1968 (4) TMI 12 - HC - Income Tax

Summary

Issues:
Whether a Hindu deity, acting through its shebait, is entitled to earned income relief under the Indian Income-tax Act, 1922.

Analysis:
The case involved a reference by the Income-tax Appellate Tribunal to determine if a Hindu deity, Uma Maheshwari, through its shebait, is eligible for earned income relief under the Indian Income-tax Act, 1922. The dispute arose as the Income-tax Officer and the Appellate Assistant Commissioner rejected the claim, arguing that a deity, as a juristic person, cannot earn income. However, the Income-tax Appellate Tribunal granted the relief based on the shebait's role in carrying out the deity's business activities.

The main issue revolved around whether a deity, as the property owner, can claim earned income relief based on the income earned by its shebait. The legal analysis delved into the definitions of "earned income" under section 2(6AA) and the application of section 41(1) of the Act. The court examined the relationship between the idol and its shebait, highlighting that the shebait acts on behalf of the deity and any income earned in that capacity should be attributed to the deity.

The arguments presented by both parties focused on the interpretation of the statutory provisions and previous case law. The court considered the nature of the deity-shebait relationship under Hindu Law, emphasizing that the shebait and the idol are considered as one entity for legal purposes. It was concluded that income earned by the shebait on behalf of the deity should be treated as income earned by the idol itself, making it eligible for earned income relief as defined in the Act.

In the judgment, the court answered the reference in the affirmative, stating that the deity through its shebait is entitled to earned income relief under the Act. The decision was based on the understanding that the shebait's actions on behalf of the deity should be attributed to the deity itself. The judgment also directed the petitioner to pay costs to the opposite party, concluding the legal proceedings.

The concurring opinion by Justice B. D. Singh supported the decision reached by the Chief Justice, further solidifying the ruling in favor of the deity's entitlement to earned income relief.