M/S. Sri Amirthakadeswaraswamy Devasthanamdharumapuram Adheenamrepresented By Manager,R.sethumanikkam v. The Income Tax Officer Exemptions Ward, Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON : 02.12.2020 PRONOUNCED ON: 18.02.2021 CORAM THE HONOURABLE DR. JUSTICE ANITA SUMANTH W.P. Nos.29312 & 29315 of 2019 & WMP.Nos.29115 & 29111 of 2019 & 2325 & 2326 of 2020 WP.No.29312 of 2019 M/s. Sri Amirthakadeswaraswamy DevasthanamDharumapuram AdheenamRepresented by Manager,R.Sethumanikkam ..Petitioner Vs. 1.The Assistant Commissioner of Income Tax Officer, Circle-I, Kumbakonam Income Tax Officer, First Floor, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam-612001 Circle-I, Kumbakonam Income Tax Officer, First Floor, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam-612001 2.The Income Tax Officer Exemptions Ward, Room No.210, 2[nd] Floor, No.44, Williams Road, Cantonment, Trichy-620001 Room No.210, 2[nd] Floor, No.44, Williams Road, Cantonment, Trichy-620001 3.The Joint Commissioner of Income Tax (Exemptions), Coimbatore Range at No.121, M.G.Road, Nungambakkam, Chennai-600034/Coimbatore Coimbatore Range at No.121, M.G.Road, Nungambakkam, Chennai-600034/Coimbatore ..Respondents WP.No.29315 of 2019 M/s.Sri Vaithiyanathaswamy DevasthanamDharumapuram AdheenamRepresented by Manager,R.Sethumanikkam ...Petitioner Vs. 1.The Assistant Commissioner of Income Tax Officer, Circle-I, Kumbakonam Income Tax Officer, First Floor, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam-612001 Circle-I, Kumbakonam Income Tax Officer, First Floor, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam-612001 2.The Income Tax Officer Exemptions Ward, Room No.210, 2[nd] Floor, No.44, Williams Road, Cantonment, Trichy-620001 Room No.210, 2[nd] Floor, No.44, Williams Road, Cantonment, Trichy-620001 3.The Joint Commissioner of Income Tax (Exemptions), Coimbatore Range at No.121, M.G.Road, Nungambakkam, Chennai-60034/Coimbatore...Respondents Prayer in W.P.No.29312 of 2019: Writ Petition filed underArticle 226 of the Constitution of India praying to issue a Writof Certiorarified Mandamus calling of the records of the 1[st]respondent contained in the impugned notice in No.ITBA/AIM/S/142(1)/2017-18/1007755052(1) dated 23.11.2017, issued u/s 142(1) ofthe Income Tax Act, 1961 along with proceedings in No.59/JCIT(E)/CBE/144A/AAKTS9055M/2019-20 dated 23.09.2019 issued by the3[rd] respondent and quash the same as arbitrary, unjust andillegal and to consequently direct the 1[st] respondent to treatthe income of the petitioner as exempt u/s 10(23BBA) of theIncome Tax Act, 1961. Prayer in W.P.No.29315 of 2019: Writ Petition filed underArticle 226 of the Constitution of India praying to issue a Writof Certiorarified Mandamus calling of the records of the 1[st]respondent contained in the impugned notice in No.ITBA/AIM/S/142(1)/2017-18/1007803352(1) dated 27.11.2017, issued u/s 142(1) ofthe Income Tax Act, 1961 along with proceedings in in F/No.JCIT(E) /CBE/144A/Scrutiny/2019-20 dated 18.09.2019 issued by the 3[rd]respondent and quash the same as arbitrary, unjust and illegaland to consequently direct the 1[st] respondent to treat the incomeof the petitioner as exempt u/s 10(23BBA) of the Income Tax Act,1961.(In both Wps)For Petitioners : Mr.Satyanarayanan (W.P.No.29312 of2019)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 Respondents: Mrs.Hema Muralikrishnan Senior Standing CounselCOMMON ORDER These writ petitions have been filed by the SriVaithiyanathaswamy and Sri Amirthakadeswaraswamy Devasthanamsand raise important issues on the interpretation of Section 10(23BBA) of the Income Tax Act, 1961 (IT Act). https://hcservices.ecourts.gov.in/hcservices/ These writ petitions have been filed by the SriVaithiyanathaswamy and Sri Amirthakadeswaraswamy Devasthanamsand raise important issues on the interpretation of Section 10(23BBA) of the Income Tax Act, 1961 (IT Act). https://hcservices.ecourts.gov.in/hcservices/ 2. The impugned notice and order in W.P.No.29315 of 2019have been issued to Sri Vaithiyanathaswamy Devasthanam, alsoknown as the Velur Devasthanam, comprising the VaitheeswaranKoil at Sirkazhi Taluk, Thanjavur, Sri Veeratteswara SwamiTemple, Korkkai, Mayiladuthurai Taluk, Sri KutramporutheeswararTemple,Thalaignayiru,MayiladuthuraiTaluk,SriLakshmipureeswarar Temple, Thirunandriyur, Mayiladuthurai Taluk,Sri Maruthapureeswarar Temple, Maruvatthur, Sirkazhi Taluk, SriMariyamman Temple, Sri Angalaparameswari Temple, Sri AyyanarTemple, Sri Pidariyamman Temple, Sri Thirowbathaiyamman Temple,Vaitheeswaran koil, Sirkazhi Taluk, Sri Ayyanar Temple,Neikuppai, Sirkazhi Taluk, (‘constituent temples’) shrines inthe aforesaid temple premises and endowments and charities. AsforthepetitionerinW.P.29312of2019,theAmirthakadeswaraswamyDevasthanamcomprisestheSriAmirthakadeswara Swami Temple, Thirukkadaiyur, Tranqubar Taluk,Sri Veeratteswara Swami Temple, Parasaloor, Tranqubar Taluk, SriThuraikattum Vallalar Swami Temple, Vilanagar, Tranqubar Taluk,Sri Mariyamman Temple, Ottangadu Temple, Tranqubar Taluk, SriAgneeswara Swami Temple, Udayavar Koil Pathu, (Panjakkai),Tranqubar Taluk, Sri Edirkaleswarar Temple, Thirukkadaiyur,Tranqubar Taluk and Sri Kathayamman Temple, Thirukkadaiyur,Tranqubar Taluk (‘constituent temples’) along with shrines forother deities and endowments. Both Devasthanams come under thesupervision and management of the Dharmapuram Adheenam and arejointly referred to as ‘devasthanams’ and singly as‘devasthanam’ for convenience and clarity. All the constituenttemples are listed in terms of Section 45(3) of the Tamil NaduHindu Religious and Charitable Endowments Act 1959 (HR&CE Act). 