TMI Blog2007 (8) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of its members will make it a case of double taxation and therefore also assessment on the AOP is bad in law is also liable to be rejected since as held by Hon'ble Supreme Court in the case of ITO vs. Ch. Atchaiah, merely because a 'wrong person' has been assessed, the AO is not precluded from taxing the 'right person' and 'wrong person' can seek remedy as available under law. So on the ground of double taxation also, assessment on AOP (which is the right person to be assessed under the 1961 Act) cannot be held to be invalid and the argument raised by the assessee in this regard is also liable to be rejected and is rejected. ld AR, Pleaded that Applicability of the beneficial circular and therefore the same was binding on AO and CIT(A) and thus assessment made on AOP subsequent to the assessment of its members could not be validly made by AO, and CIT(A) has wrongly upheld the same. There cannot be any dispute to the proposition that IT authorities are bound to follow the circulars issued by CBDT u/s 119 of the Act. At the same time, it is also well settled that it is not irrelevant for the judicial forum to examine the circumstances/contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been pointed out in this order that there was subsequent change in the legislation when s. 167B was introduced. Thus relying on the circular it cannot be held that AO had no jurisdiction to assess the AOP (assessee) as he had already assessed its members. Thus, the question referred to the Special Bench is that assessment made by AO on AOP is valid in the light of the judgment of Hon'ble Supreme Court in the case of ITO vs. Ch. Atchaiah and also in the light of the statutory amendments brought in the statute. For the reasons discussed Board's circular cannot be relied upon to hold that the assessment on AOP is invalid. The said circular had lost its validity. Our findings with regard to grounds raised by the assessee in its appeal are as under: Apropos ground No. 1 it is held that CIT(A) was right in confirming the findings of the AO that commission income was taxable in the hands of assessee (i.e. in the status of AOP) and the said income was not taxable in the hands of respective members of joint venture; Apropos ground No. 2 it is held that as share of income falling to the shares of respective members of AOP in all cases is above the exemption limit, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share in P L of JV 1. Laxmi Traders (Regd. firm) 25% 2. Bijay Paper Trading Co. (Prop. Shri Bijay Kumar Pasai) 25% 3. Pradeep Agencies (Prop. Shri Pradeep Kumar Pasai) 25% 4. Biswanath Industries Ltd. 12.50% 5. Bishwanath Traders Investment Ltd. 12.50% 4. A copy of joint venture (JV) agreement has been placed at pp. 1 to 6 of the paper book. The above association was constituted for carrying ,on the business of procuring orders on behalf of M/s Reliance Industries Ltd. (RIL) for supply of purified terephthalic acid (PTA) to M/s Indo Rama Synthetics India Ltd. 5. During the year under consideration the AOP has earned commission of Rs. 2,40,61,937 and after meeting expenses, net profit at Rs. 2,37,55,912 is shown by the assessee which has been apportioned amongst the members of JV according to their profit sharing ratio. During the year under consideration all the members of AOP have income above th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 747 (Guj); (e) CIT vs. V.H. Sheth (1984) 41 CTR (Bom) 380 : (1984) 148 ITR 169 (Bom); (f) Narnauli Jewel Corporation vs. CIT (1987) 163 ITR 293 (Raj); (g) CIT vs. Taj Oil Traders (2003) 130 Taxman 585 (Raj). 8. Further reliance was placed on Board's Circular No. 75/19/191/62-ITJ, dt. 24th Aug., 1966 (for short the circular ). It was pointed out that Section 86 and Section 167B of the Act have no relevance in the present context. It was contended that these sections come into play when the income is first assessed in the hands of AOP and not in those cases where first assessment has not been made in the hands of AOP. It was pleaded that as members of the AOP are assessed without making prior assessment in the hands of the AOP, therefore, Sections 86 and 167B cannot be applied in the present case. It was pleaded that second proviso to Section 86 itself contemplates a situation where, when no income-tax is chargeable on the AOP tax will be levied on the members. Therefore, it was contended that it cannot be said that legally tax is to be levied only in the hands of AOP. It was pleaded that no assessment could be made in the hands of AOP as its members were first as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of law as it stood on the relevant date. He held that since the income has accrued to the assessee it should be taxed in the hands