1972 PLP 137 (PTD)

Income‑tax‑Earned income relief ‑ Idol acting through Shebait carrying on business‑Whether entitled to earned income relief‑Indian Income‑tax Act, 1922, S. 2 (6‑AA)(6). The assessee, a Hindu deity, acting through its Shebait, was carrying on business of coal mining, etc. For the assessment year 1961‑62, the income‑tax Officer and the Appellate Assistant Commissioner rejected the claim of the assessee for earned Income relief holding that it vas not the assessee that actually carried on of the business, but the Sheball. The Appellate Tribunal allowed the claim. On a reference: Held, that the assessee was entitled to earned income relief as defined in section 2(6‑AA) of the Act. Under Hindu law the personality of the idol is merged in that of the Shebait and for all legal purposes the Shebait and the idol are one ; any income earned by the Shebait must be deemed to be the income of the idol and, therefore, the income sought to be taxed fell within the definition of earned income. Commissioner of Income‑tax v. Managing Trustees, Nagore Durgha (1965) 57 I T R 321 (S C) ; Commissioner of Income‑tax v. Marimuthu Nadar (1962) 44 I T R 1 (S C) ; Deokinandan v. Murlidhar A I R 1957 S C 133 and Sri Sri Sridhar Jiew v. Income‑tax Officer, Dint. II (1), Calcutta (1967) 63 I T R 192 ref. Ugra Singh for the Commissioner. Tarkeshwar Prasad, Awadh Bihari Prasad, Rameshwar Prasad (No. 2) and Manindra Nath Varma for the Assessee. JUDGMENT NARASIMHAM, C. J.‑

This is a reference by the Income‑tax Appellate Tribunal under section 256(1) of the Income‑tax Act, 1961, stating the following case for the opinion of this Court, viz., whether, on the facts and in the circumstances of the case, the assessee is entitled to earned income relief as defined in section 2(6‑AA) of the Indian Income‑tax Act, 1922. The assessee (opposite‑party) is a Hindu deity, Uma Maheshwari, acting through its Shebait, H. Barat, who was appointed as Shebait under the orders of the Calcutta High Court made in 1936. The assessee owns several collieries and other business assets in the Dhanbad District of Bihar. Here, we are dealing with the assessment year 1961‑62, for which the relevant accounting year was the financial year 1960‑

