TaxTMI 
TaxTMI 
2019 (3) TMI 1253
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....nd whether the provisions for withholding of tax or deduction of tax at source are dependent upon the final taxability of the sum paid or not, are the background cords, in which, we are called upon to decide a few important questions of law arising in the present Writ Appeals filed by the Union of India and Income Tax Department, arising from the judgment of the learned Single Judge, by which he allowed the writ petitions filed by the respondent/assessees, the Christian Religious Institutions, which run and control a large number of educational institutions, Convents or Schools in the State of Tamil Nadu and who represent the cause of the Teachers working in such Schools, mainly the Nuns, Sisters, Missionaries and Fathers, who are also Teachers in such Schools of the various subjects. 2. The crux of controversy is that the Nuns, Sisters, Priests or Fathers, who also render their services as Teachers in these schools which receive Grant-in-aid from the State Government under the Grant-in-Aid Schemes formulated by the State to the extent of their full salary, claim that they are bound by the Canon Law for their vows of poverty to the Christ and that they cannot be taxed in respect....
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....ractice a religion as guaranteed under Articles 25 and 26 of the Constitution of India has to be held to be as not sustainable. 4. Aggrieved by the said judgment, the Union of India and Income Tax Department have come up in the present set of writ appeals, which we heard finally at the admission stage itself, by consent of the parties and Mr.Karthik Ranganathan appeared for the Revenue, whereas Mr.Arvind Datar, learned senior counsel and Fr. Xavier Arulraj, learned senior counsel himself a Father under Canon Law, appeared on behalf of the assessee Institutions. 5. Besides the aforesaid order of the learned Single Judge passed at Principal seat at Chennai, another learned single Judge of this Court allowed a batch of writ petitions filed at Madurai Bench of Madras High Court on 03.3.2016 in WP (MD) Nos.21172 to 21181 of 2015 etc. batch (The Correspondent, Holy Cross Primary School, Golden Rock v. Central Board of Direct Taxes and Others). The learned single Judge at Madurai also allowed the writ petitions and held that upon individual Undertaking and Affidavit given by Priests or Nuns to the Income Tax Department, that his/her entire salary as Teacher/Non-Teaching Staff can be....
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.... CENTRAL BOARD OF REVENUE Simla, the 24th January 1944. ----- CIRCULAR Liability to tax - Fees received by Missionaries and subsequently made over to their Society ----- Attention is invited to the instructions contained in Board's circular No.5 of 1940/D.Dis.No.26(33)-I.T./39 dated the 2nd January, 1940 and D.O. D.Dis.No.26(33)-I.T./39, dated the 9th May 1940. It has been brought to the Board's notice that considerable hardship is caused to Missionaries by the taxation of fees received by them for services rendered, which, by the conditions of their service and the Rules of their Society, they are required to make over to the Society. In view of the principle of diversion of income enunciated by the Privy Council in Dudhuria's case (6 I.T.C. 449) it is arguable that fees received by Missionaries on behalf of a Missionary Society and which are payable to it according to their contract of service are not their income. As recognised in the Board's D.O. letter referred to above, where a Missionary employee collects fees in payment of bills due to the institution the amount collected will be the income of the institution and not t....
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.... Date: Head of the Institution The undermentioned officers are requested to bring this decision to the notice of the managements for their information and guidance. C.D.S. Chetti for Director of Public Instruction IV - Letter of the Commissioner of Income Tax, Madras II, dated 30.01.1969 Office of the Commissioner of Income Tax Madras II 22, Nungambakkam High Road, Madras-34 RC.No.230....11(75) dated 30.1.1969 From The Commissioner of Income Tax Madras-II, Madras To Very Rev.Mgr.B.A. Figredo Secretary Madras Catholic Education Council 15, Kolandai Street Madras - 3. Rev.Father, Sub: Representation for exemption of emoluments drawn by Priests and Religious employed in Education. Ref: Your letter dated 9-8-1967 It has been decided that in cases where the amounts received by Priests and Religious as salary are subject to an overriding title by their conditions, and rules of service to be passed over to the church authorities (Whose income is exempted fro....