of the AOP and the shares of members of such AOP will be subject to tax as per provisions of law. He observed that to examine the contention of the assessee that the income was offered to tax in the hands of members, therefore, the same cannot be again subjected to tax is required to be examined in view of relevant provisions of law. He referred to Section 4 of the 1961 Act which is charging section which enables the Department to levy tax on the total income of the previous year of every person . It was pointed out by him that the language used in charging section i.e. Section 4 is different from the corresponding charging section of IT Act, 1922 (for short 1922 Act ). He examined the provisions of Sections 67A, 86 and 167B of 1961 Act to consider the taxability or otherwise of income of AOP/members of AOP. He referred to the definition of 'person' as given in Section 2(31) of 1961 Act in which both the AOP and members of AOP are included as 'persons' and expressed the opinion that there is a certain liability of taxation impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'right person' and the right person alone. It was held that by right person it means the person who is liable to be taxed according to law with respect to a particular income. It was held that merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income and this is so irrespective of the fact that which course is more beneficial to the Revenue. It was held that under old provisions the option was available to assessing authority to take more advantage of the Revenue position and thus once such option was exercised by the AO, he could not proceed to tax the said income again in another hand. Reference was also made to the decision of Hon'ble Allahabad High Court in the case of Bhagmal Saudagar Mal v. CIT (2004) 188 CTR (All) 431 : (2004) 267 ITR 637 (All) and it has been held by learned CIT(A) that the assessment on the assessee is valid and does not amount to double taxation as is contended by the assessee. 13. He further prepared a chart showing therein the taxable income returned by the constituents of the AOP and found that much less tax was paid on the income returned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 67A. It provided further that when such association is chargeable to tax on its total income at maximum marginal rate or at any higher rate under the provisions of IT Act then the share of a member computed as aforesaid shall not be included in his total income and in any other case the share of the member computed as aforesaid shall form part of his total income. It also provides that where no income-tax was chargeable on the income of such association, the share of members as computed under Section 67A shall be chargeable to tax as part of its total income. 16. Learned Authorised Representative pleaded that a further change was brought into Section 86 w.e.f. 1st April, 1993 which also enacted similar provisions as it was on the statute w.e.f. 1st April, 1989 and thus he contended that there is no material change except renumbering of the earlier section. 17. Learned Authorised Representative then carried us through s. 167A. He contended that Section 167A as it stood on the statute w.e.f. 1st April, 1981 to 31st March, 1985 provides the chargeability of a tax where shares of members were unknown. In such a situation Section 167A provides that the tax will be charged on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that in a case where any member or members of such AOP/BOI are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the AOP or BOI which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of such AOP or BOI shall be taxed at maximum marginal rate. 20. Reading from these sections, learned Authorised Representative vehemently pleaded that even according to Sub-section (2) of Section 167B the chargeability of tax in the hands of AOP/BOI cannot be determined if tax liability is not first computed in the hands of members of such AOP/BOI. He contended that from reading all these sections one thing is clear that the AO is not precluded from making assessment on the members of AOP/BOI prior to making assessment on AOP/BOI. He contended that according to the scheme of the Act it is rather necessary to first assess the members of such AOP/BOI and thus AO cannot be said to have wrongly proceeded to assess members of AOP/BOI prior to making assessment in the hands of AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT circulars are binding on the IT authorities even if they deviate from the correct legal position. CBDT stating that provisions for assessments of partners and unregistered firm in 1961 Act were on the same lines as in 1922 Act, circular of Board dt. 24th Aug., 1966 must be followed and even a deviation from the legal position cannot be a ground to ignore the binding effect of a circular. 