A Three Judge Bench of the Supreme Court comprising A bench comprising Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra decided to list the batch containing 93 appeals to hear after 3 weeks in a matter relating to the TDS liability of Catholic Nuns and Missionaries.
The batch of appeals was filed challenging the decisions of the Kerala and Madras High Court wherein it was ruled that Tax Deduction at Source ( TDS ) must be applied with respect to the salaries given to nuns and missionaries.
The single bench of the Madras High Court accepted the case of religious institutions that since priests/nuns took a vow of poverty as per which they have to surrender their personal income to the Church/Diocese, no income is effectively accrued to them so as to make it liable for taxation. The Court further held that priests/nuns have suffered civil death as per Canon Law and renounced the world and therefore they cannot be subjected to TDS.
The Division Bench of the Madras High Court of Justices Dr Vineet Kothari and C V Karthikeyan set aside the judgment of single bench, and held that the salaries were received by the priests or nuns in their individual capacity and that the subsequent surrender of their salaries to the religious institutions can only be treated as an application of income. The Court also went on to add that religious institutions cannot claim to have an overriding title with respect to the salaries at the source itself.
Later the Supreme Court stayed the Madras High Court judgment which had ruled that salaries received by missionaries and nuns of Catholic Church are liable to be subjected to Tax Deduction at Source ( TDS ) under Section 192 of the Income Tax Income Tax Act. The bench of Justice Ashok Bhushan and K M Joseph ordered to maintain “status quo as on today” while issuing notice in the petition filed by Institute of Franciscan Missionaries of Mary.
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