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.... To The President Kerala Conference of Major Superiors (KCMS) Near Darusalm, Thaikkattukara PO Aluva KERALA 638 106 Subject: Writ Appeal in Kerala High Court and Writ Petition in Madras High Court against TDS in the case of cases of Members of religious congregation-Order dated 9.3.2015 of the Hon'ble High Court of Kerala in WP(C) 35546 of 2014- regarding Sir, I am directed to refer to your letter dated 29.09.2015 on the above mentioned subject. It is considered that Circular No.1 dated 24.01.1944 is applicable only where "a Missionary employee collects fees in payments of bills due to the institutions". Considering the principle of diversion of Income, the Circular prescribed that "The amount collected will be the income of the institution and not that of the employee. It makes little difference whether the bills are prepared by the Society and sent out for collection or whether the employee collects the fees in a fiduciary capacity and pays the amount over to the Society". It appears that the circular is applicable only on the amounts received as fees towards payments of bills due to the institutions an....
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....in the cases of Members of religious congregation-Order dated 9.3.2015 of the Hon'ble High Court of Kerala in WP(C) 35546 of 2014- regarding Sir, I am directed to refer to the captioned order of the Kerala High Court and your letters dated 29.09.2015, 07.03.2016 and 18.03.2016 on the above mentioned subject. It is considered that Circular No.1 dated 24.02.1944 is applicable only where " a Missionary employee collects fees in payments of bills due to the Institutions ". Considering the principle of diversion of Income, the Circular had prescribed that "The amount collected will be the Income of the Institution and not that of the employee. It makes little difference whether the bills are prepared by the Society and sent out for collection or whether the employee collects the fees in a fiduciary capacity and pays the amount over to the Society". Thus the circular is applicable only on the amounts received as fees towards payments of bills due to the institutions and does not cover salary and pension, which the missionaries earn in their individual capacity. 2. Further, it is noted that Instruction No.1121 dated 05.12.1977 basically reiterates the conten....
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....nt is responsible for paying the salary to the Teachers in these recognised and approved educational institutions in the form of Grant-in-Aid, irrespective of the fact whether such Teacher is a Sister or Nun or Missionary or any other person who is not affiliated with Canon Law, Church or Diocese in any manner, but is still employed as a Teacher in these educational institutions run and managed by such religious institution and therefore, irrespective of caste, sex or Religious Order to which such person is bound by or has surrendered to, the State Government is responsible and under an obligation to deduct income tax at source on such payments which are undoubtedly taxable under the Head of "Salaries" at the time of payment thereof. He submitted that failure to deduct tax at source can render the persons obliged to do so, liable for penalty and prosecution, under the Act. 10. The learned counsel urged that the said provision of Section 192 of the Act does not recognise any aspect of religious character of the person receiving such salary and therefore, irrespective of the Religious Order to which a recipient Teacher may belong or any person receiving the salary, the payer of th....
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....achers was made over to the Institution concerned, which distributed the said amount of salary to various teachers including the Missionaries or Nuns, etc. and they were also liable to deduct tax at source as persons responsible for paying the salary and therefore, the receipt of salary in the hands of teachers concerned, irrespective of their class or belonging to any Religious Order or not, was taxable in their hands and as such, no exemption under Section 10 of the Act was available in respect of such salary income to the Teachers. 14. The learned counsel for the Revenue also submitted that the exemption under Section 11 available to the charitable and religious Trusts would be available to the respective religious institutions, subject to the conditions stipulated in those provisions, but that does not have any bearing on the taxable character of the salary income paid by the State to these Teachers, including Nuns and Missionaries and therefore, there is no question of treating the salary income as exempt in the hands of the Teachers. Therefore, the Institutions could not agitate against the tax deduction at source on the payment of salary to these Teachers. 15. The lear....
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....emed to have surrendered to the Institution or Religion, but if they can come out of that Order on their own volition, in such circumstances also, such income would be taxable in their hands, because they derived direct or indirect benefit from such transfer. Sub-section (2) of Section 62, he urged, that all income arising thereof by virtue of any such transfer shall be chargeable to income tax as the income of the transferor as and when the power to revoke the transfer arises and then shall be included in his total income. 18. We may observe here itself that we are not much impressed with this argument of the learned counsel for the Revenue as the concept of transfer of an Asset or irrevocable transfer for a specific period as envisaged in Sections 60 and 62 of the Act cannot be applied to the present case, as no transfer of asset as such has taken place and the claim of the Assessee is based on their surrender or civil death on account of adopting a particular Religious Order and therefore, the receipt in the form of salary not being taxable in their hands and their claim that the receipt of salary by them actually belong to the Institution which they serve, in the name of Chr....