24. Learned Authorised Representative further referred to the decision of Hon'ble Bombay High Court in the case of CIT v. V.H. Sheth and Ors. (supra) wherein the abovementioned circular was held to be binding on the Department. 25. Learned Authorised Representative further referred to the decision of Hon'ble Karnataka High Court in the case of CIT v. Manjunatha Motor Service Canara Public Conveyances (1992) 197 ITR 321 (Kar) wherein it is held that assessment having been made on each member of AOP in individual status, assessment in respect of the same income cannot once again be made on the AOP as such course would amount to double taxation, more so in view of CBDT Circular No. F. No. 75/19/191/62-ITJ, dt. 24th Aug., 1966 which is binding on the Revenue. 26. Learned Authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are clearly in the nature of contemporaneous exposition furnishing legitimate aid in the construction of Sub-section (2) of Section 52. The rule of construction by reference to contemporaneous exposition is a well-established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. It is worth noting that circulars issued by the CBDT are legally binding on the Revenue and this binding character attaches to the aforesaid two circulars dt. 7th July, 1964 and 14th Jan., 1974, even if they be found not in accordance with the correct interpretation of Sub-section (2) and they depart or deviate from such construction.-- Navnit Lal C. Javeri vs. K.K. Sen, AAC (1965) 56 ITR 198 (SC) : TC 69R.265 and Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 : (1971) 82 ITR 913 (SC) : TC 69R.265 relied on.. (iv) Keshavji Ravji Co. Etc. Etc. v. CIT (1990) 82 CTR (SC) 123 : (1990) 183 ITR 1 (SC) wherein it has been held as under: The Board cannot pre-empt a judicial interpretation of the scope and ambit of a provision of the Act by issuing circulars on the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such duty is nil, the exemption notification in question will not apply; however, if there are circulars which have been issued by the CBEC which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. (viii) ITO v. Bir Engg. Works (2005) 93 TTJ (Asr)(SB) 257: (2005) 94 ITD 164 (Asr)(SB) wherein it has been held as under: Instructions issued by the CBDT prescribing monetary limit for filing the appeals before the Tribunal, High Court or the Supreme Court are binding on the IT authorities and therefore Tribunal did not commit any error in dismissing the Department's appeal by relying on Instruction No. 1979, dt. 27th March, 2000. 28. Referring to all these decisions learned Authorised Representative finally pleaded that circular issued by CBDT dt. 24th Aug., 1966 is binding and thus assessment made by AO on the AOP is contrary to that circular and assessment should be set aside. 29. On the other hand, learned Departmental Representative pleaded that the assessment in the present case is framed under the provisions of Section 167B(2) of the Act. He contended that ss. 86 and 67 are only consequential in nature. He co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be applicable as there was an amendment in the Act after the issue of circular. He contended that in view of introduction of Section 167B to the statute by the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1st April, 1989, the circular of 24th Aug., 1966 had lost its effect. He contended that when base is removed superstructure cannot stand. He contended that substantial provisions are to be applied rather than the circular. Reading from the circular of 1966, he contended that it was only an advice given by CBDT to its officer to complete the assessment of AOP first and the said instruction was given only for avoiding further complication and it was not intended to give any benefit to the assessee. He contended that instead of applicability of the circular of 1966, the circular explaining the provisions of Section 167B i.e. Circular No. 551 (1990) 82 CTR (St) 325 will be applicable and with the issue of the said circular i.e. Circular No. 551 earlier circular of 1966 had become redundant. He contended that the moment the amendment was introduced in the Act by way of introduction of Section 167B the circular of 1966 had died its natural death. He further relied on the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislation. The Court is to ascribe the natural and ordinary meaning to the words used by the legislature and the Court ought not, under any circumstances, substitute its own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. Learned Departmental Representative further contended that under the Act Board has power to issue beneficial circulars and there is also no doubt that such circulars are