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Validity of amalgamated assessment on the receiver as the principal officer of an association of persons. Detailed Analysis: The case involved a reference under Section 66(1) of the Income-tax Act regarding the validity of an amalgamated assessment on the receiver as the principal officer of an association of persons. The facts revealed a family estate partition suit where a receiver was appointed by the Court to manage certain collieries and lands. The income from these properties was the subject of assessment for several years. The dispute arose when the Income-tax Officer assessed the entire income in the hands of the receiver as one unit, leading to a higher tax rate. The assessee contended that the tax should be recoverable separately for each beneficiary based on defined shares. The Income-tax Officer considered the receiver as the principal officer of the association, leading to an appeal by the assessee. The Appellate Assistant Commissioner affirmed the main order with a minor reduction in income. The Appellate Income-tax Tribunal dismissed the appeal, emphasizing that the receiver was appointed by the Court and continued in that role by consent of the parties. The crucial question was whether the assessees constituted an association of persons and if Section 41 could be applied to the assessment. The judgment analyzed the legal principles surrounding the concept of an association of persons, particularly in the context of property income. It was established that letting out property does not constitute carrying on a trade or business by the lessor. The court deliberated on the conflicting interpretations of the term "association of persons" and highlighted the necessity of considering the specific facts of each case. In this instance, the receiver managed the business independently, and the beneficiaries had no involvement in the operations generating royalty income. The judgment distinguished this case from precedents and emphasized that the assessment should have been made either on the receiver or on each beneficiary separately due to the absence of a genuine association of persons. Referring to Section 41(1), the court held that the tax should be levied on the receiver only to the extent it would be recoverable from each beneficiary individually. The decision concluded that the amalgamated assessment on the receiver as the principal officer of an association of persons was invalid in this scenario, and the assessee was awarded costs for the reference. In a concurring opinion, the second judge agreed with the analysis and the decision to answer the reference accordingly.
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