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TMI Blog1963 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 19, 1955, transferred the right of ownership of the estate to his three sons in shares who continued to administer and cultivate the lands of the estate as equal partners. As the ownership of the estate was merely transferred from the father to the sons, the Agricultural Income-tax Officer, Coorg, treated the status of the assessee as that of an association of persons and assessed them to tax. Being aggrieved of the assessment, an appeal was filed before the Deputy Commissioner of Agricultural Income-tax, Coorg, who remanded the case for fresh disposal, but the appellate authority upheld the stand taken by the assessing officer in so far as the question of status was concerned. As could be seen from the order of reassessment passed by the Agricultural Income-tax Officer on March 14, 1960, the right of co-ownership and separate assessment was passed, but it was turned down as there was no such provision under the Coorg Agricultural Income-tax Act, 1951, analogous to section 3(3) of the Mysore Agricultural Income-tax Act, 1957, or section 9(3) of the Indian Income-tax Act, 1922. The petitioners filed a revision petition before the Commissioner of Agricultural Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now, coming to the first question referred to us, the finding of the Commissioner of Agricultural Income-tax, to be hereinafter referred to as Commissioner , is as follows: The deed of settlement dated December 19, 1955, has transferred the right of ownership of the estate from the father to the sons. From that day onwards the three brothers joined themselves for a common purpose, namely, to work the estate together and earn profits. This is fortified by the fact that the estate is not specifically divided and no share in the corpus is defined. On this finding, which finding is binding on us, it cannot be successfully contended that the assessees are not an association of persons . Sri V. Krishna Murthy, the learned counsel for the petitioners, contended that the above finding of the Commissioner is unsupported by the decision given by him in A.I.T./R.P.N./S.R./15 of 1960-61. This contention does not appear to be correct. But before going to that finding, we may first refer to section 3(1) of the Act; that section reads: Agricultural income-tax at the rate or rates specified in the schedule to this Act shall be charged for each financial year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n association of two or more persons for the acquisition of property which is to be managed for the purpose of producing income, profits or gains falls within the words, 'other association of individuals' in section 3, and under section 9 of the Act, the association of individuals is the owner of the property, and as such is assessable. This decision was cited with approval by the Supreme Court in Commissioner of Income-tax v. Smt. Indira Balkrishna [1960] 39 I.T.R. 546, 551; [1960] 3 S.C.R. 513; A.I.R. 1960 S.C. 1172. Dealing with the point under consideration, this is what S.K. Das J., who spoke for the court, observed in paragraph 9 of the judgment: It is enough for our purpose to refer to three decisions: In re B.N. Elias [1935] 3 I.T.R. 408, Commissioner of Income-tax v. Laxmidas Devidas [1937] 5 I.T.R. 584 and In re Dwarakanath Harischandra Pitale #[1937] 5 I.T.R. 716; A.I.R. 1938 Bom. 353. In In re B.N. Elias**, Derbyshire C.J. rightly pointed out that the word 'associate' means, according to the Oxford Dictionary, 'to join in common purpose, or to join in an action.' Therefore, an association of persons must be one in which two or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter his death under Mohammadan law specific shares of the property left by him. The assessees did not partition the property and the rent deeds stood in their joint names. They had jointly employed a munshi to manage the property and collect the rents and the income; after deducting the cost of collection and other expenses, the balance was distributed in accordance with their respective shares. In the assessment year 1937-38 the income-tax authorities assessed the assessee as an association of individuals. The court held, on a reference, that the assessees did not form an association of individuals and they should be separately assessed on their individual shares. It may be noted that in that case the only two relevant facts established were: (1) the assessees jointly owned the property; and (2) that they jointly managed that property. On the basis of those facts, the assessees could not have been held to be an association of persons. We do not think that that decision is of any assistance to the assessees. We are already of the opinion that, on the facts found by the Commissioner, the assessees must be held to be an association of persons . Now coming to the second q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst refer to the decision of the Judicial Committee in Raja Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330 (P.C.). Therein the Judicial Committee held that, though it must always be difficult to draw a line yet, unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Income-tax Act, 1922. Their Lordships further held that the income from the sale of forest trees growing naturally and without the intervention of human agency, even if the land is assessed to land revenue, is not agricultural income within the meaning of section 2(1)(a). To the same effect is the decision of the Judicial Committee in Sri Rajah Ravu Venkata Mahipathi Gangadhara Rama Rao Yuvarajah of Pithapuram v. Commissioner of Income-tax [1949] 17 I.T.R. 445 (P.C.).. For the reasons mentioned above, our answer to the first question referred to us is in the affirmative and against the assessees. Our answer to the second question referred to is in the negative and in favour of the assessees. The parties will bear their own costs. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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