binding on IT authorities but he pleaded that the circular had lost its validity in view of subsequent decision of Hon'ble Supreme Court in the case of ITO v. Ch. Atchaiah (supra) and also in the light of subsequent amendment by which Section 167B was inserted. He contended that, therefore, assessment framed by the AO on AOP is a valid assessment. Further referring to the order of CIT(A), he pleaded that it has been held by CIT(A) that it was a dubious method adopted by the assessee and those findings have not been challenged by the assessee. Therefore, on merits also assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d case related to asst. yrs. 1965-66 and 1968-69. In the said case Shri Ch. Atchaiah and another person namely, Shri Kondal Reddy purchased land measuring 454.11 acres in a village in Medak District in Andhra Pradesh from Shri Ikramuddin and Smt. Azizunnisa Begum under a sale deed dt. 20th Oct., 1962, for a consideration of Rs. 75,000. Prior to the execution of the sale deed, the said land had been notified for acquisition under the Land Acquisition Act. One of the purchasers, namely, Shri Kondal Reddy appeared before the Land Acquisition Officer claiming compensation and vide award dt. 4th Feb., 1964, the Land Acquisition Officer determined the compensation at Rs. 1,38,794.12 annas which amount was received by both the purchasers of the land on 4th Dec, 1964 in equal shares. Further, the land compensation was enhanced by Rs. 3,95,026 and the said enhanced compensation was also shared between the purchasers of the land. In the assessment proceedings relating to asst. yr. 1965-66 the AO included a sum of Rs. 35,397 treating the same as capital gain in the income of Shri Ch. Atchaiah (the said amount was calculated after considering the cost of the land). Again in the assessment rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error in holding that under 1961 Act, the ITO has an option to tax either the AOP or its members individually. It was pleaded that though there was an option with the Revenue to do so under 1922 Act but the said option is not available under 1961 Act. It was pleaded on behalf of the Revenue that the right person has to be taxed and merely because a wrong person is taxed, it does not operate as a bar to tax the right person. The contention of the Revenue was that if in law the income in question had to be taxed in the hands of AOP, it had to be taxed as such and the mere fact that the said income was taxed in the hands of individual members of the AOP does not bar the ITO from taxing the AOP. On the other hand, it was contended on behalf of the assessee that there is no difference between the position obtaining under 1922 Act and 1961 Act and that, therefore, the decision rendered under 1922 Act holds good equally under the present enactment. It was pointed out that a different view was taken later on by Andhra Pradesh High Court in the case of Choudry Brothers v. CIT (1987) 60 CTR (AP) 151 : (1986) 158 ITR 224 (AP) but the said view was overruled by Full Bench in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under Sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. [They expressed that amendments made by Direct Tax Laws (Amendment) Act, 1987 in Section 4 of 1961 Act do not make any difference so far as it relates to controversy raised in that case]. 38. They also referred to the definition of person given in Clause (31) of Section 2 in 1961 Act which is as under: (31) 'person' includes (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm, (v) an AOP or a BOI, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1961 Act appeared to have been influenced largely by the decisions of Supreme Court in the cases of CIT v. Kanpur Coal Syndicate (supra) and CIT v. Murlidhar Jhawar Purna Ginning Pressing Factory (supra) and observed that these decisions were rendered under 1922 Act and no due weight was given in those decisions to the marked difference in the language of relevant provisions in the two enactments. Thus they held that AOP being the assessable entity has to be taxed on its income and under 1961 Act no such option was available with the ITO to assess the members on the income of AOP and even if the members of AOP have been assessed, that will be the assessment on 'wrong person'. The assessment of a 'wrong person' cannot stand in the way of the assessment of 'right person' as 'wrong person' can adopt, legal course to get its assessment annulled. 