Earned income relief for a Hindu deity applies when business is carried on through a shebait on the deity's behalf.

A Hindu deity is a juristic person that can hold property only through its shebait, and business carried on by the shebait on the deity's behalf is treated as the deity's own business for income-tax purposes. On that basis, income so earned is regarded as earned income of the idol rather than the shebait in a personal capacity. Applying section 2(6AA) of the Indian Income-tax Act, 1922, the deity was held entitled to earned income relief because the business was carried on on its behalf and the statutory definition extended to income included in the assessee's income under the Act.

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Issues: Whether a Hindu deity, acting through its shebait, is entitled to earned income relief under section 2(6AA) of the Indian Income-tax Act, 1922 when the business is carried on by the shebait on behalf of the deity.

Analysis: The assessment year in question was governed by the Indian Income-tax Act, 1922. The definition of "earned income" in section 2(6AA) applies where the assessee carries on the business and also extends to income which, though that of another person, is included in the assessee's income under the Act. A Hindu idol is a juristic person and can hold property, but it functions only through its shebait; in Hindu law, the personality of the idol and the shebait is treated as merged for the purpose of managing the deity's affairs. Income earned by the shebait while acting for the deity is therefore not income earned in a personal capacity, but income earned for the idol itself. Section 41(1) was not the real foundation, but the legal relationship between idol and shebait established that the business was carried on on behalf of the deity.

Conclusion: The question was answered in the affirmative. The assessee-idol, through its shebait, was entitled to earned income relief under section 2(6AA) of the Indian Income-tax Act, 1922.

Final Conclusion: The reference was decided in favour of the assessee and the assessee was held entitled to the claimed relief.

Ratio Decidendi: Where a shebait carries on business on behalf of a Hindu deity, the income so earned is legally treated as the deity's own earned income for the purpose of earned income relief under the Act.

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