M/s Vidya Devi & Others V. The Assistant Commissioner of Income Tax, Abohar

ITA/217/2010

AI Insights

The case involves a dispute over the assessment of rental income from agricultural land owned by multiple co-owners. The Income Tax Officer (ITO) treated the income as belonging to an AOP, leading to a collective assessment, whereas the appellants argued for individual assessments based on their respective shares. The High Court of Punjab and Haryana examined whether the co-owners constituted an AOP and whether the income from the rented plinths should be assessed under the head of 'Income from other sources' or 'Income from house property'. The court ultimately decided that the co-owners did not form an AOP and that the income should be assessed individually.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 818014 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 26-07-2012
• Assessment Year: misc
• Other Referred Cases: Sudhir Nagpal and Others v The Income Tax Officer Ward Abohar, Gowardhan Das & Sons v Commissioner of Income Tax Jalandhar, M Ramalakshmi Reddy v CIT, Indira Balkrishna v Commissioner of Income Tax, Mohamed Noorullah v Commissioner of Income Tax, G Murugesan and Bros v Commissioner of Income Tax, R Valsala Amma v Commissioner of Gift Tax, Shiv Nagar Estates v Commissioner of Income Tax, AP Parukutty Mooppilamma and Others v Commissioner of Income Tax, B N Elias v Commissioner of Income Tax, Laxmidas Devidas v Commissioner of Income Tax, Dwarkanath Harishchandra Pitale v Commissioner of Income Tax, Shiv Sagar Estates v Commissioner of Income Tax
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KULDEEP SINGH; S HOODA
• Assessee Lawyers: RADHIKA SURI
• Keywords: Assessment Year; Association of Persons; Income Tax; Plinth Rental Income
• Section: 147; 148; 56; 260A; 26