40. As per above decision of the Hon'ble Supreme Court, it is very much clear that there is a marked difference in the provisions relating to assessability of AOP and its members as contained in 1922 Act and as contained in 1961 Act. Under 1961 Act, there is no option available to the ITO to assess t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circular dt. 24th Aug., 1966 relying on which it is pleaded that it is a beneficial circular and therefore the same was binding on AO and CIT(A) and thus assessment made on AOP subsequent to the assessment of its members could not be validly made by AO, and CIT(A) has wrongly upheld the same. To examine such contention, it will be relevant to reproduce the text of the circular: 33. Share income from AOP or firm once assessed directly in the hands of member or partner-Whether open to ITO to assess the same income in the hands of AOP or firm as unregistered firm--Decision of Supreme Court in Murlidhar's case to that effect whether applies to assessments under 1961 Act 1. The effect of this decision [CIT v. Murlidhar Jhawar Puma Ginning Pressing Factory (1966) 60 ITR 95 (SC)]] is that once the ITO assesses directly an assessee's share of income from an AOP or firm, it is not open to him to assess the same income again in the hands of the AOP or firm. In other words, once the assessment of a partner or a member of an association has been made by taxing directly his proportionate share from the firm or association, the ITO is precluded from assessing the firm in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Sections 3, 2(9) of 1922 Act and the provisions of Section 2(31) and Section 4 of 1961 Act. Further their Lordships have also observed that earlier decision of apex Court in the case of CIT v. Murlidhar Jhawar Puma Ginning Pressing Factory (supra) (based upon which the circular has been issued by CBDT) was rendered under 1922 Act and the same, therefore, could not be applied to 1961 Act as there was marked difference in the language of both the Acts. The reliance by the learned Authorised Representative on the decisions in the cases of Laxmichand Hirjibhai v. CIT (supra), CIT v. V.H. Sheth and Ors. (supra) and CIT v. Manjunatha Motor Service Canara Public Conveyances (supra) taking a different view on the issue thus is clearly misplaced in view of the law declared subsequently by the Supreme Court in the case of ITO v. Ch. Atchaiah (supra). 43. Secondly, Section 167B regulating charge of tax where shares of members in the AOP or BOI unknown, etc. was introduced in the statute by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1st April, 1989. Sub-section (2) of Section 167B governs the case of the assessee. Section 167B is reproduced below for the sake of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the abovementioned factual aspects, we shall proceed to examine the contention of the learned Authorised Representative as to whether the benefit as sought under the said circular can be extended to the AOP. 46. There cannot be any dispute to the proposition that IT authorities are bound to follow the circulars issued by CBDT under Section 119 of the Act. At the same time, it is also well settled that it is not irrelevant for the judicial forum to examine the circumstances/context as well as the prevailing conditions under which such circular came to be issued. A close look at the circular will reveal that the basis of issue of circular is the decision of Hon'ble Supreme Court in the case of CIT v. Murlidhar Jhawar Puma Ginning Pressing Factory (supra), which was then available on the date of issue of circular. Considering the said decision, a view was expressed by the CBDT that the position as described in the said decision will continue to apply to the provisions of 1961 Act. Under these circumstances the said circular was issued. 47. The law is well established that the circular cannot overwrite, modify or amend the provisions of the Act or judicial decision. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o direct that a circular should be given effect to and not the view expressed in a decision of the Supreme Court or the High Court. We find great force in this submission made by the learned senior advocate for the Revenue and find absolutely no merit in this appeal and the same stands dismissed, but in the circumstances of the case, there shall be no orders as to costs. (emphasis, italicised in print, ours) 49. Following the above decision the jurisdictional High Court in the case of CIT v. Blaze Advertising (Delhi) (P) Ltd. (2002) 173 CTR (Del) 482 : (2002) 255 ITR 460 (Del) has observed as under: 14. Circulars issued under Section 119 of the Act stand on a different footing. The Hon'ble Supreme Court in UCO Bank v. