TMI Blog1972 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... an association of individuals. The assessee asked for a reference to the High Court under section 29(2) of the Orissa Agricultural Income-tax Act, 1947 (hereinafter to be referred to as " the Act "), of the following questions : " (i) Whether, on the facts and circumstances of the case, the assessment as an association of individuals is correct ? (ii) Whether the petitioner should be assessed as an individual in respect of income-tax out of his share of the property? " The reference having been rejected by the Tribunal, the High Court called for a statement of the case on those two questions under section 29(3) of the Act. Appropriately those two questions were directed to be reframed for verbal changes and we reframe them in this judgment as follows: " (i) Whether, on the facts and circumstances of the case, the assessment of the income of the entire property in the hands of the assessee as the income of an association of individuals is correct ? (ii) Whether the petitioner should be assessed as an individual in respect of the income arising only out of his share of the property? " The finding of the taxing authorities that after the partition by metes and bounds by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion both under the Indian Income-tax Act, 1922, as amended from time to time and the Agricultural Income-tax Acts of different States, the provisions of which are in pari materia with the provisions of the Act. The earliest case which received the attention of the Supreme Court is Commissioner of Income-tax v. Indira Balkrishna. That was a case under the Indian Income-tax Act, 1922. The short facts of that case were as follows : One Balkrishna Purushottam Purani died on November 11, 1947. He left behind him three widows and two daughters. The widows as legal heirs inherited the estate of the deceased, which consisted of immovable properties, shares in joint stock companies, money lying in deposit, and share in a registered firm. The widows were assessed as an association of individuals. On the facts found by the Tribunal there was no finding that the three widows had combined in a joint enterprise to produce income. The only finding was that they did not exercise their right to separate enjoyment and except for receiving the dividends and interest jointly they had done no act which had helped to produce income in respect of the shares and deposits. On these findings their Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt were appointed joint receivers of the properties of the deceased on March 17, 1943. This appointment was by consent of parties. On 10th of May, 1943, the widow filed a suit for partition and also applied for the continuance of the joint receivers. By an order dated May 25, 1943, the receivers were ordered to be continued and they carried on the business as before. The High Court found that none of the parties wanted to break the continuity of the business after the death of Oomer Sahib. The profits of the business were assessed to tax in the hands of the receivers as the income of an association of persons. The nature of the business was such that it could not be divided up and had to be carried on as one whole with a unity of control and all the parties desired to preserve and did preserve this unity. On such facts their Lordships held that the income was the income of a business which was carried on as a single business by the consent of all parties and the mere fact that a suit was pending at the time for the administration of the estate of the deceased or for the separation of the shares of the co-heirs did not affect the incidence of taxation as the business was carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(i) of the Madras Agricultural Income-tax Act, 1955, is more or less similar to section 2(i) of the Act. After a thorough analysis of the legal position, their Lordships observed thus: " But there is no evidence that, while Subrainania Iyer was thus managing the several parcels of the property, his grandsons by the daughter, on the one hand, and his son and son's son, on the other, entered into an arrangement inter se among themselves for the purpose of common exploitation of their distinct properties. The arrangement could very well be consistent with the case put forward by the assessee that what in fact happened was a separate individual arrangement, between the different owners of the land and Subramania Iyer, without the owners themselves coming to an agreement inter se regarding joint cultivation ...... If the factum of common cultivation by a single agent or manager of different parcels of land owned by different persons could by itself be held to be sufficient to constitute the owners into an association of persons, it would lead to undesirable results. It is a common experience in this part of the country, where the system of absentee landlords prevails, that dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od each of the heirs was being given one-fourth share of the income of the estate. The question was whether for the assessment year 1359-F., the heirs could be assessed as an association of individuals under the Hyderabad Agricultural Income-tax Act, 1950, in respect of the income from the estate. Their Lordships followed Commissioner of Income-tax v. Indira Balkrishna and Mohamed Noorullah v. Commissioner of Income-tax and held that the four nephews did not form a unit for the promotion of any joint enterprise to earn income, profits or gains and could not, therefore, be assessed as an association of individuals. In Commissioner of Agricultural Income-tax v. M. L. Bagla the facts were as follows : A was the owner of an extensive area of land. By a deed dated January 21, 1941, B took a lease for agricultural purposes of 316.3 acres of land and by a separate dead dated April 20, 1942, C took a lease for agricultural purposes of 326.1 acres of land. B and C appointed a common manager for cultivation of the lands. The manager maintained a common account of expenditure and income and after deducting from the receipts expenditure for management of the lands, divided the profits betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sale of snuff. The deed of partnership provided that the firm could not be dissolved before August 31, 1955, but it was open to the partners to continue the partnership or enter into a fresh partnership. On September 17, 1956, one of the partners filed a suit in the civil court for the dissolution of the firm with effect from August 31, 1956, and for taking of accounts. He also applied for the appointment of a receiver. On September 21, 1956, the court appointed three receivers two of whom were partners and the third was an advocate. Since the business had been stopped from September 1 to 21 the court directed the receivers " to reopen and conduct the snuff business for the purpose of winding up " subject to the terms, inter alia, that the receivers could carry on the business normally, that the profits, if any, earned, will be treated as an asset of the firm subject to be divided between the parties in the manner set out in the partnership deed, and that the receivers will pay every month certain Specified amounts to the partners. Some time later the court appointed a commissioner for taking accounts and for arranging the sale of the business as a going concern. The business yi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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