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TMI Blog1989 (5) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... t the hearing it was stated that it was contended that the capital gains was not assessable in the hands of either the AOP or the HUF but what was sold was the separate share of each of the vendors. There is no discussion in the assessment order. The assessee put forth the same contentions before the AAC but the AAC did not agree with the assessee. 2. The assessee reiterates the claim before us. One Muthalagu Pillai had three sons, Kumaravelu Pillai, Karuppaiah Pillai and Erulappa Pillai. There was a partition in 1937 by which time Muthalagu Pillai, Kumaravelu Pillai and Karuppaiah Pillai had died. Therefore, the partition was between the four sons of Kumaravela Pillai, i.e, Ondimuthu Pillai, Muthalugu Pillai, Mahalingam and Chockalingam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessment as made required to be quashed since the notice was issued in the status of " AOP ". His further submission was that the assessment could not be made even in the status of a ' Body of Individuals ' because the Madras High Court themselves pointed out the difference where the property came by devolution and such property constituted a business and where such property was a mere investment where there was no continuous activity. 4. The learned Departmental Representative, on the other hand, submitted that since all the persons had joined together in executing the sale deed, there was clearly a coming together voluntarily and there was an Association of Persons. He further stated that there was no difference whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the category those who found themselves thrown together by the accident of their birth, by the accident of another's death, by the accident of testamentary dispositions, and so on. This was the ruling which the Supreme Court rendered in the year 1960 in Indira Balkrishna's case [1960] 39 ITR 546. In rendering that decision, the Supreme Court were not laying down the principle for the first time. They were merely following three very early decisions of High Courts on the subject. Thus, by the time Parliament came to recodify the IT Act, which was in 1961, the year after the Supreme Court decided Indira Balkrishna's case [1960] 39 ITR 546, the idea of an AOP had become too well settled to need further clarification." From the aforesaid o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss to the income or to the income yielding asset in question." However, an exception appears to have been carved out when proceeding further their Lordships pointed out as under :--- " Here is a family group of a widow and four sons. They are by no means a motely crowd. Nor are they an ad hoe or random lot finding themselves together by sheer accident. They are, on the contrary, a family group, knit by family ties. At the inception, they were united in a common grief. The bequest of the business to all of them in common under the testator's will only tended to make their family tie-up into more of an economic group or body than it would otherwise have been what is more, the object which united them economically was not just an investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property had already been leased out. There was no fresh joining together for leasing out the property by the present vendors. They only continued to enjoy the income from the leased out property. The Madras High Court in the case of CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 has observed at page 556 : "A person who lets out a property and enjoy the income therefrom, is more passive than active. It is not, therefore, reasonable to call it an activity for profit." Where the vendors in the present case merely continued to receive the leased rent in respect of the property which had already been let out and subsequently sold the property, having regard to the observations of the Madras High Court it cannot be said that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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