9911796707
TMI Blog1968 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of persons' ? " On December 4, 1940, Sinnamani Nadar and his son, Ganesan, effected a partition of the family properties and a firm by name A.M.M. Sinnamani Nadar Firm was started on June 27, 1955. Sinnamani Nadar executed a settlement deed conveying to his four grandsons the life-interest in a house property, 94, V.E. Road, Tuticorin, and the remainder to their children. Sinnamani Nadar also made a gift of a certain number of shares in joint stock companies in the name of G. Murugesan and Brothers. The four grandsons, Murugesan, Kathiresan, Raja Shanker and Vetrivel, attained their age of majority on March 15, 1955, February 3, 1956, September 2, 1961, and December 12, 1962. The further facts relating to the determination of the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together of more than one person, having regard to the context in which the expression occurs, namely, in the Income-tax Act, such combination has naturally to be viewed to be one for the purpose of making income, profit or gain. Having said that, it seems to us that it is difficult to define the term " association of persons " with more exactitude, for, it is one of those phrases which is better understood than defined. There are a number of cases decided in the light of particular facts but, in doing so, attempt has been made at some definition or other, but such attempt, as we see, took colour from the facts of the case which came up for decision. In Commissioner of Income-tax v. N. V. Shanmugam & Co., to which one of us was a party, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... status of an association of persons within the meaning of section 3 of the Income-tax Act. Dwarakannath Harischandra Pitate, In re related to persons inheriting immovable property in equal shares under a will and the legatees jointly managing the properties. Beaumont C.J. and Blackwell J. were of the view that they constituted an association of persons. The learned Chief justice, with whom Blackwell J. agreed, observed : " I think this case is really governed by the decision of this court in Commissioner of Income-tax v. Laxmidas Devidas in which we held, following the principle laid down by the Calcutta High Court in In re B. N. Elias, that two persons who had purchased property and managed it for, the purpose of producing income were pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to produce income in respect of the shares and deposits. On these findings it cannot be held that the three widows had the status of an association of persons within the meaning of section 3 of the Indian Income-tax Act. " It is pointed out for the assessee that at the same time, earlier in the same judgment, the Supreme Court approved the tests laid down by Dwarakanath Harischandra Pitale, In re. It seems to us that it will be sufficient to say that, so far as the reference before us is concerned, the four brothers joined in the acquisition of 250 shares out of the joint funds lying to their credit in the common account. That joint enterprise was undoubtedly with a view to derive profits and that, in our opinion, will stamp the combinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hink that the house automatically produced income, for, the mother could have kept quiet and not let out the house at all in which case no income would have been derived. Her act on behalf of the four boys undoubtedly produced income in that sense. The same reasoning would apply to the dividends derived from the shares. It is this enterprise which in our opinion distinguishes the combination from mere co-ownership. But while it will follow from our observation that the four brothers constituted an association of persons in regard to the house property, they will be governed by section 9(3) of the Income-tax Act. That section presupposes that, even if coowners who derived income from the house constituted an association of persons, neverthel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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