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....s from payment of Income Tax and hence, such fees/earnings are not taxable in the hands of the Assessee. 24. Mr.Arvind Datar, learned senior counsel, therefore, emphasised that if consistently for the last 40 years the Income Tax Department as well as Central Board of Direct Taxes has taken a stand and have not imposed any income tax, therefore, without there being any change of facts or law with regard to the same, the Income Tax Department is unnecessarily invoking and applying these provisions to the salary payments now made to Nuns and Missionaries, merely because the mode of payment has been changed from the earlier lumpsum payment of Grant-in-Aid to these Institutions directly to the individual bank accounts of the Teachers under the ECS payment system now. He also drew our attention to some of the account numbers of the Missionaries to indicate that even for them, the payment has directly gone to the common Bank Account of the educational Institution. 25. Mr.Arvind Datar, learned senior counsel urged that the receipt in the hands of these Teachers was for and on behalf of the Institutions, which are Religious Institutions in character and obviously are, therefore, exem....
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....-in-aid. Whether they are Nuns, Sisters or Missionaries on the one hand or normal persons serving as Teachers in the Government Aided Schools on the other hand and their religious character or bindings have no effect on the uniform operatability of Section 192 of the Act. Section 192 reads as under: "Section 192: (1)Any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. ..." 30. The said provision, without regard to the caste, colour, sex or religious bent of the person who receives the salary, makes the person responsible for paying any income chargeable under the Head "Salaries" to deduct income tax at the rates prescribed, from such payment and deposit the same in the Treasury in the Account of Income Tax Revenue Department. State Government here is the person responsible for paying the salary. The words "at the time of payment" employed in Sect....
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....em. Such application of salary income cannot be said to be diverted at source by overriding title and the salary as such, cannot be said to be earned by the Institution or the Religion, Church or Diocese as such. It is the individuals, be that Nuns or Missionaries or any other person who are working as Teachers, depending on their personal knowledge of subject, training and skill, for which they get the Grant-in-Aid in the form of salary from the State Government under the enactments and Schemes announced by the State Government and therefore, the character of such receipt taxable as salary in their hands cannot be disputed and denied. The Institution, Church or Diocese does not have any legal right to directly receive that payment from the State Government, but for working of such individuals as the Teachers in those Schools. 32. The term "Salary" has been defined in Section 15 of the Act, which stipulates that any salary due from an employer or a former employer to an Assessee, including any arrears of such salary, shall be chargeable to income tax under the Head "Salary". 33. Section 15, read with Section 192, obligates the State Government or the employer, be it education....
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....their salary income taxable in their hands and such application of income can obviously be made only after meeting their tax obligations under the Income Tax Act a priori. 38. On the above said debatable issue of diversion of income by overriding title and application of income, we would like to refer to one of the decision dated 25th September 2018, rendered by Karnataka High Court, to which one of us was a party (Dr.Vineet Kothari,J), in the case of Principal Commissioner of Income Tax v. Chamundi Winery and Distillery [(2018) 97 Taxmann.com 568 = (2018) 408 ITR 402], In the said case, the Court discussing the legal precedents and the background of the facts that the Assessee, Chamundi Winery, an Excise licensee under the provisions of Karnataka Excise Act, entered into an agreement with UK based company Diageo and undertook the business of manufacture and sale of liquor, which was closely controlled and regulated by the State Government, including its storage, bottling, wastage, retail and wholesale sales thereof and it was contended by Assessee Chamundi Winery that since Chamundi was only manufacturing liquor on behalf of Diageo and the receipts of sale of liquor to the Gove....
