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Issues Involved:
1. Whether there was an association of persons under the name and style of Delhi Beopar Mandal with R. B. Harish Chandra as a member during the accounting year relevant to the assessment year 1952-53. 2. Whether the compensation received by the three persons could be included in the total income of the association of persons and whether tax assessed on the association of persons could be realized from Memo Devi as a legal heir of late R. B. Harish Chandra. Detailed Analysis: Issue 1: Association of Persons The primary question was whether Delhi Beopar Mandal, including L. Harish Chandra, could be regarded as an association of persons in the financial year relevant to the assessment year 1952-53. The court examined the nature of the entity formed by the five individuals under the deed dated 27th October 1936, and whether it continued to exist as an association of persons after the land was acquired in 1948. - Historical Context: The deed dated 27th October 1936, indicated that the five individuals joined together for a joint enterprise involving the purchase and sale of land. The partnership was to subsist until the land was disposed of or the partnership was dissolved by mutual agreement. The land was acquired by the Delhi Improvement Trust in 1948, which led to the cessation of the original purpose of the partnership. - Legal Interpretation: The court noted that for an association of persons to exist, there must be a combination of individuals engaged in a joint enterprise. The Supreme Court's decisions in Commissioner of Income-tax v. Indira Balkrishna and G. Murugesan and Bros. v. Commissioner of Income-tax were cited, emphasizing that an association of persons must involve a common purpose or action to produce income, profits, or gains. - Conclusion: The court concluded that after the acquisition of the entire land in 1948, the original purpose of the association ceased to exist. There was no evidence of a joint enterprise by all five individuals to realize or receive the compensation amount. Therefore, the assessee (Delhi Beopar Mandal) could not be regarded as an association of persons in the financial year relevant to the assessment year 1952-53. Issue 2: Inclusion of Compensation in Total Income The second issue was whether the compensation received by the three individuals could be included in the total income of the association of persons and whether the tax assessed on the association could be realized from Memo Devi as a legal heir of late R. B. Harish Chandra. - Assessment of Compensation: The compensation for the acquired land was paid only to the three individuals whose names were recorded in the revenue records. The court noted that the compensation amount was payable by the Government to these three individuals, and they had the right to receive it. The five individuals, including Harish Chandra, did not have a collective right to claim or receive the compensation from the Government. - Legal Implications: The court referenced the Supreme Court's decision in E. D. Sassoon & Co. Ltd. v. Commissioner of Income-tax, which stated that a debt is created when a right to receive is established. In this case, the right to receive the compensation amount was only with the three individuals, and not with the association of five individuals. - Conclusion: Since the compensation amount did not accrue to the association of five individuals, it could not be included in the total income of the association. Consequently, the tax assessed on the association could not be realized from Memo Devi as a legal heir of late R. B. Harish Chandra. Final Judgment: The court answered the first question in the negative, concluding that the assessee (Delhi Beopar Mandal) could not be regarded as an association of persons in the financial year relevant to the assessment year 1952-53. The second question was answered in the affirmative, indicating that the compensation received by the three individuals could not be included in the total income of the association of persons, and the tax could not be realized from Memo Devi. No order as to costs was made.
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