1978 (9) TMI 27 - HC - Income Tax

Summary

Issues Involved:
1. Whether Meera & Co. is a "body of individuals" and assessable as such.
2. Whether the assessment should be made u/s 4 read with s. 2(31)(v) or u/s 160, 161, or 166.

Summary:

Issue 1: Whether Meera & Co. is a "body of individuals" and assessable as such.

The Tribunal held that Meera & Co. is a "body of individuals" and is assessable as such. The business was continued by Shrimati Krishna Gupta on behalf of herself and her three minor children after the death of Shri Prem Narain. The Tribunal found that the business was carried on as an organic unit by Shrimati Krishna Gupta, acting as the natural guardian of her minor children. The court referred to the definition of "person" in s. 2(31) of the Act, which includes a "body of individuals." The court applied the ratio from Deccan Wine & General Stores v. CIT and CIT v. Harivadan Tribhovandas, concluding that Shrimati Krishna Gupta and her three minor children constituted a "body of individuals" as they had a unity of interest and the business was carried on for their common benefit. The court rejected the argument that the minors' status as beneficiaries and their guardian's role as trustee would alter this classification.

Issue 2: Whether the assessment should be made u/s 4 read with s. 2(31)(v) or u/s 160, 161, or 166.

The court held that the assessment should be made u/s 4 read with s. 2(31)(v) and not u/s 160, 161, or 166. Section 4 is the charging section, and the term "person" includes a "body of individuals." The court noted that if the assessee is treated as a "body of individuals," the provisions of ss. 160, 161, etc., do not apply. The court emphasized that the business, after the death of Shri Prem Narain, was owned by his legal heirs as a group and continued by Shrimati Krishna Gupta for the benefit of all. The income from the business accrued to the "body of individuals" consisting of Shrimati Krishna Gupta and her three minor children. Therefore, the special provisions for representative assessees under ss. 160, 161, etc., were not applicable.

Conclusion:

1. The Tribunal was right in law in holding that Meera & Co. is a "body of individuals" and is assessable as such.
2. The Tribunal was right in holding that the assessment of the body of individuals identified as M/s. Meera & Co. will be made u/s 4 read with s. 2(31)(v) and not u/s 160, 161, and 166 of the Act.

The parties were left to bear their own costs.