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....d be provided with the sum of Rs. 40,000 for a public charitable trust which he would create. When the trial was over the assessee was paid a sum of Rs. 32,000 and he created a trust deed. The question was whether the sum of Rs. 32,000 was the assessee's professional income:. Held, that on the facts, the proper legal inference was that the sum of Rs. 32,000 paid to the assessee was his professional income at the time when it was paid to him and no trust or obligation in the nature of a trust was created at that time and when the assessee created a trust by executing the trust deed he applied part of his professional income as trust property. The desire on the part of the assessee to create a trust out of the moneys paid to him created no trust; nor did it give rise to any legally enforceable obligation. The sum of Rs. 32,000 was taxable in the hands of the assessee. The rule in Bejoy Singh Dudhuria's case did not apply." 38. Further explaining the background in which the case was decided by the Appellate Authority, the Hon'ble Apex Court emphasized that unless the money paid was earmarked for charity ab initio once such amount was received as his Professional I....
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....erty of the assessee and it was only the income arising therefrom which was sought to be settled or assigned to his wife. During relevant previous year assessee's wife received dividends on those shares. In course of assessment, the ITO included dividend amount in the total income of assessee. Against the said inclusion, the assessee contended that since the settlement was for the lifetime of his wife, the third proviso to section 16(1)(c) applied and the dividend which his wife received could not be deemed to be his income under section 16(1)(c) and that in his case section 16(1)(c) did not apply, because there was no transfer of the shares to his wife. ... ... ... ... ... ... In this view of the matter, it is not necessary to decide the further question if a contract of this nature operates only as a contract to be performed in future which may be specifically enforced as soon as the property comes into existence or is a contract which fastens upon the property as soon as the property comes into existence or is a contract which fastens upon the property as soon as the settler acquires it. In either view, the incomes from the shares will first accrue to the settler....
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....ITR 367 (SC) held that the true test is, where by the contractual obligation, the income is diverted before it reaches the Assessee, it is deductible, but where the income is required to be only applied to discharge the contractual obligations, it will not escape taxation in the hands of the Assessee so diverting his income. 43. The relevant extract of the said judgment which in the opinion of this Court covers the case in hand before us also is quoted below for ready reference:- "The assessee was a partner in a firm having a 10 per cent. share therein. He created a trust by a deed of settlement assigning 50 per cent. out of his 10 per cent. right, title and interest (excluding capital) as a partner in the firm and a sum of Rs. 5,000 out of his capital in the firm in favour of the trust. The beneficiaries were the assessee's brother's wife, the assessee's niece and his mother. The question was whether 50 per cent. of the income attributable to his share from the firm stood transferred to the trust resulting in diversion of income at source. The Appellate Tribunal held that there was no diversion of income and that section 60 of the Income-tax Act, 1961, appl....
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....in the latter case, the obligation of the assessee to pay amounts to the beneficiaries was required to be discharged after receipt of the income from the properties. In CIT v. Sitaldas Tirathdas [1961] 41 ITR 367, speaking for a Bench of three learned judges of this Court, Hidayatullah J. (as he then was) having considered, among others, the aforesaid two judgments of the Privy Council laid down the test as follows (page 374): "In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and....
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....f at a prescribed price which was unusually high but adequate to cover the market price of the securities, brokerage/incidental charges to be levied by the Respondent on these transactions, apart from covering the extra interest payable to the PSUs. The Respondent, on the instructions of Indian Bank, purchased securities at a particular rate quoted by the Bank and sold them to Indian Railways Finance Corporation. Bank of Madura was the routing bank through which the securities were purchased and sold to Indian Bank for which Bank of Madura charged service charges. The Respondent was paid commission in respect of transactions done on behalf of Indian Bank. Under instructions from Indian Bank, a portion of the amount realized from the security transactions carried on behalf of Indian Bank was paid by way of additional interest to certain Public Sector Undertakings (PSU) on the deposits made with the Indian Bank and out of eight PSUs three has confirmed the receipt of such additional interest through demand drafts. (d) The Respondent filed his return of income for the Assessment Year 1991-92 on 01.11.1993 and declared his income at Rs. 4,82,83,620/-. The total income was determined....
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....o physical receipt of income, but by the receipt of income in reality. Given the fact that the Respondent had acted only as a broker and could not claim any ownership on the sum of Rs. 14,73,91,000/- and that the receipt of money was only for the purpose of taking demand drafts for the payment of the differential interest payable by Indian Bank and that the Respondent had actually handed over the said money to the Bank itself, we have no hesitation in holding that the Respondent held the said amount in trust to be paid to the public sector units on behalf of the Indian Bank based on prior understanding reached with the bank at the time of sale of securities and, hence, the said sum of Rs. 14,73,91,000/- cannot be termed as the income of the Respondent." 46. This judgment does not help the Assessee, though the Contract/Agreement dated 30/10/2007 in the present case may prima facie reflect that the Assessee CHAMUNDI was only entitled to get only the Bottling charges of Rs. 45/- per Case, but that is precisely what is hoodwinking of Revenue, in the face of the fact that the entire business is carried on by CHAMUNDI only and finally profit or income is applied by way of distri....