3. The Dharmapuram Adheenam (‘Adheenam’) is a SaiviteMutt, based in Mayiladuthurai that oversees the administrationand management of 27 temples dedicated to the worship of LordShiva and His consorts. The temples are grouped into smallerdevasthanams under the overall management of the Adheenam, eachdevasthanam administering major and minor temples shrines,charities and endowments. 4. The devasthanams claim that they are regularly auditedby the HR&CE Department and the collections from Hundis anddonations, and income from endowments and other properties areproperly accounted for, deposited in their bank accounts andutilised towards their objects. 5. While so, the devasthanams had made cash deposits ofamountsofRs.11,40,800/-andRs.38,84,660/-(SriVaithiyanathaswamy Devasthanam) and Rs.60,21,054/- (SriAmirthakadeswara Swami Devasthanam) for assessment year (AY)2017-18 which came to the attention of the Income TaxDepartment. No returns of income in terms of the provisions of https://hcservices.ecourts.gov.in/hcservices/ 4. The devasthanams claim that they are regularly auditedby the HR&CE Department and the collections from Hundis anddonations, and income from endowments and other properties areproperly accounted for, deposited in their bank accounts andutilised towards their objects. 5. While so, the devasthanams had made cash deposits ofamountsofRs.11,40,800/-andRs.38,84,660/-(SriVaithiyanathaswamy Devasthanam) and Rs.60,21,054/- (SriAmirthakadeswara Swami Devasthanam) for assessment year (AY)2017-18 which came to the attention of the Income TaxDepartment. No returns of income in terms of the provisions of https://hcservices.ecourts.gov.in/hcservices/ the IT Act had been filed by the devasthanams and notices underSection 142(1) thus came to be issued calling upon thedevasthanams to file returns of income. The notices werefollowed up with reminders to which also, there was nocompliance by the devasthanams. Thus, a communication dated09.03.2018 came to be issued by the Principal Commissioner ofIncome Tax bringing to the notice of the devasthanams theextension of due date for filing of a ROI for AY 2017-18, upto31.03.2018. He urged that the opportunity be utilised andreturns 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 inspecified bank notes (SBN) in their hundis. They claimed anexemption in terms of Section 10(23BBA) of the IT Act and prayedthat the proposed proceedings for assessment be dropped. Thepetitioners also requested the refund of any amounts deducted astax at source. 6. Communication dated 05.08.2019 was thereafter issued byR2, the Income Tax Officer (Exemption Ward), putting thepetitioners to notice that the cash deposits made were proposedto be brought to tax as unaccounted cash credits in terms ofSection 115 BBE of the IT Act and inviting the petitioners tosubmit objections to this proposal. The petitioners reiteratedthe claim of exemption under Section 10(23BBA) stating that theywere under no obligation to file returns of income. As far asthe cash deposits are concerned, the explanation given was thatthe offerings in SBN had been made by devotees in the hundisvoluntarily during the period of demonetization, and suchcollections, according to the devasthanams, were not taxable.Several judgements have been relied upon in support of theirclaim for exemption. 7. On 09.09.2019, the Joint Commissioner of Income Tax(Exemptions)/R3 proposed to complete the assessments to the bestof his judgment and, invoking the proviso to Section 144(a) ofthe IT Act issued show cause notices, again putting thepetitioners to notice that the cash deposits were proposed to bebrought to tax. The petitioners reiterated the claim ofexemption. On 18.09.2019 directions were issued by the JointCommissioner/R3 to the Assessing Officer to bring to tax theunexplained cash credits and also initiate proceedings for thelevy of penalty. This is an internal communication between R3and R2, a copy of which was provided to the petitioners by R2,and this, along with initial notices dated 23.11.2017 (SriAmirthakadeswara Swamy devasthanam) and 27.11.2017 (SriVaithiyanathaswamy devasthnam) issued by R1, constitute thesubject matter of challenge in these writ petitions. 8. In support of their claim for exemption, the petitionershave relied on the following judgments: i) Sri La Subramanya Desiga Gnanasambada Pandarasannadhi,Trustee of Sri Vaidyanathaswami Temple Vs. State of Madras(1965) 2 SCR 934 : AIR 1965 SC 1683 ii) Commissioner of Income-tax, Kota v. Bade MathureshjiTemple Board (2018) 99 taxmann.com 452 (Rajasthan) iii) Shri Jagannath Temple Managing Committee, Puri Vs.Commissioner of Income-tax, Bhubaneswar and Ors (2007 SCC OnLineOri 43) 8. In support of their claim for exemption, the petitionershave relied on the following judgments: i) Sri La Subramanya Desiga Gnanasambada Pandarasannadhi,Trustee of Sri Vaidyanathaswami Temple Vs. State of Madras(1965) 2 SCR 934 : AIR 1965 SC 1683 ii) Commissioner of Income-tax, Kota v. Bade MathureshjiTemple Board (2018) 99 taxmann.com 452 (Rajasthan) iii) Shri Jagannath Temple Managing Committee, Puri Vs.Commissioner of Income-tax, Bhubaneswar and Ors (2007 SCC OnLineOri 43) iv) Payyanur Sree Subrahmanya Swami Temple Vs. Income TaxOfficer & others, High Court of Kerala in W.P.