TMI Blog1981 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessments on the ground that when individual members had already been assessed on their individual shares, the same income could not be assessed as an " association of persons ". It appears that the notices were challenged by the assessee by way of writ petitions in this court (being Writ Petition No. 1294 of 1966, connected with Writ Petitions Nos. 1360 to 1366 and 1465 of 1966). These petitions came up for hearing before a learned single judge and were dismissed on March 24, 1967. This court held that it had not been established that the ITO was aware of the facts and that he did not in fact exercise the option to assess the petitioners individually or as members of an association. It was hence open to him to exercise that option now. It was further held that the notices issued under s. 148 of the Act again were valid and the ITO had jurisdiction to issue the same. On these findings the writ petitions were dismissed. Meanwhile the Department had gone up in appeal to the Tribunal. The Tribunal accepted the decision of this court and set aside the order of the AAC and remanded the matter to him. It observed that the AAC may also consider whether in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc.. stated that the hirer would not remove the said goods or any of them from the cinema building and they would be used in the same manner as being then done. It was further agreed that if the lease of the cinema building was renewed, the hiring of the furniture, etc., would as well be renewed. On these facts the ITO recorded the following finding: " As regards the status there is no dispute that the investments over the construction of property and furniture were made jointly by the members, and there is no definite share either of the investment or of the proprietary rights. The furniture was also installed jointly. The agreement for lease of the cinema building and furniture has also been executed by the members themselves as party No. 1 and the lessee as party No. 2. It is, therefore, quite evident that the entire income was earned by the members by their joint efforts and joint investments. The assessee is thus assessable as a separate entity recognised by the I.T. Act and if any income is earned by it, it has to be taxed in its hands irrespective of the fact that the pro rata share of the income was assessed in the individual hands of the members. For double assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether for the purpose of producing an income, that an association of persons could be formed only when two or more individuals voluntarily combined together for a certain purpose, that volition on the part of the members was an essential ingredient, that for receiving dividends from shares, there was no question of any management, and that an association could not be inferred from the mere fact that more than one person jointly owned shares and jointly received the dividends. In the instant case, the Tribunal had found that the five ladies had drawn out their separate funds to purchase the property and that they had distinct shares in the ownership of the property. There was no specific finding of the Tribunal that the five ladies had intended to embark upon a joint enterprise. There was also no finding that there was any arrangement or agreement or any common aim or purpose or volition of the persons concerned. There was no evidence of any common management or use of the property after the purchase. Except for the deed of purchase and the deed of sale where the five ladies joined as purchasers and vendors, there was no other material before the Tribunal. " Here the position is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from property. Section 26 is inapplicable to a case where the income has been assessed to tax as " income from other sources ". In the circumstances it cannot be said that the income from Jeewan Cinema should have been taxed under the head " Income from property ". In our opinion, the Tribunal was right in holding that the assessment of the assessee in the status of an " association of persons " was valid. The second question referred to us is whether the income from the cinema building as well as from the furniture and fixtures, etc., were inseparable and composite. The Tribunal has on this part of the case relied upon a decision of the Supreme Court in Sultan Brothers P. Ltd. v. CIT [1964] 51 ITR 353. In that case plant or building as well as the furniture installed in it were let out separately. It was held that the question whether they can be taxed on the footing that they constitute inseparable lettings was dependent upon the intention of the parties. That intention may be ascertained by framing the following questions: (1) Was it the intention in making the lease and it matters not whether there is one lease or two, that is, separate leases in respect of the furnitur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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