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TMI Blog1953 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... nd rent from Ramna Gola and Murshidapur, The assessees are the descendants of the late Chowdhury Karamat Hussain of Arrah. The latter was assessed as an individual prior to 1927-28 on income from property and non-agricultural income from ground rent and from other sources, such as, bazars, fisheries, etc. He died in 1926 leaving behind him his widow, Mostt. Saroor Fatma, and five sons, Chowdhury Sharafat Hussain, Dr. Reyasat Hussain, Chowdhury Warasat Hussain, Chowdhury Wajahat Hussain and Chowdhury Rafazat Hussain. Wajahat Hussain died in 1945, and his heirs were Most. Saida Begam and two sons and two daughters, who have been substituted in his place. The assessees contended before the Income-tax Officer that they did not form an associati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments have been made in the status of an association of persons and the income was assessed as a unit. It was also urged by the Authorised Representative for the Department that the payments referred to in the remand report are not according to the shares ; and that not only before this year, but for this year and subsequently, the assessee had filed returns declaring its status as an association of persons. We see no reason to take another view in this year and especially after perusing the remand report and hearing the parties thereon." The Accountant Member, Mr. Narayana Row, agreed with the Judicial Member and held that although mere inheritance unaccompanied by any further fact was inadequate to constitute an association of perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a Muhammedan inherited after his death, under Muhammedan law, specific shares of the property left by him. The assessees did not partition the property, and the rent deeds stood in their joint names. They had jointly employed a munshi to manage the property and collect the rents, and the income after deducting the cost of collection and other expenses was distributed in accordance with their respective shares. On these facts, their Lordships of the Lahore High Court held that the assessees did not form an association of individuals. In the latter case, it was held by the Allahabad High Court that persons having specified but undivided shares in property which produces income do not come within the expression association of individuals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have constituted an association of persons as contemplated by section 3 of the Act. In this case, over and above the management and possession of the property and appropriation of the income remaining joint, there was the added fact, not found in the eases placed before us, that apart from the notional specification of these shares of the heirs of a deceased Muhammedan, there was no actual separation or specification of shares in the revenue records, that the leases in respect of the land in question were granted by Mr. Sharafat Hussain jointly on behalf of himself as well as on behalf of other co-sharers, and the receipts in respect of the ground rent, the income derived wherefrom is in dispute, were granted jointly on behalf of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he determination of the question whether or not there was an association of persons within the meaning of section 3 of the Act, possession of definite and ascertainable shares was not conclusive on the point. As explained in Commissioner of Income-tax, Burma v. M. A. Bapona [1939] 7 ITR 225the words "association of individuals" in section 3 of the Income-tax Act should be construed ejusdem generis with all the other groups of persons mentioned in the section, namely, Hindu undivided family, company and firm, and not with firm alone. Accordingly, the familar considerations governing Hindu undivided family, company, or firm shall apply here also, notwithstanding the fact that the assessees are Muhammedans. It was considered that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income-tax authorities can base their ultimate decision, and further that by merely inheriting a share of property however, no person can become a member of an association of individuals unless there is some forbearance or act upon his part to show that his intention and will accompanied the new status which he has been asked to receive. The present case stands on a higher footing. Here, on their own showing, the assessees were an association of individuals. Further although they inherited specific and ascertainable shares in the property, they for several years had jointly managed the property and derived income therefrom, and the appropriation of income was not strictly in accordance with their shares. Their cash book showed that the me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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