(c).No.8524 of 2019v) Arulmigu Vaithiyanathaswamy Devasthanam vs. The HinduReligious and Charitable Endowments & others (2012) 2 CTC 218. vi) Ramiengar alias Ramanuja Chariyar and 2 others Vs.Gnanasambanda Pandarasannada and others (Regular Appeal No.12 of1867). vii) S.V.Ramaswamy Poosari and Anr. Vs. DeputyCommissioner, Hindu Religious and Charitable Endowments and Ors.(1972 3 CTCOL 909). 9. The impugned orders in the case of SriVaithyanathaswamy Devasthanam are extracted hereinbelow as beingillustrative of the orders passed in both cases, for completionand clarity: 27.11.2017 Notice Under Clause(i), Sub-Section (1) of Section 142of the Income-Tax Act, 1961 Sir/Madam, In connection with assessment forassessment year 2017-18, you are required toprepare a true and correct return of your income inrespect of which you are assessable under theIncome-tax Act, 1961 (Act), during the previousyear relevant to the assessment year, mentionedabove. The said return of income should be inappropriate form as prescribed in Rule 12 of theIncome Tax Rules, 1962 and duly verified inaccordance with provisions of section 140 of theAct. The said return of income is required tobe furnished as per the conditions and mannerprescribed in Rule 12 of Income-tax Rules, 1962, onor before 27/12/2017.P.VIJAIDEEPAN CIRCLE 1 KUMBAKONAM--------GOVERNMENT OF INDIAINCOME TAX DEPARTMENTOFFICE OF THE JOINT COMMISSIONER OF INCOME TAX(EXEMPTIONS)Room no.308, 3[rd ] Floor,Aannexue Builidng, AayakarBhawan, No.121, M.G.Road,Nungambakkam, Chennai-34/Coimbatore F.No.JCIT(E)/BCE/144A/Scrutiny/2019-20 Date-18/09/2019To,The Income Tax Officer (Exemptions)Trichy.Sir,Sub:Directions u/s144A-in the case of SriVaithiyanatha Swamy Devasthanam Vaitheeswaran Koil-A.Y.2017-18-reg.Ref: 1.Assessee’s letter dated 10.08.20192. Instructions No.3/2017 dt.21.02.20173. Instruction No.4/2017 dt.31.03.20174.SOP dated 15.11.20175. SOP dated 05/03/20196. Internal guidelines dated 13.06.20197. Checklist dated 09.08.2019-------------Please refer to the above subject and references citedabove. 1.During demonetization period 09/11/2016 to31.12.2016, the trust had made cash deposits ofRs.28,57,782/-.2. It is seen from the e-filing portal that thetrust has not filed any Return of Income for the AY2017-18 within the due date u/s 139 (1) of IncomeTax Act, 1961.3. The assessee trust was also asked to file returnof income notice u/s 142(1) and it has failed tofile return of income before the time allowed.4. Further assessee trust also failed to file auditreport in form no.10B mandatory for claimingexemption u/s.11 & 12. https://hcservices.ecourts.gov.in/hcservices/ 5. It was stated before Assessing Officer videwritten submission dated 10.08.2019 by the assesseetrust that income is exempted u/s 10(23BBA) ofIncome Tax Act and not liable for file the return ofincome and requested to drop the proceedingsinitiated/s. 144. The assessee’s AR Shri K.Vishva,CA has appeared before me on 17.09.2019 and the casewas discussed on the lines of submission made beforeAssessing Officer. https://hcservices.ecourts.gov.in/hcservices/ 5. It was stated before Assessing Officer videwritten submission dated 10.08.2019 by the assesseetrust that income is exempted u/s 10(23BBA) ofIncome Tax Act and not liable for file the return ofincome and requested to drop the proceedingsinitiated/s. 144. The assessee’s AR Shri K.Vishva,CA has appeared before me on 17.09.2019 and the casewas discussed on the lines of submission made beforeAssessing Officer. 6. It was reported by the AO that the claim ofexemption u/s.10(23BBA) is not entitled for theassessee trust. In this regard the plain reading ofexplanatory note in the Finance Act, 1979 (21 of1979) for insertion of clause 23BBA of sec.10 ofIncome Tax Act clearly mention that: ‘Exemption …. charitable purposes’. (deleted in theinterests of space,as the explanatory memorandum isextracted elsewhere in this order) Hence as per the proviso to above section theassessee trust is not entitled for exemption ofincome u/s. 10 (23BBA) as it has not established thatthe assessee trust was set up by the State Act ofTamilnadu. It is only being managed by the TamilnaduState Body, HR&CE. 7. In the absence of the return of income for AY2017-18, Audit report in form 10-B even it hasregistration u/s 12AA of the Act, the assessee trustis not entitled to claim exemption under Section 11of the IT Act as per clause (b) to sub section (1) ofSec 12A and therefore the trust has to be treatedunder AOP Status. 8. The AO is directed to verify the total cashcredits reflected in the bank accounts with regularbooks of accounts to verify an unexplained cashcredits u/s 68 or unexplained money u/s. 69A of theIT Act, 1961, and also verify any inadmissible underAOP status for finalizing the assessment in the linesas per SOPs issued by the CBDT time to time (asmentioned under reference). Necessary penaltyproceedings may be initiated. Draft Assessment ordermay be sent to this office. 