TMI Blog1947 (8) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the Trigunaits are governed by the Mitakshara school of Hindu law in which the plaintiffs as representatives of Janardan Trigunait have one-third share, the representatives of Sham Lal Trigunait one-third share, and the remaining one-third belongs to the representatives of Santustamoni Trigunait. Bhubneshwar Trigunait and Mukteshwar Trigunait as representatives of Janardhan Trigunait instituted title suit No. 139 of 1906 for partition of the family estate consisting of certain collieries and royalty bearing lands. The Subordinate Judge of Purulia on the 15th of February, 1907, passed an interlocutory order for the appointment of a receiver, but as the parties did not agree to the person to be appointed as receiver, he on the 25th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6th of February, 1910, and this arrangement continued till the 11th of April, 1931, when Mr. Mazumdar was appointed the receiver in place of Mr. Tewari, and since then the colliery at Angerpathra and other royalty bearing lands have been in his possession and management. The income from these lands and collieries is the subject matter of the assessment in the present case. From 1925-26 right up to 1939-40 the assessments have been made on the Trigunait Brothers' Estate, through the receiver, but the total income was being distributed among the beneficiaries in proportion to their respective shares, and the tax applicable to each was recovered from the receiver in accordance with the provisions of Section 41 of the Income- tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees to the receiver as royalty and ₹ 48,050 as the amount of profits made by the receiver who employed contractors to carry on the business of coal cutting and raising it on the pit-head. The Income-tax Officer says in his order that he gave Mr. Mazumdar, the receiver, an opportunity to show cause why he should not be treated as the principal officer of the association. The receiver made an objection in writing that he was subject to the control of the Court who appointed him and was independent of the co-owners in all respects. The Income-tax Officer observed at page 9: That may be so, it is apparent that he is in charge of the management, competent to enter into contracts, to receive and pay cash and responsible for correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide is whether the assessees are association of persons and whether the provisions of Section 41 cannot be applied to the present assessment. To begin with, it may be at once stated that ₹ 21,747, which is the amount paid by the lessees, cannot be taxed in one lump sum as being the profits of any business carried on by an association of persons. Letting out property is not carrying on a trade or business, the business would be carried on by the lessees to whom the property is let. The previous conflict of case law is now solved so far as income from property is concerned by the insertion of sub-clause (3) to Section 9 where it is clearly stipulated that where property is owned by two or more persons and their shares are definite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising costs are paid by him, and (2) that the Trigunaits have no hand whatsoever in the business which produces royalty. On these admitted facts the inference that the Trigunaits are an association of persons is not warranted in law―indeed the Trigunaits have dissociated themselves from each other because a partition suit is pending between the parties in which each party may well be treated as a plaintiff. That being the position it follows that this is one of those cases in which the receiver is carrying on a trade or business on behalf of the estate of which he has been appointed the receiver by an order of the civil Court. The assessment, therefore, should have been made and could only be made on the receiver―see th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case the assessment should have been made upon the receiver or upon each of the Trigunaits separately for his share as there is no association of persons as contemplated by the Act. The learned Advocate for the assessee then relying upon Section 41(1) contended that the tax should be levied upon the receiver only to the same amount as it would be leviable upon and recoverable from each of the Trigunaits. In support of his contention he relied upon the case of Khan Bahadur M. Habibur Rahman [1945] 13 I.T.R. 189, where the mutwalli of a trust consisting of twenty-four beneficiaries was held taxable on the basis of the profits falling to the share of each of the beneficiaries and not on the footing of all the beneficiaries constitutin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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