Judgement Text

"65 S IN THE HIGH COURT OF PUNJABAND HARYANAAT CHANDIGARH ITANo17 of 2010 OSMI Dateof Decisionll72012 Mls Vidya Devi S others Appellants 1 Versus r The Assistant Commissioner of IncomeTax Abohar 0 0 espondent I C9 CORA HONBLE MRJUSTICE AJAY KUMAR MITTAL I HONBLE MRJUSTICE G SANDHAWALIA Z PRESENT Ms Radhika Suri Advocatefor theappeliant 2 Mr Kuldeep Singh Advocate for Mr S Hooda Advocatefor the respondent I C0 AJAY KUMAR MITTAL J Z Delay in filing and refiling the appeal is condoned D For orderS see ITA No 463 of 2009 1Sudhir Nagpaland ewo Z others v The Income Tax Officer Ward Abohar JUDGE J el July6 2012 gbs j Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 66 1 1 01 1 4 ITA No63 of 2009 1 m INTHE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH ITANo 463 of 2009 Date of Decision26 2012 SudhirNagpal and others Appeilant Versus The IncomeTax Officer Ward 1131 Abohar Respondent 1 r CORAM HONBLE MRJUSTICE AJAY KUMAR MITTAL HONBLE MRJUSTICE GS SANDHAWALIA 0 C0 PRESENT Ms Radhika Suri Advocatefor the appellant I C5 Mr Kuldeep SinghAdvocatefor Mr G Hooda Advocate forthe respondent I Z AJAY KUMAR MITTAL J 1 This order shall disposeof a bunch of eightappeals 9 r bearing ITA Nos63 464 559 of 2009 49 51 and 217 to 219 of 2010 I as according to the Iearnedcounsel for the paniesthe primary issue Z involvedtherein is identical For brevity the facts are being extracted from ITA No63 of 2009 00 2 This appeal has been filed bythe assessee under Section VA7 Z 260A of the IncomeTax Act 1961 n short the ActI against the order dated 221 2009 passed bythe IncomeTaxAppeliate Tribunai Amritsar Bench Amritsar hereinafterreferred to as the Tribunall in ITA No 3521ASR12008 for the assessment year 2004 On May24 2010 all the appeals were admittedfor determination of the following substantial questions of Iawl Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 67 ITA No63 of 2009 e2 1 INhetheron the facts and circumstances of the case the Ld ITATis justified in upholding the actionof the Ld AO initiating the proceedings uls 147 of the Act on merechange of opinion on any otherground7 2 VVhether on the facts and circumstances of the case the plinth rental income is not assessable as income of AO and is assessable as individual income of 1 the coowners2 lr 3 Briefly stated the facts necessary for adjudication of the 0 0 presentappeaiare that five persons namelySlSh SuniI Nagpal Sudhir Nagpal Raj Kumar Nagpal Adarsh Kumar NagpaI and Smt C5 Saraswati Nagpal were c0vowners of the agricultural Iand known as NagpaiFarms inheritedfrom their forefathers situated at OId Fazilka Z Road Abohar and executed a General Power ofAttorney on 2631996 in favour of Sudhir Nagpal appointing him to construct plinths on their I joint agricultural Iandin the names of all the owners and to funherIease out such open plinths to any party on their behalf The Iand was not Z purchased for the purpose and it was inheritedbythem and they were CO the owners not in theirjoint capacity but in their individualcapacity with 7 Z a definiteldefined proportion of share Agreement dated 15l l 2002 was executed by the covners Ieasing out the plinths to the Punjab State CiviI SuppIies Corporation Limited Chandigarh for the period which includedthe period assessable forthe assessment year 200405 Sudhir NagpaI filed his returnof income for the assessment year 2004 05 showing this central income and also paidtax accordinglyVide assessment order dated 201 22005 the rental income was duly Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 68 ITA No63 of 2009 a3m included in the said assessment Similar returns were Oled by the assesseein the cases of other coowners wherevertheywere taxable and necessary tax was deposited in thetreasury in accordance withIaw Thereafter theAssessing Omcerissued noticeunder Section 148of the Act to all the coeowners of the property in the name of Sudhir Nagpal and others on the ground that there is Association of Persons OPl made bythe covners and that income had escaped assessment in 1 the hands ofAOP The assessee was asked to Olethe returnwho Oled L return of incomedeclaring nil income Itwas pleaded thatsince no Iand 0 was purchased therefore the status of the coeowners cannot be treated 0 I as AOP and that the income of the plinths was assessed by the 0 department in the hands of individualas per theirshares in the propeny I The Assessing Officer vide order dated 10102007 assessed it as AOP Z treating the entire income from plinths as income fromother sources in m r the hands of AOP tax payable byapplying Section 167B 21of theAct Against the order of theAssessing Officer an appeal was t3 filed before the Commissioner of Income Tax Appealsl Bathinda tin Z short the ClTrl who vide order dated 19 32008 dismissed the 0 appeal Stili feeiing dissatisfied the assessee Oledan appeal beforethe 7 Z TribunaI The Tribunal vide order dated 212009 rejected the appeal holding that the proceedings under Section 147 of the Act have been rightly initiated and the tncome has ghUybeen assessed as AOP Hence the present appeal bythe assessee 4 We have heard Iearned counsel for the parties and have perused the record 5 Learned counsel for the