10. The counter filed by the respondents adopts the standthat the provisions of Section 10(23BBA) are not attracted tothe facts and circumstances of the petitioner devasthanams as,according to them, the constituent temples function under theaegis of the HR&CE Act and the ‘body’ or ‘authority’ as referredto in Section 10(23BBA) would be the HR&CE department only withexemption only available to it. Moreover, the proviso toSection 10(23BBA) specifically excludes temples and other religious institutions functioning under the management of the‘body’ or ‘authority’ from the scope of exemption, stating thatthey fall within the ambit of taxability. Thus, in summation,exemption under Section 10(23BBA) can be claimed only by theHR&CE department and not by the petitioners. If at all thedevasthanams believed that they were entitled to an exemption,such exemption can only be in line with the provisions ofSection 11 of the Act, subject to all compliances set outthereunder. 11. That apart, the challenge in the writ petitions is toproceedings for assessment that are in line with the provisionsof the IT Act. No case has been made to establish how suchproceedings are bad in law and it is incumbent upon thepetitioners to appear before the authorities and explain theirstand. The writ petitions, according to the revenue, are devoidof merits on all fronts, liable to be dismissed in limine. 12. The provisions of Section 10(23BBA) of the IT Act areextracted below: 11. That apart, the challenge in the writ petitions is toproceedings for assessment that are in line with the provisionsof the IT Act. No case has been made to establish how suchproceedings are bad in law and it is incumbent upon thepetitioners to appear before the authorities and explain theirstand. The writ petitions, according to the revenue, are devoidof merits on all fronts, liable to be dismissed in limine. 12. The provisions of Section 10(23BBA) of the IT Act areextracted below: Section 10(23BBA) any income of any body orauthority (whether or not a body corporate orcorporation sole) established, constituted orappointed by or under any Central, State orProvincialActwhichprovidesfortheadministration of any one or more of the following,that is to say, public religious or charitabletrusts or endowments (including maths, temples,gurdwaras, wakfs, churches, synagogues, agiaries orother place of public religious worship) orsocieties for religious or charitable purposesregistered as such under the Societies RegistrationAct, 1860 (21 of 1860), or any other law for thetime being in force. Provided that nothing in this clause shall beconstrued to exempt from tax the income of anytrust, endowment or society referred to therein;]’ 13. Sub-clause 10(23BBA) was inserted by Finance Act, 1979with retrospective effect from 01.04.1962. At the time ofinsertion, the memorandum explaining its objects states asfollows: Exemption from income-tax in the case ofstatutory bodies or authorities for the administrationof public religious or charitable trusts orendowments, etc. Section 9 of the Wakfs Act, 1954 provides for theestablishment of the Board of Wakfs for each State forthe general superintendence of all wakfs in thatState. Section 8A of the Wakfs Act provides for theestablishment of the Central Wakf Council for thepurpose of advising the Central Government on mattersconcerning the working of State Wakf Boards and dueadministration of the wakfs. In the cases of publicreligious or charitable trusts or endowments of othercommunities, there are similar bodies set up underenactments in force in different States. These bodiesor authorities set up by or under the Central, Stateor Provincial Acts are entrusted with theadministration of public religious or charitabletrusts within their jurisdiction. These publicreligiousorcharitabletrustsalso covertemples, maths, wakfs, churches, synagogues, agiariesand other places of public religious worship, otherreligious and charitable endowments, as also societiesformed for religious or charitable purposes under theSocieties Registration Act, 1860. Such bodies orauthorities are at times in receipt of income duringthe course of administration of such public religiousor charitable trusts or institutions. Since thesebodies or authorities are not engaged in anycommercial activity, it is proposed to insert a newclause (23BBA) in section 10 in order to grantexemption in respect of income arising to anybody orauthority established, constituted or appointed underany enactment for the administration of such publicreligious or charitable trusts or endowments orsocieties for religious or charitable purposes. It ishowever, being made clear that the exemption would notapply to the income of such trust, endowment orsociety.70. The proposed provision will take effectretrospectively from 1[st] April, 1962 i.e. from thecommencement of the Income-tax Act, 1961. 14. The grant of exemption is with specific reference tothe hierarchy under the Wakf Act that has constituted Board ofWakfs in each State for the general superintendence of all Wakfsin that State. Overseeing them all is the Central Wakf Council,which also advices the Central Government on all mattersconcerning the working of the State Wakf Boards. The existenceof similar hierarchies in other communities has been recognised. 14. The grant of exemption is with specific reference tothe hierarchy under the Wakf Act that has constituted Board ofWakfs in each State for the general superintendence of all Wakfsin that State. Overseeing them all is the Central Wakf Council,which also advices the Central Government on all mattersconcerning the working of the State Wakf Boards. The existenceof similar hierarchies in other communities has been recognised. 