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TMI Blog1961 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 18-1-1961 - J. L. KAPUR., M. HIDAYATULLAH., J. C. SHAH R. Ganapathy Iyer and G. Gopalakrishnan for the appellant. K. N. Rajagopal Sastri and D. Gupta, for the respondent. JUDGMENT KAPUR, J.- --These appeals are brought by special leave against the judgment and order of the High Court of Madras in an Income-tax reference under section 66(1) of the Indian Income-tax Act, hereinafter termed the Act . The question referred was : Whether the income-tax assessment of the business of ' Spade Clover Beedies ' belonging to the estate of the deceased and carried on during the previous years 1943 to 1946 as an association of persons for the assessment years 1944-45 to 1947-48 is valid ? And this question was decided in the affirmative and, therefore, against the appellants. The facts leading to the appeals are that one Khan Sahib Mohamed Oomer Sahib, who was carrying on the business of manufacture and sale of Spade Clover brand beedies, died on December 17, 1942, leaving a minor son, Mohamed Noorullah (the appellant), by his pre-deceased wife, a widow, Luthfunnissa Begum, and four children by her who were all minors at the date of the death of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed and not to the continuance of the business or to the unity of control. The Income-tax Appellate Tribunal in its order stated : In fact, there was no change in the continuity of the business and from the date of death of Md. Oomer Sahib up to 24th March, 1943, the business was carried on by mutual agreement and consent by Luthfunnissa Begum acting on her own behalf and on behalf of her minor children and her minor step-son, Md. Noorullah. There can, therefore, be no gainsaying the fact that immediately after the death of Md. Oomer his estate was inherited and run by a combination of individuals who had pooled their resources for the common purpose of earning income. And the High Court has observed : The opposition was apparently to the persons to be appointed receivers and not to the continuance of the business or to the unity of control that was necessary. Noorullah himself had realised that when he applied earlier for the appointment of receivers to conduct the business among other things. Despite Noorullah's opposition when Luthfunnissa asked for the continuance of receivers in her application No. 1162 of 1943, the existence of the desire of all the co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inations of individuals who were engaged together in some joint enterprise but not constituting a partnership. Such a combination of persons formed for the promotion of a joint enterprise banded together as if they were co-adventurers , it was held, would constitute an association of individuals. In the second case, that is, Commissioner of Income-tax v. Laxmi Das Devi Das Beaumont, C. J., at page 589 laid down the test as follows : In my opinion, the only limit to be imposed on the words other association of individuals' is such as naturally follows from the fact that the words appear in an Act imposing a tax on income, profits and gains, so that the association must be one which produces income, profits or gains. It seems to me that an association of two or more persons for 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. In that case it was also held that the fact that one of the assessees was a minor during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u law. A suit for partition was filed and the court appointed a receiver and a preliminary decree was passed but the receiver was continued in regard to certain portion of the property and the income was assessed by the taxing authorities as the income of an association of persons. It was held that the income from property could not be taxed as such, because the shares of the parties were definite and ascertainable. The amount paid by the lessees could not be taxed in a lump sum as being the profits of a business carried on by an association of persons and the assessment was, therefore, made in accordance with the provisions of section 9(3). It was also held that the assessees were not carrying on a trade or business themselves and there was no association of persons as contemplated by the Act. But that case can be of no assistance in the decision of the matter now before us. The income to be assessed there was not income of any business carried on by or on behalf of the assessees and it was held that letting out property was not a trade or business. With regard to the income received by the receiver who employed contractors to carry on the business of coal cutting and raising it o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seem to have been contended that the assessee had any other relations than those enumerated by the Tribunal who would be entitled to share the profits, it is academic to discuss whether the various categories of persons referred to by the Appellate Assistant Commissioner of Income-tax were included in the term ' family ' or not . On this ground the income was not assessed as the income of an association of persons and that case was also decided on its own facts. The question in the present case is as to what income was to be taxed. The income was the income of a business which was carried on as a single business by the consent of all the parties. The mere fact that a suit was pending at the time for the administration of the estate of the deceased or for the separation of the shares of the co-heirs does not affect the incidence of taxation in this case, because the business was carried on, as said above, as one business with unitary control and by the consent of the parties. The High Court was right in holding that the income was assessable as an income of an association of persons. The appeals must, therefore, be dismissed with costs. One hearing fee. Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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