61. Hence, the law applicable will be the old Act, viz., Indian Income‑tax Act, 1922 (hereinafter referred to as the Act). The assessee claimed earned Income relief ; but that claim was rejected both by the Income‑tax Officer and the Appellate Assistant Commissioner, who thought that a deity, though a juristic person for assessment, was incapable of earning any income. The Income‑tax Appellate Tribunal, however, granted earned income relief, relying on section 41(1) of the Act, and observed that, inasmuch as the Shebait was appointed by the Court and it was he who carried on the business of the deity assessee and he was capable of earning income, the assessee would also get the benefit of that income. Hence, the main question for consideration is whether a Hindu deity, who is the owner of property, can claim earned income relief under the provisions of the Act on the ground that its Shebait earned that income for the deity. The relevant statutory provisions for consideration for this purpose are section 2(5‑AA), defining "earned income", and section 41(1). Whose provisions, omitting immaterial portion, r, are quoted below: "2(6‑AA) `earned income' means any income of an assessee who is an individual, Hindu undivided family, unregistered firm or other association of persons not being a company, a local authority, a registered firm or a firm assessed under clause (b) of subsection (5) of section 23 . . . . . (b) which is chargeable under the head `Profits and gains of business, profession or vocation' where the business, profession or vocation is carried on by the assessee or, in the case of a firm, where the assessee is a partner actively engaged in the conduct of the business, profession or vocation ; or .... and includes any such income which, though it is the income of another person, is included in the assessee's income under the provisions of this Act, but does not include any such income which is exempt from tax under subsection (2) of section 14 or under a notification issued under section 60." It is now well settled that, though a Hindu idol is a juristic person holding properties and the properties endowed vest in the same, nevertheless the idol is the owner only in an ideal sense (see Deoki Nandan v. Murlidhar) (A I R 1957 S C 133). In Mukherjea's Law of Endowment (Second Edition), at page 249, the legal position about the relationship between the idol and its Shebait has been summed up as follows: "An idol is a juristic person in whom the title to the properties of the endowment vests. But it is only in an ideal sense that the idol is the owner. It has to act through human agency, and that agent is the Shebait, who is, in law, the person entitled to take proceedings on its behalf. The personality of the idol might, therefore, be said to be merged in that of the Shebait." On behalf of the assessee, Mr. Tarkeshwar Prasad contended that, by virtue of subsection (1) of section 41, the tax due from the idol was leviable and recoverable from its Shebait in the like manner and to the same extent as it would be leviable and recoverable from the idol itself. Hence, he urged that, though the idol may be incapable of "earning any income", the income earned by its Shebait for the idol must be deemed to be the income earned by the idol for the purpose of claiming the earned income benefit. As regards the definition of "earned income" given in section 2(6‑AA)(b), Mr. Ugra Singh contended that that would apply in terms only where the assessee himself carries on business. Here, admittedly, the idol could not and did not carry on business. He further urged that the inclusive part of the definition given at the end of subsection (6‑AA) will also not help the assessee because its application is restricted only to those instances where the income of another person is included in the assessee's income under the provisions of the Act. Mr. Ugra Singh urged that the words "another person" in this portion of the definition must mean another distinct legal person other than the assessee. But, where the Shebait acts merely for the idol, according to Mr. Ugra Singh, he cannot be said to be "another person" as mentioned in the inclusive part of the definition of "earned income". There is, undoubtedly, considerable force in the contention of Mr. Ugra Singh. Reliance on section 41(1) of the Act may not be quite appropriate because, though it permits the levy and recovery of tax from a Shebait in the same manner and to the same amount as would be leviable and recoverable from the deity, it does not answer the real question at issue in this case, viz., how can a deity earn any income ? The cases where section 41 has been applied are not helpful. Mr. Tarkeshwar Prasad cited the judgment of the Supreme Court in Commissioner of Income‑tax v. S. A. S. Marimuthu Nadar ((1962) 44 I T R 1 (S C)), where it was held, applying the principle of section 41(1) of the Act, that the, income of a minor will also be entitled to earned income relief if, in fact, it was earned by his guardian, This case, however, was distinguished by Mr. Ugra Singh on the ground that a minor was not incapable of earning any Income, whereas an idol suffers from that incapacity. Similarly, Sri Sri Sridhar Jiew v. Income‑tax Officer, District II(I), Calcutta ((1967) 63 I T R 192), does not help us here because that decision only lays down that a Shebait of a Hindu deity would come within the wide meaning to be given to the word "trustee" in section 41(1) of the Act. Similarly, Commissioner of Income‑tax v. Managing Trustees, Nagore Durgha ((1965) 57 I T R 321 (S C)), may not be helpful because there the main question for consideration was whether section 41 of the Act would be applicable where trustees of a Muslim durgha (described as Nattamaigars) actually earned the income for the durgha, though the surplus out of the income was payable to some of the descendants of the original founder known as kasupangudars. Here, again, the kasupangudars are human beings and capable of having earned income, and hence there is no difficulty in applying the principle of section 41(1) to them. In my opinion, the answer to the point raised by Mr. Ugra Singh is found in the Hindu Law concept of the relationship between the Shebait and the idol. The passage from Mukherjea's book (quoted above) says that the personality of the idol might, therefore, be said to be merged in that of the Shebait. Hence, for all legal purposes, the Shebait and the idol are one, and any income earned by the Shebait not on his own personal behalf but while functioning as the Shebait of the deity must be deemed to be the income earned by the idol. The separation of the personality of the Shebait from that of the idol for the purpose of applying the provisions of the Act will not be in consonance with the Hindu law as described above. This is the reason why, in the assessment order, the assessee has been described as Uma Maheshwari through H. Barat, i.e., the deity functioning through its Shebait. Here, admittedly, the Shebait carried on the business on behalf of the idol, and earned the income which is sought to be taxed. It will, therefore, come within the definition of "earned income" of the idol as described in section 2(6‑AA)(b). For these reasons, I answer the question in the affirmative and hold that the assessee (idol) through its Shebait is entitled to the earned income relief as defined in section 2(6‑AA) of the Act. The petitioner should pay the costs of Rs. 200 to the opposite party. B. D. SINGH, J.‑I agree.