KOCHI: The Kerala High Court on Thursday upheld the order of the Income Tax Department directing the district treasury officers to deduct tax at source from the salary/pension being paid to priests and nuns who are teachers in various aided educational institutions in the state.
Justice A K Jayasankaran Nambiar passed the order while dismissing the batch of petitions challenging the order of Income Tax authorities. The Income Tax Department submitted that the members of the religious congregations were receiving income in return for services rendered by them, the salary income had accrued to them, and the subsequent making over to the congregation was only an instance of application of income.
The court observed that the members of religious congregations, who were working or retired from the educational institutions, were receiving salaries and pension in their individual capacity and based on educational qualification and skills possessed by them as individuals. Therefore, the right to receivesalary or pension was accrued to them as individual and not to the religious congregation, of which they were members. “The precepts of Canon law might require them to entrust the amount so received as salary or pension to their religious congregations. But, this obligation of the member, which is only an obligation based on personal law, would not clothe the congregation with a legal right to receive salary or pension directly from the government or employer and without involving the members,” the court observed.
The court made it clear that the amount received by the member of the congregation would tantamount to an application of income and would not be a diversion of income by way of overriding title. The instruction of the Income Tax Department cannot be said to be contrary to the circulars and instruction issued by the Central Board of Direct Taxation (CBDT), the court held.