15. An exemption was thus extended to those bodies orauthorities set up under a Central, State or Provincial Act,that are entrusted with the administration of public religiousand charitable trusts and endowments that include within theirambit temples, maths, wakfs, churches, synagogues, agiaries andother places of public religious worship and religious andcharitable endowments as also societies formed under theSocieties Registration Act for dispensation of religious andcharitable purposes. 16. Since the overseeing authorities are constituted onlyto administer or manage the affairs of the religious andcharitable endowments vested in them, and do not engage in anycommercial activity, it was felt that any income that may ariseor accrue to them would not bear the nature of taxable incomefor the purposes of the Income Tax Act. Thus, the body/authorityconstituted under the Central, State or Provincial Act, andvested with the administration of a public religious orcharitable trust encompassing places of worship, stood exemptedfrom the application of the IT Act. It was made clear in theproviso to Section 10(23BBA) that the exemption did not extendto the constituents of that body/authority whose income isliable to tax, in accordance with law. 17. A three tier structure is envisaged, a Central, Stateor Provincial enactment (tier (i)), a body or authority set upunder aforesaid Central, State or Provincial enactment in thenature of a public religious or charitable trust (tier (ii)) andtemples, maths, wakfs, churches, synagogues, agiaries and otherplaces of public religious worship, religious and charitableendowments and societies (tier (iii)). The grant of exemption isconditional upon the existence of the structure as contemplatedabove and is directed towards the entity in the second tier,explicitly excluding all places of public religious worship andcharities constituted under them, from the benefit of exemption. 18. This understanding of Section 10(23BBA) is accepted byall parties before me. The question that remains is where thepetitioner Devasthanams fall within the aforesaid structure andsuch determination would be critical to answer the question oftheir taxability. 19. The Sri Vaithiyanathaswamy Devasthanam was under thesupervision and administration of the British till, in 1842, itsmanagement was handed over to the Pandarasannadhi of DharmapuramAdheenam, who has been managing the same since then, through aKattalai Thambiran. The handing over is pursuant to theenactment of the Religious Endowments Act, 1863. 20. Original Suit (O.S.No.10 of 1911) was filed byChidambaranatha Tambiran, the then Kattalai Thambiran, seeking https://hcservices.ecourts.gov.in/hcservices/ removal of the then Pandara Sannidhi of the Dharmapuram Adheenamfrom the trusteeship of Vaitheeswaran Koil, for appointment ofnew trustees and for framing of a scheme. A scheme came to befamed by the subordinate Judge of Mayavaram that was challengedin Appeal Suit (A.S.No.181 of 2017). As per the scheme, theadministration of the devasthanam vested in the hands of theKattalai Thambiran appointed by the Pandarasannadhi, assisted bya treasurer, a shroff and an auctioneer, appointed by Court inrotation every three years. The scheme survived the Madras HinduReligious Endowments Act, 1926. 20. Original Suit (O.S.No.10 of 1911) was filed byChidambaranatha Tambiran, the then Kattalai Thambiran, seeking https://hcservices.ecourts.gov.in/hcservices/ removal of the then Pandara Sannidhi of the Dharmapuram Adheenamfrom the trusteeship of Vaitheeswaran Koil, for appointment ofnew trustees and for framing of a scheme. A scheme came to befamed by the subordinate Judge of Mayavaram that was challengedin Appeal Suit (A.S.No.181 of 2017). As per the scheme, theadministration of the devasthanam vested in the hands of theKattalai Thambiran appointed by the Pandarasannadhi, assisted bya treasurer, a shroff and an auctioneer, appointed by Court inrotation every three years. The scheme survived the Madras HinduReligious Endowments Act, 1926. 21. The Madras Hindu Religious and Charitable EndowmentsAct, 1951 came into force thereafter and the Commissioner soughtamendment of the Scheme under Section 62(3)(a) of that Actalleging various acts of commission and omission by the thentrustee and his subordinates in the management of thedevasthanam. The Commissioner averred that the interests of thedevasthanam had not been secured and that the scheme ought to bemodified and machinery set up to ensure proper administration ofthe devasthanam. Accordingly, the Commissioner sought thesubstitution of an Executive Officer in the place of theKattalai Thambiran and treasurer. This was contested by thePandarasannadhi and the contest was accepted by the SubordinateJudge. An appeal was filed to the High Court which did notdisturb any of the findings of the lower Court, despite whichthe Court modified the Scheme and appointed an ExecutiveOfficer, as against which an appeal was filed to the SupremeCourt. The Supreme Court in the judgment in Sri La SubramanyaDesigaGnanasambadaPandarasannadhi,TrusteeofSriVaidyanathaswami Temple (supra) para 6 of the judgment (reportedin the SCC online report), has extracted the scheme in full.Clauses 1 to 3 are relevant and read as follow:1. The Temple of Sri Vaithianathaswami atVaitheeswarankoil, Shiyali Taluk,the shrines andminor temples attached thereto, and charities andendowments thereof, together comprise the “VelurDevasthanam” and it shall be governed with theprovisions of Act 19 of 1951 and the rules madethereunder. 