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC) has held that circulars under Section 119 are meant for ensuring proper administration of the statutes and mitigate rigours of provisions of law. These circulars are binding and enforceable against the Revenue. However, when Supreme Court or High Court has declared law on a question, it is not open to the Court to direct that a circular should be given effect to and not the decision [See Hindustan Aeron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 (6) SCC 722 is being misunderstood. It therefore, becomes necessary to clarify para 9 (para 11 in SCC) of Dhiren Chemical's case (supra). One of us (Variava, J.) was a party to the judgment of Dhiren Chemical case (supra) and knows what was the intention in incorporating para 9 (para 11 in SCC). It must be remembered that law laid down by this Court is law of the land. The law so laid down is binding on all Courts/Tribunals and bodies. It is clear that circulars of the Board cannot prevail over the law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemical case (supra) because of the circulars of the Board in many cases the Department had granted benefits of exemption notifications. It was submitted that on the interpretation now given by this Court in Dhiren Chemical case (supra), the Revenue was likely to reopen cases. Thus, para 9 (para 11 in SCC) was incorporated to ensure that in cases where benefits of exemption notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where the Revenue/Department had already conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority under the Act, therefore, circulars do not bind it. Though the benefits of such circulars to the assessee have been held to be permissible even though the circulars might have departed from the strict tenor of the statutory provisions and mitigate the rigour of law. But that is not the same thing as saying that such circulars would either have a binding effect in the interpretation of the provision itself or that the Tribunal and the High Court are supposed to interpret the law in the light of the circular. The following observations of their Lordships from the said decision are reproduced below: This contention and the proposition on which it rests, namely, that all circulars issued by the Board have a binding legal quality incurs, quite obviously, the criticism of being too broadly stated. The Board cannot pre-empt a judicial interpretation of the scope and ambit of a provision of the Act by issuing circulars on the subject. This is too obvious a proposition to require any argument for it. A circular cannot even impose on the taxpayer a burden higher than what the Act itself, on a true interpretation, envisages. The task of interpretation of the laws is the exclusive d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treatment of such notional income under accounting practice. It is further held as under: We do not see any inconsistency or contradiction between the circular so issued and Section 145 of the IT Act. In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to Section 145 of the IT Act or illegal in any form. It is meant for a uniform administration of law by all the IT authorities in a specific situation and, therefore, validly issued under Section 119 of the IT Act. As such, the circular would be binding on the Department. (emphasis, italicised in print, ours) 57. In the case of CIT vs. Sahney Steel Press Works Ltd. (1985) 44 CTR (AP) 243 : (1985) 152 ITR 39 (AP) [affirmed by apex Court in Sahney Steel Press Works Ltd. Etc. Etc. vs. CIT (1997) 142 CTR (SC) 261 : (1997) 228 ITR 253 (SC)] it has been held that powers conferred by the Board under Section 119 cannot be put on a higher footing than the rule making effect and it is well settled that rule making authority cannot travel beyond the four corners of the Act nor can it make rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was introduced. Thus relying on the circular it cannot be held that AO had no jurisdiction to assess the AOP (assessee) as he had already assessed its members. 59. In view of the above discussion our answer to the question referred to the Special Bench is that assessment made by AO on AOP is valid in the light of the judgment of Hon'ble Supreme Court in the case of ITO v. Ch. Atchaiah (supra) and also in the light of the statutory amendments brought in the statute. For the reasons discussed above Board's circular dt. 24th Aug., 1966 cannot be relied upon to hold that the assessment on AOP is invalid. The said circular had lost its validity. 60. Our findings with regard to grounds raised by the assessee in its appeal are as under: 1. Apropos ground No. 1 it is held that CIT(A) was right in confirming the findings of the AO that commission income of Rs. 2,37,55,912 was taxable in the hands of assessee (i.e. in the status of AOP) and the said income was not taxable in the hands of respective members of joint venture; 2. Apropos ground No. 2 it is held that as share of income falling to the shares of respective members of AOP in all cases is above the exemption lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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