1963 (4) TMI 100 - HC - Income Tax

Hindu Deity Tax Status: Trustee-Like Assessments Upheld

Commissioner of Income Tax Versus Jogendra Nath Naskar And Anr.

Commissioner of Income Tax Versus Jogendra Nath Naskar And Anr. - AIR 1965 Cal 570 Issues Involved:1. Whether a Hindu deity is assessable under the Income-tax Act as a unit of assessment.2. Whether the dedication to a deity is always for public religious purposes and thus exempt under Section 4(3)(i) of the Income-tax Act.3. Whether Section 41 of the Income-tax Act can be applied to shebaits of a Hindu deity.Detailed Analysis:1. Assessability of Hindu Deity under the Income-tax Act:The question of whether a Hindu deity is assessable under the Income-tax Act was examined in detail. The court noted that the deity is treated as a juridical entity capable of owning property, and thus, the deity is liable to be taxed. The court referenced several cases and authorities to establish that the deity, though acting through human agency, is considered a legal person for the purposes of taxation. The court concluded that a Hindu deity is an artificial juridical person and can be assessed under the Income-tax Act.2. Public Religious Purpose and Exemption under Section 4(3)(i):The court examined whether the dedication to a deity is always for public religious purposes and thus exempt under Section 4(3)(i) of the Income-tax Act. It was argued that an absolute debutter (dedication) to a deity should be considered a public religious purpose, and therefore, the income derived from such property should be exempt from tax. The court considered the terms of the will and the nature of the dedication, concluding that the dedication in this case was for a private religious purpose, as it did not benefit the public at large. Therefore, the income was not exempt under Section 4(3)(i).3. Applicability of Section 41 to Shebaits:The court analyzed whether Section 41 of the Income-tax Act, which deals with the taxation of income received by courts of wards, administrators-general, official trustees, receivers, managers, and trustees, could be applied to shebaits of a Hindu deity. The court noted that while shebaits are not trustees in the English sense, they perform similar functions and have similar obligations. The court concluded that shebaits could be considered trustees within the meaning of Section 41, provided they are appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise. Therefore, the assessments on the shebaits under Section 41 were held to be in accordance with the law.Conclusion:The court answered the reference affirmatively, holding that the assessments on the deities through the shebaits under Section 41 of the Income-tax Act were in accordance with the law. The court emphasized that the shebaits, though not trustees in the technical sense, fall within the scope of Section 41 due to their obligations and duties akin to those of trustees. The court also clarified that the dedication in this case was for a private religious purpose, and thus, the income was not exempt under Section 4(3)(i).