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.... no insignia of diversion of income through an overriding title vesting in a third party outside the corpus of the society itself so as to consider it to be a case of diversion of income by overriding title to somebody other than the assessee. It is also to be noticed that the question of transferring any amount to the reserve fund arises only in the case the assessee society received its net profit, after paying off all its expenses" 49. The Division Bench of the Madras High Court in the case of Commissioner of Income Tax Vs. Madras Race Club [2003] 126 Taxman 6 (Mad), dealt with a similar controversy involved before them in the following manner:- "The payments made are compulsory exactions, which if not complied with will result in the disqualification altogether of the person, who has subjected himself to the levy of penalty, fine or the requirement to take out a licence from participating in the assessee's racing activity. The power to collect these amounts is the power of the stewards and of the club generally to regulate racing and to ensure that it is carried on in an orderly fashion only with persons, who are considered competent and desirable, being allowed....
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....ng in accordance with the rules framed by it, non-compliance with which would result in the jockeys, trainers and others being excluded from participating in racing. The levy had direct nexus with their activity as participants in racing and the levies were designed to ensure compliance with the requirement of the rules. There was no earmarking of those amounts for the benevolent fund ab initio. The amounts collected by the club as licence fees, fines and penalties were therefore, amounts which form part of its income. The execution of a trust deed and the inclusion of a provision in the rules of racing for crediting the sums to the benevolent fund was merely the application of a part of the income of the assessee for benevolent purpose. Creation of the benevolent fund by the trust deed and the provision made for the benevolent fund in the rules did not result in the amounts which the club was to credit to that fund being diverted at source by the overriding title of the benevolent fund to those sums. The concept of diversion of income by overriding title is to be applied in situations which are clear and where the existence of the title in the legal or natural person in whom an....
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....Act, during the accounting years the assessee credited the said amounts to the "Consumers' Benefit Reserve Account". They were a part of the excess amount paid to it and reserved to be returned to the consumers. They did not form part of the assessee's real profits. So, to arrive at the taxable income of the assessee from the business under section 10(I) of the Act, the said amounts have to be deducted from its total income. Income-tax is a tax on the real income, i.e., the profits arrived at on commercial principles subject to the provisions of the Income-tax Act. The real profit can be ascertained only by making the permissible deductions. There is a clear- cut distinction between deductions made for ascertaining the profits and distributions made out of profits. In a given case whether the outgoings fall in one or the other of the heads is a question of fact to be found on the relevant circumstances, having regard to business principles. Another distinction that shall be borne in mind is that between the real and the statutory profits, i.e., between the commercial profits and statutory profits. The latter are statutorily fixed for a specified purpose. If we bear in mi....
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....ew partnership was entered into, M had pre- existing rights in the partnership and its assets. Therefore, without settling her rights, the other partners could not exclude her from the partnership. The partners other than M decided to exclude her and provide her compensation for the user in the new partnership of the assets of the firm to the extent of her share in the old partnership. Such a position did not result from her retirement nor severance from the partnership but from her exclusion by the other partners. Though M was not a party to the deed dated April 1, 1975, the partners of the assessee firm had to confer the benefit on M. The firm was carrying on the business of manufacture and sale of tiles; the factory was not easily divisible and the new partnership had to utilise the assets of the firm as a whole including the interest of M in the same. The business could not have been carried on without providing for such utilisation. The assessee-firm came into existence only by creating a pre-existing charge at source. The amount paid to M was diverted at source and did not form part of the assessee's income. CIT v. Sitalda Tirathdas [1961] 41 ITR 367 (SC) applied." ....
