Law:

Section:

Section 4, read with section 2(31) of the Income-tax Act, 1961 (Corresponding to section 3 of the Indian Income-tax Act, 1922) - Individual - Assessable as - Assessment years 1939-40 to 1942-43 - Whether, a Hindu deity can hold property and be in receipt of income - Held, yes - Whether, however, Hindu deity would be taxed through its shebaits who are in possession and management of its property - Held, yes FACTS In the year 1820 one 'C' executed an ekrarnama making a gift of a piece of land for religious purposes. In 1842 she executed a will referring to the fact that she had earlier made the property debutter and directed her four sons, the executors, to perform the daily service of Sri Radhagobindjee. She died in 1855. In 1876 a suit was filed in the High Court praying that the trust should be administered by the Court and a scheme should be prepared. In year 1929 a scheme of administration was framed and a little later the official trustee of Bengal was appointed to be the trustee of the said debutter estate. After the official trustee took possession of the properties he was assessed in respect of the income of the debutter estate in the status of an 'individual' under section 41 of the 1922 Act. In respect of the assessment years 1939-40 to 1942-43, a reference was made under section 66(2) of the 1922 Act. The High Court upheld the assessment holding that the deity is an individual. On appeal to the Supreme Court : HELD As a Hindu deity can hold property and be in receipt of income and can also sue and be sued in a court of law there is no reason why its income should be held to be outside the ambit of taxation if it can be brought within it without straining the language of the statutory provision. It would naturally be taxed through its shebaits who are in possession and management of its property. However, the problem whether the Hindu deity is an individual is not likely to arise after the enactment of the Income-tax Act, 1961, which in clause (31) of section 2 defines a "person" as including: (i ) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or…

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