2. The properties, movables and immovables,belonging to the Devasthanam that may hereafter beacquired by the Devasthanam shall vest in the deityof Vaithianathaswami. 3. The admnistration of the Devasthanam andits properties shall vest in Pandarasannadhi at theDharmapuran Adhinam for the time being, who shallbe the “Trustee” of the Devasthanam. 22. The scheme sets out a framework for governance andadministration of the assets and receipts of the devasthanam andconstituent temples by the Pandarasannadhi, who was named astrustee. Suffice it to say that the Supreme Court set aside theappointment of the Executive Officer confirming the scheme asframed originally. Thus, the temples, endowments and charitiescomprising the Vaithiyanathaswamy or Velur Devasthanam continueto be administered and managed till date by a Kattalai Thambiranappointed periodically by the Pandarasannathi in his capacity astrustee under a scheme of administration framed in a scheme suitfiled under Section 92 of the Civil Procedure Code 1908 in linewith the provisions of the Madras Hindu Religious & CharitableEndowment Act, 1951 (‘1951 Act’) and its precursor enactments,in the year 1919. 23. In light of the above facts, the requirements ofSection 10(23BBA) appear to be satisfied in this case (i) thebody or authority being the Devasthanam, (ii) the requiredenactments being the Civil Procedure Code 1909 (Central) and theMadras Hindu Religious & Charitable Endowment Act, 1951 (State)and precursor State enactments (iii) the devasthanam holdingwithin its fold several constituent temples as detailed inparagraph 2 of this order. 23. In light of the above facts, the requirements ofSection 10(23BBA) appear to be satisfied in this case (i) thebody or authority being the Devasthanam, (ii) the requiredenactments being the Civil Procedure Code 1909 (Central) and theMadras Hindu Religious & Charitable Endowment Act, 1951 (State)and precursor State enactments (iii) the devasthanam holdingwithin its fold several constituent temples as detailed inparagraph 2 of this order. 24. I had called for the records in A.S.No.181 of 1917simply to verify whether there were any other documents on filethat might facilitate proper understanding of the matter and, Imust confess, was pleasantly surprised when the Registry of theOriginal side did procure some of the documents in A.S.No.181 of1917, (Index, Memorandum of Appeal and Judgment) though not all.It was a pleasure to hold and peruse century old documents and Icommend the efforts of the Registry in book-keeping with thefond hope of improvements in the methodology and efficacythereof in times to come. 25. Coming to Sri Amirthakadeswaraswamy Devasthanam, thereare differences in the history of the management over the years,when compared with the Vaithiyanathaswamy Devasthanam. Acertificate issued by the Joint Commissioner, HR&CE Department(date is unclear) states that this devasthanam was beingadministered under the trusteeship of the SrilasriPandarasanadhi of Dharmapuram Adheenakartar appointed in 1841 bythe East India Company and his appointment has been acceptedwithout challenge till date, despite the enactment of theReligious Endowment Act, 1863, Madras Hindu Religious EndowmentAct, 1926, The Madras HR&CE Act, 1951 and TN HR&CE Act, 1959 inthe intervening periods. 26. My attention is drawn to the 1863 enactment,specifically Section 6 thereof, stipulating that the rights,powers and responsibilities of every trustee or manager to whoma religious establishment had been handed over, was to be deemedto have enured always: that is to say that Section 6 deemed theDharmapura Adheenam as being the trustee of the temple inperpetuity and from earlier times and all forms of authorityexerted earlier over that temple stood determined and repealedwith the coming into force of the 1863 enactment on 10.03.1863.The statement of objects of the 1863 Act states that it had beenenacted ‘to enable the Government to divest itself of themanagement of the religious endowments’. A specific argumentadvanced 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 DelhiHigh 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 andtheir endowments has been referred to in detail. The Courtnoticed that proper appropriation of the endowments of Hindu andMohammedan temples and religious establishments and thepreservation of the structures and management of their affairswere exercised by officers of the local Governmentindiscriminately prior to the period before they were assumed bythe Government. It was in 1817 that the management of religiousestablishments and their endowments was made a legal obligationon the Board of revenue and their local agents by virtue ofRegulation VII of that year. Act 20 of 1863 also states inSections 3 and 4 thereof that the two classes of temples andreligious establishments referred therein were at the time ofits passing subject to the control of the Board of revenue andtheir local agents. 