TMI Blog1979 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and in the circumstances of the case, the Appellate Tribunal was right in holding that Kanakarathinam and his wife, Yeshodammal, leased out the cinema theatre as tenants-in-common for the sake of convenient earning, of rental income. " Under two sale deeds dated November 15, 1959, Kanakarathinam and his wife, Yeshodammal, separately purchased 5/8 and 3/8th share respectively in a building known as " Opera House " at Bangalore. " Opera House " was a cinema theatre. It was leased out on a monthly rent of Rs. 950 for the building and Rs. 550 for the machinery and furniture, etc., totally in all Rs. 1,500 per month. The ITO took the view that since the letting of the building is inseparable from the letting of the machinery and furniture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either of the sale deeds, in the respective names of Kanakarathinam and Yeshodammal, or the lease deed. Even as regards the lease, there was a statement before us on behalf of the assessee's counsel that at the time of purchase by the respective individuals there was a subsisting lease deed and that the lessee was asked to attorn to the respective co-owners. It was also stated that the lease executed subsequent to the two co-owners coming on the scene was only in favour of the same lessee. The submission, therefore, was that there was merely an exercise of a right of ownership in the respective individuals granting lease of the property. The learned counsel for the Commissioner of Income-tax contended that this being a commercial asset the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : " Therefore, an association of persons must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains." Their Lordships further quoted a passage from a decision of the Calcutta High Court in In re B. N. -Elias [1935] 3 ITR 408 wherein Costello J. had formulated the test as follows (p. 55.1 of 39 ITR): " It may well be that the intention of the Legislature was to hit combination of individuals who were engaged together in some joint enterprise but did not in law constitute partnerships...... When we find.... that there is a combination of persons formed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to show that the transaction was being entered into by each individual co-owner separately with the lessee. Thus, taking into account the peculiar facts of this case, it has to be held that the income by way of rent accrued separately in respect of the 5/8ths and 3/8ths share to Kanakarathinam and Yeshodammal respectively. Further, it would appear that at the time when the purchase was separately effected by these two individuals from their vendors, the two vendors to the two individuals had themselves separate and distinct share in the property and they purchased only such a separate share. It appears that Kanakarathinam purchased from the executors of one Rengamma who had died executing a will in respect of her 5/8ths share. Similarl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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