Safiya Malik

The High Court of Kerala Single Bench of Justice Ziyad Rahman A.A. held that income arising in the hands of public religious and charitable trusts and endowments administered by statutory temple authorities is not exempt under Section 10(23BBA) of the Income Tax Act, which grants complete exemption only to the income of bodies or authorities constituted by legislation to administer such institutions. Deciding writ petitions filed by administrative bodies of several temples challenging assessment orders and tax deducted at source, the Court declared that the benefit of Section 10(23BBA) is confined to the income of such statutory administrative bodies and does not extend to the income of the temples or other religious or charitable institutions themselves, leaving the assessees to pursue appropriate statutory remedies on disputed factual issues

The petitions were filed by administrative bodies of several temples under the Malabar Devaswom Board seeking exemption of income under Section 10(23BBA) of the Income Tax Act. One petition challenged an assessment order issued in respect of income for a past assessment year, while the remaining petitions sought refund of tax deducted at source on interest from bank deposits held in the names of the respective temples.

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The petitioners contended that the HR&CE Act, 1951 governed the formation of temple administrative structures, and therefore they were bodies constituted under a State enactment eligible for exemption. They relied on the statutory scheme under Section 58 of the HR&CE Act and the nature of endowments as defined therein.

The Income Tax Department opposed the relief, stating that Section 10(23BBA) granted exemption only to the income of bodies or authorities constituted under statute and not to temples or religious endowments themselves. It was argued that the proviso to Section 10(23BBA) expressly excluded the income of trusts, endowments, or societies from exemption. Materials placed included the statutory schemes, assessment records, bank statements showing TDS deductions, audit reports, and prior decisions relied upon by both sides.

The dispute centered on whether the income assessed or subjected to TDS belonged to the statutory body administering the temple or to the temple/deity itself.

The Court examined Section 10(23BBA) and recorded: “what is exempted is the income of the body or authority, which is created for the purpose of administration of a public religious trust or endowment… the income of such body or authority alone is exempted, and the establishments/institutions which are under the administration of the said authority as such, is not exempted from the liability to pay the income tax.”

It stated that the proviso “confirms the said aspect, by clearly specifying that the provisions under the said Act, should not be construed to mean that, the income of any proposed endowment or society which are subjected to the administration by the bodies referred to in the provision is exempted from tax.”

The Court noted the structure of the statutory scheme, stating: “all the properties and activities from which the income is generated are that of the deity, which means that of the temple… the role of the administrative body is to manage the properties of the temple, including the income.” It further recorded: “Section 10(23BBA) does not contemplate any exemption for the income of the temple as such.”

The Court also discussed the relevance of Sections 11 and 12 of the Income Tax Act, observing: “there is a separate provision for exemption contemplated under Section 11, 12 and 12A… and it was not necessary to incorporate another statutory provision for extending a further exemption which is unconditional, as per Section 10(23BBA).”

Regarding the petitioners’ contention that the proviso contradicted the main provision, the Court stated: “the main provision itself does not contemplate any exemption to the income of the public religious or charitable trust or endowments… the proviso in Section 10(23BBA) is only for the purpose of providing clarity to the main provision.”

The Court held that the factual determination of whether the income belonged to the temples or to administrative bodies must be made by the competent authorities.

The Court held that “exemption contemplated under Section 10(23BBA) is applicable only in respect of the bodies and authorities constituted, established and appointed under the Central, State or Provincial Act, and the same is not applicable to the public religious or charitable trusts or endowments (including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or other places of public religious worship) or societies for religious or charitable purposes registered as such under the Societies Registration Act, 1860, or any other law for the time being in force, which are being administered by the body or the authority referred to above.”

“With the above declaration, the parties are permitted to invoke their remedies available. In W.P(C) No.27452/2023, it is ordered that, it shall be open to the petitioner therein to submit appeal against the assessment order, and while computing the period of limitation for filing the appeal, the period during which this writ petition was pending consideration, which is from 18.08.2023 till the date of receipt of certified copy of the judgment, shall be excluded.”

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“In cases where, the applications were submitted seeking refund of the TDS, those can be adjudicated by the appropriate authorities, in the light of the observations made by this Court and after giving the respective petitioners an opportunity to be heard. In respect of the matters where notices are issued under Section 148A or 148, the same can be contested by the appropriate petitioners by submitting objections or additional objections, which shall be considered by the authorities concerned. In all these cases, the proceedings shall be finalized after giving the respective petitioners the opportunity for being heard. In W.P(C) No.27452/2023, the coercive proceedings based on Ext.P11 assessment order shall be kept in abeyance for a period of three months, to enable the petitioner to invoke the statutory remedies.”

Advocates Representing the Parties

For the Petitioners: Sri. Mahesh V. Ramakrishnan; Sri. K. Mohanakannan; Shri. Mohan C. Menon; Smt. K. Krishna; Shri. Achyuth Menon; Shri. Nirmal Krishnan.

For the Respondents: Christopher Abraham; Shri. R. Lakshmi Narayan (Senior); Smt. R. Ranjanie (Standing Counsel, Malabar Devaswom Board); Shri. P.R. Ajith Kumar; Shri. Jose Joseph; Shri. P.G. Jayashankar; Shri. G. Keerthivas; Shri. Justus S. (CGC); Shri. Harikumar G. (Gopinathan Nair); Smt. Vandana P. (CGC); Shri. Navaneeth N. Nath (CGC).

Case Title: Madhur Sree Madanantheswara Vinayaka Temple Administrative Body v. Income Tax Officer & Others
Neutral Citation: 2025: KER:84982
Case Number: WP(C) 27452/2023 & connected cases
Bench: Justice Ziyad Rahman A.A.