28. Reference is made to S.Govinda Menon Vs. The Union ofIndia and Another (1967 2 SCR 566) that considered certainallegations of misconduct levelled upon the appellant, S.GovindMenon in the discharge of his duties as Commissioner, HinduReligious and Charitable Endowments. The contention of theappellant that he had a separate legal personality and wasexempt from disciplinary proceedings for any act of omission orcommission in his capacity as Commissioner, was rejected. Tosimilar purpose is a decision of the Madras High Court in thecase of S.V.Ramaswamy Poosari (supra). 29. The cases cited at paragraphs 26, 27 and 28 above aremeant to buttress the case of the AmirthakadeswaraswamyDevasthanam to show continuity in the management of theDevasthanam from time immemorial till date. To sum up, theargument of the Amirthakadeswaraswamy Devasthanam, as Iunderstand it, is that the Pandarasannadhi should be deemed tohave been appointed under the 1863 Religious Endowment Act whichis a Central Act. 30. In the case of Bade Mathuresh Ji Temple Board (supra)an appeal had been filed by the Revenue challenging the grant ofexemption to the Bade Mathuresh Ji Temple on the ground that theBoard had been created under Section 92 of the CPC but had notbeen registered. At para 4, a Division Bench of the RajasthanHigh Court noticed that the Tribunal had considered that theBoard had been created under the CPC, a Central Act and theTemple was being managed by the Board. In the hierarchyestablished in line with the provisions of 10(23BBA), theTribunal dismissed the revenue’s appeal as against which astatutory appeal had been filed before the Rajasthan High Courtwhich also dismissed the same. 31. A Division Bench of the Orissa High Court in JagannathTemple Managing Committee (supra) considered a similar issuerelating to the claim for exemption by the Managing Committeeconstituted under the provisions of the Sri Jagannath Temple Actof 1955. Thus, the hierarchy as required under Section 10(23BBA)had been clearly established in that case satisfying theparameters of the exemption provision. In that case, the Benchrefers 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 anentity/authority/board/body by whatever name called, has beengranted exemption under Section 10(23BBA), there is no necessityfor it to file a statutory return of income and no requirementfor 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 Courtanswered the claim of that temple to exemption under Section 10(23BBA) positively, on the ground that the temple wasconstituted under the 1951 Act. The matter was decided on aconcession by the Income Tax Department, recorded by the Courtat paragraph 6, the court then issuing a mandamus for refund ofthe tax collected. There is no discussion on the interpretationof Section 10(23BBA) itself. 33. The Vaithyanathaswamy Devasthanam had questioned thefixation of salary payable to the employees of the devasthanamcontending that the Government had no jurisdiction to fix the salaries of its employees. The matter was held adverse to thepetitioner in a decision in 2012 2 CTC 218, ArulmighuVaithiyanathaswamy Devasthanam, represented by its HereditaryTrustee (supra). This case does not advance the case of eitherparty before me. 33. The Vaithyanathaswamy Devasthanam had questioned thefixation of salary payable to the employees of the devasthanamcontending that the Government had no jurisdiction to fix the salaries of its employees. The matter was held adverse to thepetitioner in a decision in 2012 2 CTC 218, ArulmighuVaithiyanathaswamy Devasthanam, represented by its HereditaryTrustee (supra). This case does not advance the case of eitherparty before me. 34. The argument of the Sri AmirthakadeswaraswamyDevasthanam to the effect that it should be deemed to have beenconstituted under the 1863 Central Act is, in my view, notliable to be accepted as the link is too circuitous andindirect. While one could take a purposive view on the meaningof ‘established, constituted or appointed’ in Section 10(23BBA),the object and spirit of the provision is to bifurcate themanagerial entity from the temple/religious establishment thatit manages, in order that the roles, functions and two income-generating apparatus, are clearly demarcated. This is notpossible in the absence of a scheme as there is no clarity onthe bifurcation of assets or functions. The intention of theexemption under Section 10(23BBA) is to benefit only thoseentities whose role is managerial or administrative and notcommercial, engaged with the purpose of income generation. 35. In the case of the Sri Vaithyanathaswamy devasthanam,this cleavage emanates from the clauses in the scheme asextracted in the judgment of the Supreme Court (see para 21 ofthis order). The role of the Pandara Sannidhi is as a trustee,and that of the Kattalai Thambiran is as a Manager. All incomesearned by the constituent temples vest in the respectivedeities. Thus, the apparent division of roles enables the grantof exemption to the managerial entity leaving the constituenttemples to bear the brunt of taxation, subject to any claim forexemption that may be made by the latter, to be considered inaccordance with law. This enabling feature is absent in the caseof the Sri Amithakadeswaraswamy devasthanam and for this reason,I reject its arguments. 