Law:

Section:

Section 2(6AA) of the Indian Income-tax Act, 1922 - Earned income - Assessment year 1960-61 - Whether for all legal purposes, shebait and idol are one, and any income earned by shebait not on his own personal behalf but while functioning as shebait of deity must be deemed to be income earned by idol - Held, yes - Whether where assessee deity carried on its business through its shebait and earned income which was sought to be taxed, assessee would be entitled to claim earned income relief under section 2(6AA) - Held, yes FACTS The assessee-HUF was acting through its shebait, who was appointed as shebait under the orders of the High Court made in 1936. The assessee owned several collieries and other business assets. For the assessment year 1960-61, the assessee claimed earned income relief; but that claim was rejected both by the ITO and the AAC, who thought that a deity, though a juristic person for assessment, was incapable of earning any income. The 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. On reference : HELD 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 had been described as, the deity functioning through its shebait. Here, admittedly, the shebait carried on the business on behalf of the idol, and earned the income which was sought to be taxed. It would, therefore, come within the definition of "earned income" of the idol as described in section 2(6AA)( b). Note : The case has been decided in favour of the assessee. CASES REFERRED TO CIT v. Managing Trustees [1965]…

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