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Issues Involved:
1. Whether the assessments upon the applicants as an association of persons are correct in law. 2. Whether the Tribunal was justified in holding that the income from the temple on non-festival as well as festival days accrued to the applicants as an association of persons. 3. Whether the Tribunal erred in law in declining to consider the contention that the income of the Ambaji Temple was the income of a public religious trust and not assessable in the hands of the applicants. Detailed Analysis: Issue 1: Assessment as an Association of Persons The primary issue was whether the assessees constituted an "association of persons" (AOP) under Section 3 of the Income-tax Act, 1922. The court referred to the Supreme Court's decision in Commissioner of Income-tax v. Indira Balkrishna, which defined an AOP as "one in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains." The court found that the assessees inherited the temple and managed it jointly. They performed various functions, including the adornment of the deity and the performance of pooja, with the objective of attracting devotees who would make offerings. These offerings constituted income for the assessees. The court concluded that the assessees were engaged in a joint enterprise with the object of earning income, thus forming an AOP. Issue 2: Income Accrued as an Association of Persons on Non-Festival and Festival Days The assessees argued that on non-festival days, each of them performed the temple functions in turns and collected offerings individually, which should not be considered as income of an AOP. However, the court noted that the management and performance of temple functions were concerted activities aimed at earning income. The arrangement to perform these functions in turns was merely a method to share the income proportionately. On festival days, when offerings were larger, the assessees performed the functions jointly and shared the offerings in their entitled proportions. The court held that the essential character of the joint enterprise remained unchanged, whether on festival or non-festival days. Therefore, the income from both festival and non-festival days was assessable as income of an AOP. Issue 3: Tribunal's Refusal to Consider the Public Religious Trust Contention The third issue was whether the Tribunal erred in law by declining to consider the assessees' contention that the offerings constituted the income of a public religious trust. The Tribunal had refused to entertain this contention because the assessees had not appealed against the Appellate Assistant Commissioner's refusal to consider it. The court found this reasoning flawed. It noted that the assessees, having succeeded before the Appellate Assistant Commissioner on other grounds, could not have filed an appeal against the refusal to entertain the public religious trust contention. The court held that the Tribunal should have considered this contention on its merits. The court clarified that its decision was limited to the Tribunal's error in refusing to consider the contention. The Tribunal must now decide whether to entertain the contention and, if so, whether the temple was indeed a public religious trust. Conclusion: The court answered the first two questions in the affirmative, confirming that the assessees constituted an AOP and that the income from the temple accrued to them as such. The third question was also answered in the affirmative, indicating that the Tribunal erred in refusing to consider the public religious trust contention. The matter was remanded to the Tribunal for further consideration. The assessees were ordered to pay the costs of the reference to the Commissioner, while the Commissioner was to pay the costs of the application under Section 66(2).
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