Liability to tax - Fees received by Missionaries and subsequently made over to their Society - Income Tax - 1 of 1944

Circular No.1 of 1944 C.No.26(48)-I.T./43 CENTRAL BOARD OF REVENUE Simla, the 24th January 1944. Liability to tax - Fees received by Missionaries and subsequently made over to their Society Attention is invited to the instructions contained in Board s circular No. 5 of 1940/D.Dis.No.26(33)-I.T./39 dated the 2nd January, 1940 and D.O. D.Dis.No.26(33)-I.T./39, dated the 9th May 1940. It has been brought to the Board s notice that considerable hardship is caused to Missionaries by the taxation of fees received by them for services rendered, which, by the conditions of their service and the Rules of their Society, they are required to make over to the Society. In view of the principle of diversion of income enunciated by the Privy Council in Dudhuria s case (6 I.T.C. 449) it is arguable that fees received by Missionaries on behalf of a Missionary Society and which are payable to it according to their contract of service are not their income . As recognised in the Board s D.O. letter referred to above, where a Missionary employee collects fees in payment of bills due to the institution the amount collected will be the income of the institution and not that of the employee . It makes little difference whether the bills are prepared by the Society and sent out for collection or whether the employee collects the fees in a fiduciary capacity and pays the amount over to the Society. In the circumstances, the Board have decided that no income-tax should be levied on fees received by Missionaries for services rendered by them , which by the conditions of their service and the Rules of their Society , they are required to make over to the Society . Such income would also be exempt in the hands of the Society concerned if the conditions laid down in Sec. 4(3)(ia) are satisfied . 2. Board s circular No.5 of 1940 (D.Dis.No.26(33)-I.T./39) dated the 2nd January 1940 is hereby cancelled . Sd/- for First Secretary, Central Board of Revenue