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Assessment of share income from an association of persons without the association itself being assessed to tax. Analysis: The judgment pertains to the assessments for the year 1963-64 of two individuals, Kailash Lamba and Madan Lal Lamba, who were members of an association of persons running a guest house in New Delhi. The primary issue in question was whether the Tribunal rightly upheld the direct assessment of the assessees' share income from the association without the association itself being taxed. The assessees contended that without a direct assessment on the association, their share income should not be included in their total income. The Appellate Assistant Commissioner agreed with the assessees, but the Appellate Tribunal did not. The court analyzed the provisions of the Income-tax Act, noting that while an association of persons is a taxable entity, the income earned by the association is also considered the income of its members. The court highlighted that there is no prohibition in the Act against taxing both the association and its members for their share of income. The court also addressed the distinction between the provisions of the old Income-tax Act of 1922 and the current Income-tax Act of 1961. Under the old Act, there was an option for the Income-tax Officer to assess either the association or the individual members, but not both. However, under the current Act, there is no such restriction, allowing for the direct assessment of a member of an association without assessing the association itself. The court emphasized that the absence of such an option in the current Act indicates that there is no impediment to directly assessing a member of an association without assessing the association. Furthermore, the court dismissed the argument raised by the assessees regarding the timing of the assessment, stating that it was not permissible to raise a new point at that stage which had not been raised before the authorities or the Tribunal. Ultimately, the court held in favor of the Department, concluding that the question posed in the references should be answered affirmatively. The court awarded costs to the Commissioner, to be shared equally by the two assesses.
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