TMI Blog1988 (7) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ometax Officer initiated proceedings under section 148 of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), to assess such share income in the hands of the applicant and her children as an association of persons. The applicant filed her return declaring that she had no income in that status. Her case was that her income should have been assessed as that of Hindu undivided family. But the Income-tax Officer rejected this plea and brought to tax the income in question in the hands of an association of persons. The applicant took up the matter in appeal and the Appellate Assistant Commissioner held that the applicant and her children inherited the business interest of the deceased, Murugappa, as co-heirs and succeeded to it in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh a body of individuals is not identical with an association of persons, they have similarities. An association of persons may consist of non-individuals, but a body of individuals consists of only human beings. "Body" in "body of individuals" would mean association for some common purpose or object and there must be unity under some common tie or occupation. A mere collection of individuals without common tie or aim will not constitute a body of individuals under section 2(31) of the Act and tinder section 47(ii) of the Act. A body of individuals must be capable of holding income-producing assets or assets that produce income. A group of persons may come together in the following situations: (i) members joining together for income-pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is in what capacity the gift was made by the assessee. Did they do it as an association or as a body of individuals or as individuals. The property received by the assessees under the will of their mother was admittedly received by them as co-tenants. Each one of them had half share in that property. The question whether they divided that property or not is not a material question. In law, each one of them had half right in the property that they gifted to their brother. They were holding that property as tenants-in-common and not as joint tenants. Hence, they made the gift as tenants-in-common and not as joint tenants. Each one must be held to have made a gift of her share of the property though the gift is made through one single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eive the income ; whereas in the case of business, the individuals have to come together and carry on business and several transactions have to be entered into in connection therewith. Therefore, they act in concert certainly amounting to a body of individuals or an association of persons. In the present case, all that happened is that the applicant has merely carried on the business as it was done earlier and there is no overt act or tacit act on her part to indicate that she was not carrying on the business as partner of the firm in her own capacity and on behalf of the minors in representative capacity as guardian. There is no material placed before the court to infer a conduct on the part of the applicant that she had given her consen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 111, the true effect of the decision in the case of CGT v. R. Valsala Amma [1971] 82 ITR 828 (SC) was not considered by the Andhra Pradesh High Court. Their Lordships distinguished the case on the ground that it is a case under the Gift-tax Act and not under the Income-tax Act though this aspect was criticised by the Gujarat High Court but they adopted the reasoning of the Andhra Pradesh High Court. The test of unity of interest is absent in the present case. Therefore, these three decisions cannot be of any assistance to Sri Srinivasan. However, Sri Srinivasan, contended that in view of the decision in the case of M. M. Ipoh v. CIT [1962] 46 ITR 301 (Mad), it is possible and permissible for a minor through her guardian to become a memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the court and were on that account an "association of persons". The existence of a specific or a defined interest in the profits did not make any difference. But, this decision is not applicable to the situation arising on the facts of the present case because in that case, a partnership business which was carried on by the erstwhile partners came to be stopped and that business was continued in the course of winding up. Therefore, certainly, there was a unity of purpose and the receivers had acted jointly. Such a situation does not arise here at all in the present case. Now, it is necessary to refer to two more decisions ; firstly, the case of CIT v. C. Karunakaran [1988] 170 ITR 426 (Ker), where a sole proprietor of a business di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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