PAYYANUR SREE SUBRAHMANYA SWAMI TEMPLE vs. INCOME TAX OFFICER,

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.”

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 -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.

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.

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 -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)

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 -7- appropriate remedies.”

Heard Sri Mahesh V. Ramakrishnan and Sri Christopher Abraham, the learned counsel appearing for the parties.

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 -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.

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 -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. S.V.BHATTI JUDGE jjj -10-