TMI Blog1963 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... the case which ran as follows.] Sri E. M. Muthappa Chettiar, the former owner of the Estate called the 'Cotacaudu and Jeynacaudu Estates', Sontikoppa, Coorg, by a deed of settlement dated December 19, 1955, transferred the right of ownership of the estate to his three sons in shares who continued to administer and cultivate the lands of the estate as equal partners. As the ownership of the estate was merely transferred from the father to the sons, the Agricultural Income-tax Officer, Coorg, treated the status of the assessee as that of an 'association of persons' and assessed them to tax. Being aggrieved of the assessment, an appeal was filed before the Deputy Commissioner of Agricultural Income-tax, Coorg, who remanded the case for fresh disposal but the appellate authority upheld the stand taken by the assessing officer in so far as the question of status was concerned. As could be seen from the order of reassessment passed by the Agricultural Income-tax Officer on March 14, 1960, the right of co-ownership and separate assessment was pressed but it was turned down as there was no such provision under the Coorg Agricultural Income-tax Act, 1951, analogous to section 3(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of the case, the learned judge continued.] Now coming to the first question referred to us, the finding of the Commissioner of Agricultural Income-tax, to be hereinafter referred to as "Commissioner", is as follows : " The deed of settlement dated December 19, 1955, has transferred the right of ownership of the estate from the father to the sons. From that day onwards the three brothers joined themselves for a common purpose, namely, to work the estate together and earn profits. This is fortified by the fact that the estate is not specifically divided and no share in the corpus is defined. " On this finding, which finding is binding on us, it cannot be successfully contended that the assessees are not an " association of persons". Sri V. Krishnamurthy, the learned counsel for the petitioners, contended that the above finding of the Commissioner is unsupported by the decision given by him in A.I.T/R.P.N/S.R./15 of 1960-61. This contention does not appear to be correct. But before going to that finding, we may first refer to section 3(1) of the Act. That section reads : " Agricultural income-tax at the rate or rates specified in the Schedule to this Act shall be char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the acquisition of property which is to be managed for the purpose of producing income, profits or gains falls within the words 'other association of individuals' in section 3 ; and under section 9 of the Act, the association of individuals is the owner of the property and as such is assessable. This decision was cited with approval by the Supreme Court in Commissioner of Income-tax v. Smt. Indira Balkrishna. Dealing with the point under consideration, this is what S. K. Das J., who spoke for the court, observed in paragraph 9 of the judgment : " It is enough for our purpose to refer to three decisions : In re B. N. Elias, Commissioner of Income-tax v. Laxmidas Devidas and In re Dwarakanath Harischandra Pitale. In In re B.N. Elias, Derbyshire C.J. rightly pointed out that the word 'associate' means, according to the Oxford Dictionary, 'to join in a common purpose, or to join in an action'. 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. This was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other expenses the balance was distributed in accordance with their respective shares. In the assessment year 1937-38 the income-tax authorities assessed the assessee as an " association of individuals. " The court held, on a reference, that the assessees did not form an association of individuals and they should be separately assessed on their individual shares. It may be noted that in that case the only two relevant facts established were : (1) the assessees jointly owned the property; and (2) that they jointly managed that property. On the basis of those facts, the assessees could not have been held to be an et association of persons. " We do not think that that decision is of any assistance to the assessees. We are clearly of the opinion that, on the facts found by the Commissioner, the assessees must be held to be an " association of persons ". Now coming to the second question of law set out earlier, the case for the assessees is that the timber that was cut and sold was not planted by any human agency, the same had grown spontaneously and therefore the income realised by the sale of that timber cannot be considered as " agricultural income ". "Agricultural income" is de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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