From H.P.Blavatsky - Teopedia
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Bhûts (Sk.). Bhûta.: Ghosts, phantoms. To call them “demons”, as do the Orientalists, is incorrect. For, if on the one hand, a Bhûta is “a malignant spirit which haunts cemeteries, lurks in trees, animates dead bodies, and deludes and devours human beings”, in popular fancy, in India in Tibet and China, by Bhûtas are also meant “heretics” who besmear their bodies with ashes, or Shaiva ascetics (Siva being held in India for the King of Bhûtas).

Source: H.P.Blavatsky - The Theosophical Glossary