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Interpretation of the term "association of persons" under the Indian Income-tax Act, 1922 for the assessment year 1959-60. Analysis: The case involved a reference under section 66(1) of the Indian Income-tax Act, 1922, regarding the status of two individuals, Sunil Krishna Paul and Amar Krishna Poddar, who claimed their status should be taken as a firm for the assessment year 1959-60. The Income-tax Officer determined them to be an "association of persons" instead of a firm. The Appellate Assistant Commissioner and the Appellate Tribunal upheld this status, leading to the reference question on the validity of the assessment. In determining whether the two individuals constituted an "association of persons," the court analyzed various legal precedents. The court considered cases like Commissioner of Income-tax v. Laxmidats Devidas and In re Dwarkanath Harischandra Pitale from the Bombay High Court, emphasizing the importance of joint management in determining the status of an association of persons. The court also examined the decision in Commissioner of Income-tax v. N. V. Shanmugam & Co. from the Madras High Court, highlighting that an association of persons involves a joint venture for producing income through a consensual act or understanding between the parties. The absence of evidence of joint act or venture was a crucial point raised by the counsel for the assessees. The court meticulously analyzed the facts of the case, including the agreements of assignment and partnership entered into by the assessees for sharing commission income. It was noted that the assessees jointly managed the income-producing property, incurred expenses collectively, and shared the income, demonstrating a clear joint action towards earning the commission. Drawing parallels from the judgment in In re B. N. Elias and the subsequent approval by the Supreme Court in Commissioner of Income-tax v. Indira Balkrishna, the court concluded that the assessees' joint actions and common purpose in obtaining and managing the income-producing property constituted them as an "association of persons" under the Income-tax Act. Therefore, the court held that the two individuals, Sunil Krishna Paul and Amar Krishna Poddar, were rightly assessed as an "association of persons" for the assessment year 1959-60, affirming the decision of the Appellate Tribunal. The court answered the reference question in the affirmative and directed the applicants to pay the costs of the reference. Judge K. L. Roy concurred with the judgment delivered by Judge Sankar Prasad Mitra.
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