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All Saints Church Vs. Commissioner of Income-tax, Karnataka - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberI.T.R.C. No. 1 of 1980
Judge
Reported in(1984)41CTR(Kar)306; [1984]145ITR786(KAR); [1984]145ITR786(Karn); [1984]18TAXMAN388(Kar)
ActsIncome Tax Act, 1961 - Sections 2(36), 14, 28 and 32
AppellantAll Saints Church
RespondentCommissioner of Income-tax, Karnataka
Appellant AdvocateK.R. Prasad, Adv.
Respondent AdvocateK. Srinivasan, Adv.
Excerpt:
.....power is not conferred expressly on him by act is not tenable. - he observed that the church is engaged in various activities like prayers, thanks offerings, bible readings, etc. prasad, learned counsel for the assessee, contended that there is no dispute that the assesses trust is the owner of the church building and the church is engaged in a vocation like delivering sermons and preaching bible which are the integral part of the church although they are being conducted by the chaplain or the presbyter-in-charge appointed by the diocese whose head is the bishop. 6. it seems to us that the contention urged by the learned counsel is well founded and must be accepted as correct......parties, flowers, etc., and since the excess income over the expenditure could only be computed as business income, the assessee would be entitled to depreciation. considering the nature of the activities of the church, the aac held that the assessee was engaged in a vocation and, therefore, it was entitled to depreciation. 3. being aggrieved by the order of the aac, the department preferred an appeal before the income-tax appellate tribunal. the tribunal in a short order has allowed the appeal by stating thus : '... the assessee is a church itself, though assessed in the hands of the trustees, as a trust. it is not possible to accept the contention that a church itself is running a business from the pulpit of looking after (sic) his flock may be said to be following a vocation, if he is.....
Judgment:

Jagannatha Shetty, J.

1. The following question has been referred under s. 256(1) of the I.T. Act, 1961, by the Income-tax Appellate Tribunal, Bangalore Bench, for the opinion of this court :

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no depreciation was allowable while computing the income of the assesses church ?'

Briefly stated, the facts behind the legal formulation are as follows :

The assessee, as the name implies, is a church. For the assessment year 1975-76, the assessee claimed depreciation of Rs. 18,399 in respect of the church building. The ITO disallowed the claim on the ground that the depreciation could be allowed while computing the income under the head 'Profits and gains of business or profession' and the church cannot be said to carry on any business or activity for profit.

2. Upon appeal preferred by the assessee, the AAC reversed the view taken by the ITO. He observed that the church is engaged in various activities like prayers, thanks offerings, Bible readings, etc., and in the course of these activities, the church has been receiving donations and other offerings. Expenses incurred by the church are by way of salaries, church maintenance, parties, flowers, etc., and since the excess income over the expenditure could only be computed as business income, the assessee would be entitled to depreciation. Considering the nature of the activities of the church, the AAC held that the assessee was engaged in a vocation and, therefore, it was entitled to depreciation.

3. Being aggrieved by the order of the AAC, the Department preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal in a short order has allowed the appeal by stating thus :

'... The assessee is a church itself, though assessed in the hands of the trustees, as a trust. It is not possible to accept the contention that a church itself is running a business from the pulpit of looking after (sic) his flock may be said to be following a vocation, if he is doing it on a freelance basis as was the case of P. Krishna Menon, reported in : [1959]35ITR48(SC) . If the padre or parson in a church or a poojari in a temple or granthi in a gurudwara is employed, he would be earning salary income. It is impossible to visualise that a church, a temple or a gurudwara which ministers to the needs of the religious followers of those faiths itself is running a business or vocation...'

4. So stating, the Tribunal reversed the order of the AAC and restored the order of the ITO.

5. In this reference, Mr. K. R. Prasad, learned counsel for the assessee, contended that there is no dispute that the assesses trust is the owner of the church building and the church is engaged in a vocation like delivering sermons and preaching Bible which are the integral part of the church although they are being conducted by the Chaplain or the Presbyter-in-charge appointed by the Diocese whose head is the Bishop. He also contended that, regard being had to the activities of the church, it can safely be said that the church is engaged in the vocation.

6. It seems to us that the contention urged by the learned counsel is well founded and must be accepted as correct. It is not in dispute that the income of the assessee is required to be computed under the head 'D- Profits and gains of business or profession' as provided under s. 14 of the I.T. Act. Sub-section (36) of s. 2 defines 'profession' as including 'vocation'. Even the dictionary meaning of the word 'vocation' is 'person's trade or profession'. The activities of the church to which we have earlier adverted could, therefore, be properly considered as vocation.

7. In P. Krishna Menon v. CIT : [1959]35ITR48(SC) , the Supreme Court observed that the teaching of 'Vedanta' could be considered as a vocation. This decision has not been relied upon by the Tribunal, but we see no reason why the ratio cannot be applied to the present case. The preaching of sermons in the church by the representative of the church cannot be different from the teaching of 'Vedanta' or 'any other teaching'. The teaching or preaching may be done by a representative or an employee of the church. No matter who dies it, so long as it is considered to be an integral part of the church. The disciples go to the church and not to the person who teaches or preaches. The activities of the church must, therefore, be considered as vocation. The assessee, is therefore, entitled to depreciation in respect of the church building while computing the taxable income.

8. In the result, we answer the question in the negative and in favour of the assessee. In the circumstances of the case, we make no order as to costs.


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