Collecting tax from non-taxable entities - Shree Jagannath Temple Office - T. N. Pandey - Article published in Business Advisor, dated January 10, 2015 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/

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Collecting tax from non-taxable entities:
Shree Jagannath Temple Office
T. N. Pandey
Section 4 of the Income Tax Act, 1961 (Act) provides for
levy of income-tax on every person in accordance with
the provisions at the rates prescribed by the annual
Finance Acts. The word „person‟ is defined in section
2(31) of the Act to mean an (i) an individual; (ii) a Hindu
Undivided family; (iii) a company; (iv) a firm; (v) an
association of persons or a body of individuals whether
incorporated nor not; (vi) a local authority; (vi) every
artificial juridical person – not falling within any of the
preceding sub-clauses.
Income-tax is payable by those who fall in one of the above mentioned
categories. If the entity does not fall under any of these categories, no tax
can be imposed on him/it. This view has been reiterated by the Cuttack
Bench of the Income Tax Appellate Tribunal in the case of Shree Jagannath
Temple Managing Committee v. ACIT (TDSD) (2014) 57(II) ITCL 295 (Ctk-Trib.).
2. Facts of the case
Proceedings u/s 206C relating to non-collection of tax at source on leasing
out the quarrying of mines owned by the temple for 2 years 2005-06 and
2006-07 were initiated against Shree Jagannath Temple Office (not against
Shree Jagannath Temple).
2.1 Order u/s 206(1)(C) of the Act was passed by the AO. While passing the
order, the assessing officer took the view that „Shree Jagannath Temple
Office‟ while leasing out the quarries for the financial years 20-04-05 and
2005-06 were bound to collect income-tax. It was noted from the order of
the Hon‟ble Orissa High Court in the case of Jagannath Temple Managing
Committee v. CIT ()2008) 299 ITR 56 (Ori) that Shree Jagannath Temple
Managing Committee has been constituted by the State Government under
the provisions of Shree Jagannath Temple Act (1955). From the Act of 1955,
the temple of Lord Jagannath of Puri, since its inception has been and still
is an institution of unique national importance and attracts millions of
Hindu devotees from all over the world. The temple stands as a symbol of
Hindu religious traditions and an icon of faith, belief and worship for
countless Hindu devotees all over the world. As such, in order to properly

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organise its management and to formulate a scheme of running the affairs
of the temple, the Act of 1955 was enacted. As per this Act, the Temple
Management Committee is a body corporate under the said Act of 1955 and
has perpetual succession and a common seal and can sue and be sued in
its own name. This Committee is constituted under section 5 and under
section 6 thereof, the Committee shall consist of a large number of members
of whom the Raja of Puri shall be the Chairman and an officer, not below
the rank of Additional Chief Secretary, shall be the ex-officio member and its
working chairman. Under section 33 of the said Act, the Committee shall be
entitled to take possession of all the movable and immovable properties
including the Ratna Bhandar and funds and jewellery, records, documents
and other assets belonging to temple. Section 10(23BBA) which is applicable
w.e.f. 1.4.1962 grants complete exemption to the Temple Management
Committee from tax.
3. Income-tax assessment of Temple Management Committee („TMP‟ for
short)
For the year 2004-05, the AO issued a notice to TMP u/s 142(1) of the Act
and notices were also issued to the bankers for deduction of tax at source
on interest paid to the TMP. The Orissa High Court quashed these notices
observing as under:
“For the reasons aforesaid, the Court, is constrained to quash the letter dated
12.10.2006 issued by opposite party No. 2 inasmuch as the same is not
legally sustainable and the various directions which have been issued
consequent upon said letter on the bank for deduction of tax (TDS) are also set
aside. This court holds that the petitioner is not required to file any return
under section 142(1) of the Income-tax Act and the directions given by the
Revenue to that effect are unauthorised and of no legal effect”.
4. Collection of tax at source u/s 206C
Regarding the notices relating to collection of tax at source, the same were
issued in the name of „Shree Jagannath Temple Office‟. The Tribunal
analysing the provisions of the section has observed that section 206C
applies in cases of „persons‟ who grant a lease or licence or enter into
contracts etc. The issue that then arises is whether Shree Jagannath
Temple Office can be regarded to be the „person‟. Shree Jagannath Temple
Office cannot be a person. The „person‟ has not been defined under section
206C, even though in the Explanation under section 206C various other
terms has been defined such as „buyer‟ and the „seller‟. Section 206C makes
every „person‟ who grants lease to collect the tax. From the definition of the
word „person‟ (supra), it is apparent that an authority established by under

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Central, State or Provincial Act for managing affairs of the temple cannot be
regarded to be a „person‟. Temple is different from its Managing Committee,
which has been appointed under the Jagannath Temple Act (1955). In this
case the assessing officer even did not make the Jagannath Temple
Managing Committee to be responsible for collecting tax. The Assessing
Officer has made Shree Jagannath Temple Office to be responsible to collect
tax. Shree Jagannath Temple Office cannot be a person as defined under
section 2(31) of the Act. It cannot be „every person‟ as referred to section
206(1C).
5. Hence, the order passed by the AO against Jagannath Temple Office was
held to be void ab initio as Shree Jagannath Temple Managing Committee
cannot be held to be liable under section 206C(6) to pay the tax to the credit
of the Central Government. Since Shree Jagannath Temple Office is not a
person, it cannot be deemed to be an assessee in default. In view of these
observations, the order passed by the assessing officer in both the cases has
been quashed.
(T. N. Pandey is Former Chairman, Central Board of Direct Taxes)