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TMI Blog1966 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... shares each, the testator's wife and two daughters became entitled to a share each, his two sons-in-law became entitled to a half share each, one share had to be applied for charity, and the remaining one share had to be the source of a reserve fund to be utilised for the expenses of management. After the death of the testator, the Agricultural Income-tax Officer assessed the income of the estate left by him under the Mysore Agricultural Income-tax Act. By then, one of the sons of the testator had been, under an agreement reached between the legatees, appointed manager to manage the properties. This was recorded in an agreement which was executed on March 12, 1957. The Agricultural Income-tax Officer proposed to make an assessment on the basis that the income was derived by an association of individuals, whereas on behalf of the legatees it was contended that the income was the income derived by a partnership or by tenants-in-common. Indeed, they made an application under section 29 of the Act for registration of what they called a firm. The Income-tax Officer refused the certificate on the ground that there was no partnership. He similarly repelled the argument that the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was bequeathed, as tenants-in-common, the assessment was governed by section 3(3), and so what could be assessed was the individual income of those tenants-in-common. His further submission was that, as provided by section 10 of the Act, after the appointment of the eldest son of the testator as manager for the man agement of the estate, the individual income which had to be shared by the persons to whom that income was bequeathed was what could be assessed and not the aggregate income. Section 10(1)(a), upon which dependence was placed in support of the second contention, provides among other matters that where agricultural income is derived by a property for the management of which a manager is appointed, by written agreement, the tax shall be levied upon and recoverable from the person on whose behalf such agricultural income is receivable. So, while it becomes clear from section 3(3) that if the property bequeathed by the testator was held by the legatees as tenants-in-common, what could be assessed is only the individual income of each one of those legatees ; it becomes equally clear from section 10(1)(a) that if a manager was appointed for the management of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects the assessment of the individual income of a person who is a party to an agreement under which a manager is appointed for the management of the property which has produced the income. The eldest son of the testator was the manager so appointed by agreement between, the parties who have to share the income under the provisions of the will, so long as the property was under the management which is directed by the will. If that manager managed the property which produced agricultural income, the clear meaning of section 10(1)(a) is that the income of each one of the persons on whose behalf there was such management is what could be assessed. What remains to be considered is the correctness of the postulate which appealed to the Income-tax Officer, the Deputy Commissioner and the Commissioner of Income-tax that the persons who had to share the income under the provisions of the will constituted themselves into an association of individuals within the meaning of the definition of the word " person " occurring in section 2(1)(p) of the Act. If, as we have already observed, the assessment has to be made under section 3(3) or under section 10(1)(a), the question whether the income w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be shared in a manner slightly different from the way in which the properties had been bequeathed, and, in addition, he made a bequest of such income to his two sons-in-law to whom no part of the property had been bequeathed. What was done by the legatees was to implement the provisions of the will by the appointment of the eldest son of the testator as the manager. But, nevertheless, the testator's widow and children continued to hold the property as tenants-in-common, although some part of the income had to be distributed amongst the two sons-in-law. No one can say that when the management was entrusted to the eldest son of the testator in compliance with the direction in the will, there was a combination of the testator's widow, his children and his sons-in-law for the acquisition of gain or for the production of income. The arrangement had for its purpose no other than the collection of the income which the estate undoubtedly was producing even before the agreement was entered into and for its distribution in accordance with the provisions of the will. The appointment of the manager or the arrangement recorded in the will was not an enterprise for the acquisition of gain o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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