in different States. These bodies or authorities set up by or under the Central, State or Provincial Acts are entrusted with the administration of public religious or charitable trusts within their jurisdiction. These public religious or charitable trusts also cover temples, maths, wakfs, churches, synagogues, agiaries and other places of public religious worship, other religious and charitable endowments, as also societies formed for religious or charitable purposes under the Societies Registration Act, 1860. Such bodies or authorities are at times in receipt of income during the course of administration of such public religious or charitable trusts or institutions. Since these bodies or authorities are not engaged in any comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al enactment (tier (i)), a body or authority set up under aforesaid Central, State or Provincial enactment in the nature of a public religious or charitable trust (tier (ii)) and temples, maths, wakfs, churches, synagogues, agiaries and other places of public religious worship, religious and charitable endowments and societies (tier (iii)). The grant of exemption is conditional upon the existence of the structure as contemplated above and is directed towards the entity in the second tier, explicitly excluding all places of public religious worship and charities constituted under them, from the benefit of exemption. 18. This understanding of Section 10(23BBA) is accepted by all parties before me. The question that remains is where the petitioner Devasthanams fall within the aforesaid structure and such determination would be critical to answer the question of their taxability. 19. The Sri Vaithiyanathaswamy Devasthanam was under the supervision and administration of the British till, in 1842, its management was handed over to the Pandarasannadhi of Dharmapuram Adheenam, who has been managing the same since then, through a Kattalai Thambiran. The handing over is pursuant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thanam that may hereafter be acquired by the Devasthanam shall vest in the deity of Vaithianathaswami. 3. The admnistration of the Devasthanam and its properties shall vest in Pandarasannadhi at the Dharmapuran Adhinam for the time being, who shall be the Trustee of the Devasthanam. 22. The scheme sets out a framework for governance and administration of the assets and receipts of the devasthanam and constituent temples by the Pandarasannadhi, who was named as trustee. Suffice it to say that the Supreme Court set aside the appointment of the Executive Officer confirming the scheme as framed originally. Thus, the temples, endowments and charities comprising the Vaithiyanathaswamy or Velur Devasthanam continue to be administered and managed till date by a Kattalai Thambiran appointed periodically by the Pandarasannathi in his capacity as trustee under a scheme of administration framed in a scheme suit filed under Section 92 of the Civil Procedure Code 1908 in line with the provisions of the Madras Hindu Religious Charitable Endowment Act, 1951 ( 1951 Act ) and its precursor enactments, in the year 1919. 23. In light of the above facts, the requirements of Section 10(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment advanced is that the use of the word establish in Section 10(23BBA) of the IT Act, does not necessarily mean only created or set up and should be seen to have a much wider meaning, which is to give legal or official form or shape to an entity . The judgment of the Supreme Court in R.C. Mitter Sons vs. Commissioner of Income-tax (1959 36 ITR 194 SC) and of the Delhi High Court in Finite Infratech (specifically paragraphs 25, 26 27) are relied upon in this regard. 27. Reference is made to Ramiengar alias Ramanuja Chariyar (supra) wherein the history relating to temples in Thanjavur and their endowments has been referred to in detail. The Court noticed that proper appropriation of the endowments of Hindu and Mohammedan temples and religious establishments and the preservation of the structures and management of their affairs were exercised by officers of the local Government indiscriminately prior to the period before they were assumed by the Government. It was in 1817 that the management of religious establishments and their endowments was made a legal obligation on the Board of revenue and their local agents by virtue of Regulation VII of that year. Act 20 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fers to Circular 4 of 2002 dated 16.07.2002 (256 ITR (Statutes) 22), wherein the Central Board of Direct Taxes has, in the context of Section 10(23BBA), stated that where an entity/authority/board/body by whatever name called, has been granted exemption under Section 10(23BBA), there is no necessity for it to file a statutory return of income and no requirement for deduction of tax at source from income earned by them. 32. In the case of Payyanur Sri Subramaniam Swami Temple (supra), a learned Single Judge of the Kerala High Court answered the claim of that temple to exemption under Section 10(23BBA) positively, on the ground that the temple was constituted under the 1951 Act. The matter was decided on a concession by the Income Tax Department, recorded by the Court at paragraph 6, the court then issuing a mandamus for refund of the tax collected. There is no discussion on the interpretation of Section 10(23BBA) itself. 33. The Vaithyanathaswamy Devasthanam had questioned the fixation of salary payable to the employees of the devasthanam contending that the Government had no jurisdiction to fix the salaries of its employees. The matter was held adverse to the petitioner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard is equitable to the HR CE department is rejected. I draw support in this regard from a note on the background of the Department, contained in its website, extracted below: The temples have been under the superintendence and control of the Government even during days of the East India Company. The Hindu Temples have been in possession of thousands of Acres of lands since ancient times. Even during the times of East India Company, complaints were received regarding maladministration of these institutions. The general public lodged complaints with the kings then and East India Company. In the meanwhile, the Madras regulation 1817 was enacted. This Act provided for monitoring whether the grants and endowments to temples were properly utilized or diverted for the welfare of private individuals. The Board was empowered to carry out this exercise. Due to this, thousands of temples were brought under the control of the Government. In 1858, the Indian Government's Administration was transferred to the British crown directly from the hands of the East India Company. It was required for the British Government to win the confidence of the people and to reduce their i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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