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....on the judgment of the Supreme Court in the case of Commissioner of Income Tax v. Bijli Cotton Mills (P) Ltd. [(1979) 1 SCC 496] where the assessee company used to realise certain amounts on account of 'Dharmada', in addition to the price from its customers on sales of yarn and bales of cotton at the rate of one anna per bundle of yarn and two annas per bale of cotton and in the bills issued to the customers, these amounts were shown in a separate column headed 'Dharmada'. The Assessee company did not credit the amounts of Dharmada so realised by it in its trading account, but maintained a separate account known as the 'Dharmada' account, to which amounts were credited and payments made out were debited from time to time. The Court in these circumstances held that such Dharmada or charity received from the customers would not form part of the price or surcharge on the price of the goods sold by the Assessee. 41. The said decision of the Supreme Court, dealing with a Trader's collection of an amount in a separate account of Dharmada (charity) with sale price of goods, with great respect, is not at all applicable to the facts involved in the case before....
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....inciples of Diversion of Income, which is itself an exercise of quasi-judicial adjudication being a mixed question of fact and law, could not have given a blanket exemption from tax in the hands of Nuns and Missionaries working as Teachers and earning their salary specially when these old Circulars did not refer to term 'Salary' specifically and also because the Board itself has later on held these to be not applicable to salary in 2016. 44. Consequently, we are of the opinion that an old Circular issued on 24th January 1944, much prior to Independence of the country in the year 1947 and much prior to the coming into force of the Income Tax Act, 1961 and that too vaguely worded and too narrowly worded to cover only the "fees" received by Missionaries and subsequently made over to the Society, is not taxable in their hands does not have any effect on the controversy before us. The Central Board of Revenue, as it then existed, with reference to its earlier Circular dated 9th May 1940 which was in favour of Revenue only stated in the context of medical fees, examination fees or any other kind of fees received by the Missionaries and in view of their surrender to the Church ....
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....Congregations. The learned Single Judge held as under: "16. In the light of the principles that can be culled out from the decisions referred to above, I am of the view that for the concept of diversion of income by overriding title to apply, the diversion of income must be effective at the stage when the amount in question leaves the source, on its way to the intended recipient. At that stage, on account of a pre-existing legal obligation, the amount should be diverted to another, who can claim it as of right, based on the pre- existing legal arrangement. The person to whom the amount is diverted should have a legal right that entitles him to claim the amount directly from the source, and without the intervention of the person who would have received the amount but for the said legal arrangement. Viewed from that angle, the nature of the receipt would also have a bearing on the issue of whether the amount in question reached the member of the congregation or was diverted to the congregation, without reaching the member, by way of overriding title. The receipts in question, in the instant cases, are amounts by way of salary and pension. These payments accrue to the individ....
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....ion, the amount should be diverted to another, who can claim it as of right, based on the pre-existing legal arrangement. The person to whom the amount is diverted should have a legal right that entitles him to claim the amount directly from the source, and without the intervention of the person who would have received the amount but for the said legal arrangement. The nature of the receipt would also have a bearing on the issue of whether the amount in question reached the member of the congregation or was diverted to the congregation, without reaching the member, by way of overriding title. 20. Thus, while there may be instances where the receipt of fees or other earnings by members of religious congregations do get diverted by overriding title to the congregation, the proposition is by no means an absolute one that is applicable in all cases of earnings by a member of the religious congregation. The applicability of the concept would have to be tested on the facts of each case, by examining the nature of the receipt by the assessee. Viewed in that light, the impugned instructions of the Income Tax officers, in these cases, to deduct tax at source from payments by way of....
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....ligion. The salary is paid under the contract of employment with which Educational Institution or the Church or Diocese is not even a privy to such contract of employment qua the State Government. 50. Moreover, the State Government as a Payer of salary under Income Tax Act is not bound by any Religious tenets or provisions of Canon Law. It has nothing to do with the Religious freedom as guaranteed under Articles 25 and 26 of the Constitution of India. In the present case, the State Government cannot be said to be bound to pay such salary in favour of the Church or Diocese in place of Teachers concerned who may be Nuns or Missionaries and who may even leave and come out of such Religious Order on their own volition. On the other hand, the State Authorities, if they do not deduct tax at source on such salary payments, may be held guilty of not following the provisions of Income Tax Act rendering them to pay penalty and even face prosecution. Therefore, neither the Income Tax Department nor the State Government have anything to do with the religiious character of the Institution, may be Teachers or Nuns or Missionaries and therefore, they cannot take a stand for not making the tax ....