TMI Blog1986 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... o. " as its sole proprietor. He died on March 3, 1960. He left behind his widow, Mrs. Moktar Begum, and seven minor children. The widow continued the same business in the same name and style. The profits of the business were, at the end of each year, credited in the respective accounts of the widow and the seven minor children, according to their legal shares. On the aforesaid short and simple facts, it is clear that the business whose income was liable to assessment to tax was initially owned by an individual.-On his death, his widow and seven minor children came to own the business. In Syed Shah Gulam Ghouse Mohiuddin v. Syed Shah Ahmad Mohiuddin Kamisul Qadri, AIR 1971 SC 2184, the Supreme Court ruled that on the death of a Mohammedan, his estate devolves on his heirs who succeed to the estate as tenants-in-common in specific shares. So, the widow and the seven minor children owned the business as tenants-in-common with defined shares. For the Revenue, it was submitted that the income of this business having been earned by a collection of person, it was liable to be assessed in the status of an association of persons. It is urged that Mrs. Moktar Begam, the mother, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was to hit combination of individuals who were engaged together in some joint enterprise but did not in law constitute partnership'." In the case before the Supreme Court, three co-widows had inherited, inter alia, moneys lying in deposit and shares in a registered firm. They received interest and dividend income jointly. The Supreme Court held that they had not done any act which helped to produce income in respect of the shares in deposit. Mere receipt of income jointly is not enough to hold that the three widows could be taxed in the status of an association of persons. In Mohamed Noorullah v. CIT [1961] 42 ITR 115, the Supreme Court affirmed its decision in Indira Balkrishna's case [1960] 39 ITR 546 (SC). It emphasised that since the business was carried on by receivers with the consent of all beneficiaries, its income was assessable in the status of an association of persons. It thus appears that to constitute an association of persons, there should be a common venture or activity with a view to produce income, by more than one person joining together. The concerned persons ought to be consenting parties to the scheme of arrangement. The consent may be express or implie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mad v. Ramniwas, AIR 1967 Raj 258, a mother and her minor son executed mortgage deed. Later, the son, as plaintiff, wanted to redeem the mortgage. It was held that a de facto guardian has no power to transfer any right or interest in the property of the minor and that such a transfer is not merely voidable but void. Same was the decision in Parshotamdas Narsimbhai v. Bai Dhabu, AIR 1973 Guj 88. In Mohammed Amin v. Vakil Ahmed, AIR 1952 SC 358, it was held that a de facto guardian has no authority to enter into a family settlement in respect of a minor's property, even though the settlement might be for his benefit. A Muslim widow was held not to have authority for entering into a partnership contract for her minor children (A. Khorasany v. C. Acha, AIR 1928 Rang 160). Unlike the natural guardian of a Hindu minor, a de facto guardian has no right to act on behalf of a Muslim minor. If he does act on his behalf of a Muslim minor's property, his action is totally void and of no legal effect. In this state of law, a de facto guardian of a Muslim minor cannot be assumed or deemed to give valid consent to any activity or venture for carrying on business on behalf of the minor. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits of each of the co-heirs should have been separately taxed. This plea was repelled. It was held that the business income was liable to be taxed in the status of an association of persons. The Supreme Court affirming the decision of the Madras High Court emphasised that the business was carried on as a single business with unity of control and by the consent of all the parties. This case is distinguishable. In that case, the point that a de facto guardian like the mother or next friend of minors cannot act or give consent on behalf of the minors carrying on the business was neither raised or decided. It appears that the court had passed an order appointing receivers with the consent of the parties. The court must have appointed Dawood and the mother as guardians of the minors. On such appointment by court, they became the legal guardians and could act on behalf of the minors. In the present case, however, there is no intervention of any court of law. The mother on her own could not act on behalf of the minors in respect of their shares of the business. The Tribunal held that the widow was managing the estate of her deceased husband including the business as a constructive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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