TMI Blog1956 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner on appeal confirmed this view of the Income-tax Officer. The Income-tax Tribunal took the same view and dismissed the appeal of the assessees. In dismissing the appeal it gave expression to the opinion that the view taken by the Appellate Assistant Commissioner with regard to the income from property falling under section 9(3) was not the correct view. Now, a question of law has been raised with regard to this view taken by the Appellate Assistant Commissioner and that is covered by question (4) which is to the following effect: Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the entire estate of the deceased was inherited and possessed by the three widows as joint tenants and its income was liable to be assessed in the status of an association of persons? But Mr. Palkhivala points out that it was not open to the Tribunal to take a view with regard to the assessment of the assessees which was prejudicial to them when that question did not arise in the appeal before it. The only question that arose was whether the view of the Appellate Assistant Commissioner that the assessees should be assessed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal overlooks its own responsible position and the serious consequences of expressing opinions which do not really arise for the decision of the appeal before it. The only substantial question which arises on this reference is whether these three widows have been rightly assessed as an association of persons. Mr. Palkhivala also wanted to argue that the assessment was bad because the assessment order was against Indira Balkrishna, one of the widows, manager of the estate of Balkrishna Purshottam Purani, and Mr. Palkhivala wanted to contend that what the Income-tax Officer was purporting to do was to assess the income of a dead person. We agree with the Tribunal that this is merely a misdescription which does not invalidate the assessment. It is quite clear from the record that the assessment was made on the three widows as heirs of their husband in respect of property which they have inherited, and therefore brushing aside that question which really is a very minor one, we come to the really substantial question as to whether the assessment of these three widows as an association of persons is a valid assessment. The Income-tax Act only refers to an association of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to tax in that capacity. The only property which the widows could have managed which produced income is the immovable property which fetched an income of ₹ 11,000 and undoubtedly it could have been said with regard to that property that the widows having enjoyed that property jointly and not having asked for separate possession and having managed that property which ultimately produced income, they would be liable to be assessed as an association of persons. But as far as property is concerned the Legislature has made an exception in section 9(3) and the provision is in these terms: Where property is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with this section shall be included in his total income. This is a case where property is owned by these three widows, their shares are definite and ascertainable, and therefore the income earned by these three widows, assuming that they are an association of persons for the purpose of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax of an association of persons. Both of them are reported in the same volume [1937] 5 I.T.R. The first is at page 584: Commissioner of Income-tax v. Laxmidas Devidas [1937] 5 I.T.R. 584. That was a case where two individuals actually joined together in purchasing certain immovable properties, contributing the purchase moneys in equal shares, holding them jointly and managing them, and the management resulted in profits which were shared by the assessees equally, and the assessees were sought to be taxed as an association of individuals, as that was the assessable entity then and not an association of persons, and the High Court upheld the action of the Department. Sir John Beaumont, C.J., after holding that the words association of individuals should not be construed ejusdem generis with the other expressions which precede that expression, points out: 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 associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enjoy that property separately, they retained the property and managed it and the property produced income, and therefore the ratio of that case must apply to the facts before us. It is true that the Tribunal has given as a finding of fact that the property was managed by these three widows, but as we have already pointed out that expression can only be true and appropriate with regard to immovable property. That expression, in our opinion, has no meaning when it is applied to income from dividend or interest on deposit. Again, this second decision of Sir John Beaumont, C.J., was given when there was no provision corresponding to section 9(3). Therefore, if we omit immoveable property which could be managed for the purpose of producing income and which in fact was managed by these widows, but which is now exempted under section 9(3), then there is no other income shown in their assessment with regard to which it could be said that that income was earned by these three widows by reason of their association or that they performed any operation as an association which resulted in producing the income or which even helped in producing the income. Therefore, in our opinion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
