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TMI Blog1967 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... brothers, Muthuvaithilingam Chettiar and Paramasivam Chettiar, divided their agricultural holdings. Thereafter, there was a partition in each of the branches of Muthuvaithilingam Chettiar and Paramasivam Chettiar. On June 12, 1954, Muthuvaithilingam Chettiar effected a partition of his lands between himself and his four minor sons. On June 16, 1954, Paramasivam Chettiar effected a partition between him and his three minor sons. It may be noted that Muthuvaithilingam Chettiar settled a portion of his holdings in favour of his wife on June 15, 1964, and Paramasivam Chettiar settled a portion of his holdings in favour of his wife and minor daughter on June 18, 1964. For the year 1958-59, Muthuvaithilingam Chettiar, Paramasivam Chettiar, their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the family can only be deemed to be as partners of the firm ; (5) there is a common farm and common management ; (6) the chemical manure for the entire lands is purchased by the firm and utilised for common benefit ; (7) there is therefore sufficient indicia that all the twelve persons constituted themselves into an association of individuals and the two brothers were constituted as common managers by the rest of the members. Accordingly, the Commissioner of Agricultural Income-tax held that the 12 persons, having thus constituted themselves as an association of individuals, cannot be individually assessed as was sought to be done by the Agricultural Income-tax Officer. He, therefore, set aside the assessment orders for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, in the alternative, there should exist circumstances for a fair inference by necessary implication to be drawn therefrom to enable one or a few of the members of such an association or a third party to do or refrain from doing such acts or things for the common good. An element of investiture of such authority to look after, manage or conduct the affairs of the association of individuals by them to some amongst themselves or to others, be they called managers, agents, etc., is an essential sine qua non to determine whether persons constituting such an association are indeed an association of individuals within the meaning of the Act. The mere fact that the affairs of a group of persons or individuals are managed by a common manager o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is an association of persons within the meaning of section 3 ; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not." An " association of persons " must be one in which two or more persons join in a common purpose or common action. But, as already stated by us, there should be a clear and positive intention on the part of the group of individuals to vest such control in a common man. It is this insignia of investiture of authority on another that creates a dividing line between an ordinary group of persons and an association of persons within the meaning of the Act and who are liable to be taxed as such under the Act. But in the instant case what has happened is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their affairs. Thus, therefore, it ultimately resolves itself into a question of intention and proof of the existence of such a knitting together by the individuals. There should be ample evidence to substantiate the above features, without the establishment of which, there could be no association of individuals. Recently, a Division Bench of this court, in State of Madras v. Subramania Iyer, considered a similar problem as that confronting us in this case, and the following observations therein are apposite : " It appears to us that when the question arises also in the case of persons who own separate parcels of land defined by metes and bounds, and who for the cultivation of their respective shares or parcels engage one and the same man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. We have already laid down the tests and it is unnecessary to repeat them at this juncture. The learned Commissioner, while disposing of these proceedings suo motu, assumed that the data quoted by him and referred to by us as above was sufficient to hold that the business was that of the twelve persons and that they should be deemed to be knitted together as an association of individuals. We are afraid that the law has not been properly adverted to by the Commissioner and he has failed to invoke the necessary ingredients to constitute in the eye of law an association of individuals. Reference is made in his order that the income from the lands is divided unequally between the sharers and a credit entry in the name of each sharer is made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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