TMI Blog1961 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... " Act "). The question for decision is whether the respondent is " an association of persons " within the meaning of section 3 of the Act. The appeals relate to two income-tax assessments and two excess profits tax assessments ; the former are for the years 1946-47 and 1947-48 respectively, corresponding to the accounting years February 1, 1945, to September 30, 1945, and October 1, 1945, to August 21, 1946, and the latter are in regard to the chargeable accounting periods February 2, 1945, to September 30, 1945, and October 22, 1945, to March 31, 1946. The decision of the excess profits tax appeals is consequent upon the decision of the income-tax appeals. The facts may now be stated: In 1045 the Deputy Commissioner of Buldana evolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under section 23(4) of the Act. He assessed the respondent as " an association of persons " both for purposes of income-tax and excess profits tax. An application under section 27 of the Income-tax Act was dismissed by the Income-tax Officer. Similarly for the year 1947-48 a notice was again issued and served on Haji Ahmed Haji Ali Co. and similarly the group was assessed as an association of persons to income-tax and it was also assessed to excess profits tax for the period October 22, 1945, to March 31, 1946, and an application under section 27 of the Income-tax Act was dismissed in regard to this period also. Appeals were taken against the orders of assessments of income-tax and excess profits tax but they were dismissed by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the import and distribution of cloth was done on joint basis. The purchases were on joint account, the sales were on joint account, the profit was first ascertained on the joint account and then distributed according to their agreed share of profits. In our opinion the assessment has been rightly made in the status of an association of persons. " The High Court, when the matter went to it after the statement of the case by the Tribunal, held that before a group of persons could be called an " association of persons " it had to be established that they were in the nature of partners, i.e., the members of the group of their own volition or free will had joined in a venture with a view to earn profits. As the members of the group were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Deputy Commissioner and the working of the scheme produced profits and it made no difference that the scheme was at the instance of or under the control of the Deputy Commissioner. Dealing with the argument of similar control, Sarkar, J., in Commissioner of Income-tax v. Vyas Dhotiwala observed as follows : " The Tribunal thought that since the scheme was completely under the control of the Deputy Commissioner, the assessees could not be said to have carried on business by working the scheme. We are unable to see that the fact of the control of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them. In our view, it only comes to this that the assessees had agreed to do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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