36. As regards the argument of the revenue to the effectthat ‘body’ or ‘authority’ referred to in Section 10 (23BBA)would be the HR&CE Board, this argument is misconceived as theHindu Religious and Charitable Endowments Department constitutesan arm of the State Government which is, in any event, notliable to tax. The reference in Section 10 (23BBA) to ‘body’ or‘authority’ cannot thus be the HR&CE Department but anindependent authority constituted under a Central, State orProvincial Act. The argument that the Central Wakf Board isequitable to the HR&CE department is rejected. I draw support inthis regard from a note on the background of the Department,contained in its website, extracted below: The temples have been under the superintendence andcontrol of the Government even during days of the EastIndia Company. The Hindu Temples have been in possession of thousandsof Acres of lands since ancient times. Even during thetimes of East India Company, complaints were receivedregarding maladministration of these institutions. Thegeneral public lodged complaints with the kings then andEast India Company. In the meanwhile, the Madras regulation 1817 wasenacted. This Act provided for monitoring whether thegrants and endowments to temples were properly utilizedor diverted for the welfare of private individuals. TheBoard was empowered to carry out this exercise. Due tothis, thousands of temples were brought under thecontrol of the Government. The temples have been under the superintendence andcontrol of the Government even during days of the EastIndia Company. The Hindu Temples have been in possession of thousandsof Acres of lands since ancient times. Even during thetimes of East India Company, complaints were receivedregarding maladministration of these institutions. Thegeneral public lodged complaints with the kings then andEast India Company. In the meanwhile, the Madras regulation 1817 wasenacted. This Act provided for monitoring whether thegrants and endowments to temples were properly utilizedor diverted for the welfare of private individuals. TheBoard was empowered to carry out this exercise. Due tothis, thousands of temples were brought under thecontrol of the Government. In 1858, the Indian Government's Administration wastransferred to the British crown directly from the handsof the East India Company. It was required for theBritish Government to win the confidence of the peopleand to reduce their ill will. Hence, the BritishGovernment assured that it will not interfere in thereligious matters. Hence, the persons who were managingthe affairs of the temples and their properties continueto enjoy them without any hindrance. Even though, large number of complaints was received,the British Government kept aloof from the templeadministration since they did not understand thecomplexity of the Indian society and the templeactivities entwined with it. At the same time, thepeople to continued to lodge complaints regardingmismanagement of valuable assets like icons, jewels,etc. and encroachment of properties. When the Raja of Panagal, Thiru. Ramaraya Ningar tookcharge as the Chief Minister of the Madras Presidency;he tried to bring all the temples under the control ofthe Government. He proposed for enactment of "HinduParipalanam" Act in 1922. He explained the intricaciesof the proposed bill to the then Viceroy, Lord Irwin,and got his approval. Finally, in 1927 the HinduReligious and Charitable Endowments Board wasconstituted. The Board was vested with the power tocontrol and supervise the administration of temple.Similarly, the power to appoint officials to temples forproper administration was also vested with the Board. Subsequently to streamline the administration of theBoard, a special officer was appointed in the year 1940. It was suggested in 1942 by the non-official committeeunder the chairmanship of a retired High Court Judgethat it will be proper if the Government undertakesadministration directly instead of the Board. It wasaccepted and the Hindu Religious and CharitableEndowments Act, 1951 was promulgated. Several amendments were brought out and the Governmenttook over the administration of temples and afterseveral detailed amendments were carried out, the ActXXII of 1959 came into force from 1st January 1960.Based on this Act, a separate Government Department wascreated for the Administration of temples. (underlining is for emphasis) 37. W.P.No.29315 of 2019 relating to VaithyanathaswamyDevasthanam is allowed, but it is made clear that the individualconstituent temples, endowments and charities are liable to taxin the light of the proviso to Section 10(23BBA). It is open tothe income–tax authorities to proceed accordingly qua theconstituents of the devasthanam, in accordance with law.W.P.No.29312 of 2019 relating to Sri AmirthakadeswarasamyDevasthanam is dismissed. 38. I place on record my appreciation of the assistancerendered by Mr.Karthikeyan and Mr.Sriram in my understanding ofthe issues in question. Sd/- Assistant Registrar(CS IX) //True Copy// Sub Assistant Registrar ska/vs/sl To 1.The Assistant Commissioner of Income Tax Officer, Circle-I, Kumbakonam Income Tax Officer, First Floor, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam-612001 38. I place on record my appreciation of the assistancerendered by Mr.Karthikeyan and Mr.Sriram in my understanding ofthe issues in question. Sd/- Assistant Regist