1969 (2) TMI 9 - SC - Income Tax

Whether the assessments on the deities through the shebaits were in accordance with law - A Hindu deity falls within the meaning of the word individual under s. 3 of the Act and can be treated as a unit of assessment under that section - question should be answered in the affirmative and in favour of the Commissioner of Income-tax

Issues Involved:
1. Whether a Hindu deity can be treated as a unit of assessment under sections 3 and 4 of the Indian Income-tax Act, 1922.
2. The applicability of section 41 of the Indian Income-tax Act, 1922, to the assessment of income through shebaits.
3. The legal status and taxability of a Hindu deity as a juristic person.

Issue-wise Detailed Analysis:

1. Whether a Hindu deity can be treated as a unit of assessment under sections 3 and 4 of the Indian Income-tax Act, 1922:

The primary question for determination was whether a Hindu deity could be treated as a unit of assessment under sections 3 and 4 of the Indian Income-tax Act, 1922. The court affirmed that a Hindu idol is a juristic person in whom the dedicated property vests. This is supported by high authorities and precedents such as Manohar Ganesh v. Lakhmiram and Vidyapurna Tirtha Swami v. Vidyanidhi Tirtha Swami, which recognize that a Hindu idol can hold property and sue or be sued. The court emphasized that the idol represents the spiritual purpose of the donor and is thus recognized by law as a juristic person. Consequently, the court concluded that a Hindu deity falls within the meaning of the word "individual" under section 3 of the Act and can be treated as a unit of assessment.

2. The applicability of section 41 of the Indian Income-tax Act, 1922, to the assessment of income through shebaits:

The court examined whether the assessments on the deities through the shebaits were in accordance with section 41 of the Act. The Tribunal had initially assessed the income through the shebaits as trustees or managers, but this was contested on the grounds that the shebaits were not appointed by or under any order of the court, a necessary condition under section 41. The court agreed with the Tribunal's decision that the shebaits could not be assessed under section 41 as trustees or managers since this specific provision had been given up. The court modified the question referred by the Appellate Tribunal to exclude the reference to section 41, focusing instead on whether the assessments on the deities through the shebaits were lawful.

3. The legal status and taxability of a Hindu deity as a juristic person:

The court delved into the legal status of a Hindu deity, affirming that it is a juristic entity capable of holding property and being taxed. The court cited various precedents and authoritative texts to establish that the idol, as a symbol of the spiritual purpose of the donor, is recognized by law as a juristic person. This legal personification allows the deity to own property, sue, and be sued. The court dismissed the argument that the word "individual" in section 3 should be limited to human beings, stating that it also encompasses juristic entities. The court referred to Commissioner of Income-tax v. Sodra Devi, which supports the inclusion of juristic entities within the definition of "individual." The court also compared the provisions of the 1922 and 1961 Acts, concluding that the term "individual" in the earlier Act includes all artificial juridical persons, a position made explicit in the 1961 Act.

Conclusion:

The court held that the assessments on the deities through the shebaits were in accordance with the law, affirming that a Hindu deity is a juristic person capable of being taxed. The appeals were dismissed with costs, and the question of law was answered in the affirmative and in favor of the Commissioner of Income-tax.

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