TMI Blog1992 (1) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... are the following :--- 1. Penmetsa Gopalakrishnamraju Rs. 0-10 ps. in the rupee 2. Penmetsa Bangaru Raju Rs. 0-20 ps. in the rupee 3. Penmetsa Lakshmipathiraju Rs. 0-20 ps. in the rupee 4. Penmetsa Subba Raju Rs. 0-20 ps. in the rupee 5. Penmetsa Suryanarayana Raju Rs. 0-20 ps. in the rupee 6. Penmetsa Ramachandra Raju Rs. 0-10 ps. in the rupee -------- Total : Re. 1-00 -------- The premises, rice mill and the godowns together with all machinery fitted in which constitute the joint property of the above persons were all divided by a registered partition deed dated 11-10-1974. Copy of the registered partition deed which was in Telugu was furnished to us. The partition deed was executed on 11-10-1974. The co-owners agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax in the hands of the association of persons. The ITO completed the assessment on 31-3-1986 under section 143(3). The status of the assessee was taken as association of persons. It is the case of the revenue that the leasing of the mill was possible only because of the joint activity of the co-owners and, therefore, they were rightly assessed as an association of persons. According to the assessee, the lease amount was distributed in proportion to respective share of each co-owner, they did not form part of association of persons. In simply leasing the mill there is no common activity among the co-owners which make them an association of persons. They did not carry on any common activity. Since the share of each of the co-owner is sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leased out on a monthly rent of Rs. 950 for the building and Rs. 550 for the machinery and furniture i.e., totalling to Rs. 1,500 per month. The ITO in that case, took the view that the letting of the building is inseparable from the letting of the machinery and furniture. He held that income from letting of the building was chargeable as income from other sources. He also determined the status of the assessee as the association of persons consisting of the husband and wife, i.e., Kanakarathinam and Yeshodammal. The AAC confirmed the status of the persons as association of persons and he held that leasing out of theatre was joint operation of both the co-owners. He held that co-owners were not acting in unison with each other, the leasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltimately held that the lease income derived from the two assessees, husband and wife, should be assessed separately and not in the status of association of persons. The following reasoning was given at page 367 by the Madras High Court for coming to the above mentioned conclusion :--- " Thus under the document as executed in the present case it is clear that the rent was separately payable to the respective co-owners. The two co-owners could have executed separate lease deeds, but as it was a single property with some furnitures, etc., they should have thought it more convenient to execute a common lease deed. The conditions stipulated in respect of the rent payable were separately set out so as to show that the transaction was being ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that after realtstng the total rent, Sri P. Suryanarayana Raju has to distribute the same in proportion to the share of each co-owner held in the common property. Therefore, the co-owners did not act in unison or did not join in a common purpose. Simply because all of them let out their respective shares in common property it does not amount to common action. The lease deed was executed for the convenience of all the co-owners. The mere execution of lease deed would not amount to common action. It only exhibited a convenient action on the part of the co-owners. Each of the co-owners could have separately executed lease deeds in favour of the lessee and could have realised the lease amount separately for his share, since each of them have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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