TMI Blog2016 (6) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... r in 1977 whenever ultimately the beneficiary is the Congregation which has been exempted then they need not pay tax. It is made clear because the Government is paying authority, the Income Tax Department on receipt of such affidavit and on their satisfaction would give a certificate or a letter to the Government of Tamil Nadu that they need not deduct TDS insofar as the Priests and Nuns are concerned because they are not paying salary to the individual which are now being paid only in the name of the Congregation or Diocese only. - Decided in favor of petitioners / assessee. - W.P(MD).Nos.21172 of 2015 to 21181 of 2015 - - - Dated:- 3-3-2016 - B. Rajendran, J. W.P(MD).Nos.21172 of 2015 to 21181 of 2015 and, W.P(MD).Nos.21382, 21383, 21069, 21070 to 21072 and 21491, 21789 to 21803 of 2015 and 21990 to 22000 of 2015 and 22027, 22257 to 22268 of 2015 and 23257 to 23260 of 2015 and M.P(MD).Nos.1 and 2 of 2015 in alW.Ps. and W.P(MD).No.1914 of 2016 and WMP(MD).No.1666 and 1667 of 2016 and W.P(MD).No.2185 of 2016 and WMP(MD).No.1895 and 1896 of 2016 and W.P(MD).No.2915 to 2919 of 2016 _and W.M.P(MD).Nos.2572, 2574, 2576, 2578 and 2580 of 2016 and W.M.P(MD).No.2573, 2575, 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen it is received by the concerned Priests or Nuns in their individual name, TDS is sought to be deducted by the institution but ultimately the income is being only added to the Diocese which is exempted from income tax. Therefore, it goes without saying that the ultimate beneficiaries are the congregation or Diocese, since payment of Tax has been exempted for them the salary of the Priests and Nuns received from government should not be deducted towards TDS under Section 40. 4. It is pointed out that right from 1944, the Income Tax so far as received by the Priests and Nuns are sought to be exempted. When the Act came in the year 1961, in 1977, a resolution has been passed by the Income Tax Department to this effect. Similarly, the parties have also relied upon the communication of the income Tax Department pursuant to Division Bench order seeking for exemption. Therefore, the only contention is that the TDS should not be deducted insofar as to the religious Priests and Nuns salary, which have been paid by the Government. Now, they would contend that every individual Father or Sister or the religious Priests or Nuns are preferred to file an affidavit before the Income Tax Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the salary for their personal use but when they are giving it to the respective Congregation or Diocese only and when the institution is already exempted from payment of income tax, why the salary which is given to the individuals should be deducted for TDS as the ultimate beneficiary is only the Diocese or the Congregation which has already been exempted from payment of income tax. They are now sticking upon the only point that none of the Priests and Nuns though they work under the Government and receive the salary as teaching or non-teaching staff or in any other capacity, they are not utilising the salary in their individual capacity but they are only giving it to the Congregation or Diocese. Under these circumstances, let me summarize even the stand of the department from the beginning even before the advent of the income tax right from 1944. In fact, a circular was issued by the Government in Circular No.1 of 1944 V.No.26(43)-IT/43, dated 24.01.1944 in which the liability to tax on the fees received by the missionaries and subsequently made over to the society had been considered. This Circular has been considered subsequently by the Central Board of Direct Taxes in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in reference F.No.200/88/75-IT (A1), dated the 5th December, 1977, considered the Circular No.1 of 1944 V.No.26(43)-IT/43, dated 24.01.1944. In that instructions, the question for consideration was whether the fees or other earnings when the same is made over to the Congregation to which they belong under the rules thereof is liable to be taxed. The Central Board of Taxes, has concluded as follows: 3. The Board have examined this issue and have decided that since the fees received by the missionaries are to be made over to the congregation concerned there is an over-riding title to the fees which would entitle the missionaries to exemption from payment of tax. Hence such fees of earning are not taxable in their hands. Therefore, way back on 05.12.1977 itself the Board of Tax Department itself has clearly stated that when it reaches the Congregation such fees or earnings are not taxable. 12. Therefore, from the year 1944 to 1977, the Income Tax Department on various occasions have categorized that even the Income earned by the Missionaries are exempted from Tax. Now, under Section 192, there is a mandatory provision where the employer has to deduct TDS from the salary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment has taken a stand way back in the year 1944 to the circular in 1977 whenever ultimately the beneficiary is the Congregation which has been exempted then they need not pay tax. In this connection, a reference is also made to a Division Bench judgment of the Kerala High Court in an identical matter wherein also interim order has been passed but a reference has been made to place this matter before the Central Board of Direct Taxes but no further orders have been brought to the notice of this Court. But as he stated even the Central Board of Direct Taxes itself way back in the year 1977 have considered such an issue and come to the conclusion that it is not taxable for the Nuns. In view of the same, to set at naught all the anomalies, this Court passes the following orders: (1) Every individual viz., Priests or Nuns has to specifically give an undertaking affidavit to the Income Tax Department that his/her entire salary as a teacher/non teaching staff or in any other capacity has to be paid by the Government directly to the Congregation or Diocese, to which he belongs which has already been exempted from payment of income tax. (2) Similar affidavit will also be filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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