submittedthat Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 69 ITA N 463 of 2009 a4e she does not press question Nol Accordingly the same is disposed of as not pressed Addressing on question No2 Iearnedcounsel for the appellant submitted that with regard to Iease deed the same was entered by the coowners for Ietting out plinths on rent to the Punjab CiviI Supplies Corporation Ltrl and was Iet out as co owners whereas theAssessing Officer theCITV41 and the Tbunal had erred in treatingthe income as that belonging to the association of 1 persons Itwas contendedthatunless the persons hadjoined hands as an associationof persons for carrying on any venture income therefrom 0 0 couid not have been taxed as belonging to association of persons It I was also argued that while treating the cowners as association of C5 persons the Assessing Officer had treated the income from other I sources which was contrary to the basic principle that if jointventure Z was there then income could be assessed as income fromthe business 2 r only Reference was madeto thefollowing judgmentsl I 1 Commissioner of Income Tax v Indira Balkrishna t 19601 39 ITR 546 SCl Z Il Mohamed Noorullah v Commissionerof IncomeTax m 1961142 ITR 115 SCI 7 Z Ill Commissioner of Agriculture Income Tax V Raja Ll Ratan Gopal 19661 59 ITR 728SCl IV G Murugesan and Bros v Commissioner of Income Tax 19731 88 ITR 432 SCl V R ValsalaAmma v Commissioner of Gift Tax 3691 72 ITR 579 Kerl Vl Commissioner of IncomeTax v Shiv NagarEstates Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 70 ITA No 463 of 2009 5e AOPI 19931201 ITR 953 Boml Vll CommissionerofIncome Tax KeraIav AP Parukutty Mooppilamma and others o19841 149 ITR 131 6 On the strength of the aforesaid judgments it was urged that unless there was joint management in a joint enterprise for producing the income profits or gains the status of association of persons could not have been fastened on the assesseet was pleaded thatthe test for constituting an association of individualsas association of persons was that theyshould have joinedin a promotion of joint 0 enterprise with the object of producing income protlts or gainswhich 0 I was missing in the present case Heavy reliance was placedon the t5 decision of the Bombay HighCoun Itl Shiv Nagar Estatess case I Isupralin support of her submissions Z 7 On the other hand Iearned counsel for the revenue L opposing the prayer made by the Iearned counsel for the appellant I supponed the order passedbythe Tribunal He submittedthat Since t3 there was one jointaccount opened bythe assessee they were rightly Z assessed as an association of persons and even Formel6A was issued m in one name only 7 Z 8 After giving our thoughtful consideration to the respective submissions we find considerableforce in thesubmissions made bythe Iearnedcounsel for the appellants The Tribunalhad erred in coming to the conclusion that the status of the assessee would be an association of persons 9 The core question that anses for adjudication in these appeals is whetherthe appellants are to be assessed as Association of Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 71 ITANo163 of 2009 6 Persons or as Individuals 10 In ITA NosA9 51 and 217 to 219 of 2010 besides the aforementionedissue appellants have raised substantialquestion No2 therein that the income arising from renting of plinths was assessable under Section 26 of the Act At the outset it may be noticed that in so far as the head under which the income from rental of plinths isto be assessed the same stands settled bythe Division Bench judgment of this Coutl in Gowardhan Das S Sons v Commissioner of Incomem Tax Jalandhar 120071 288 ITR 481 wherein it has been held that it 0 would fall under Income from other sources and not Income from 0 House property Relevantobservationsthereinread thusl C A plainreading thereof provides that it is the income I from propeilyconsisting of any building or Iand Z appurtenant thereto which is assessed undersection 22 of the Act and not the income from renting out of open I Iandor some kutchaplinth onlyl the present casenO t building having been Iet out there is no question of Z treating the rentreceived m What is covered bythe expression appurtenant IS 3 Z the Iand which is necessary for enjoyment of the ll building and not the Iandonly Similarissue came up for consideration before Madras High Court In M Ramalakshmi Reddy v ClT 3981 232 ITR 281 where the issue was decided against the assessee and in favouroftherevenue 12 Accordingly it is heid thatthe rent receivedfromIetting out the plinths is Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 72 ITA No63 of 2009 7 assessable under Section 56 of the Act and therefore provisions of Section26 of theAct have no e Taking up the primary issue as to whether the assessee could be assessed in the status of Association of Persons or not it would be appropriate to refer to person as deOnedin Section 2l l of theAct The definitionof person as given in this clause is inclusiveand not exhaustiveection 21 1oftheAct reads thusle m 231 1 person includesee r il an individual 0 oil a Hindu undividedfamily 0 I iiil a company 0 ovl a firm I VI an association of persons or a body of Z individuals whether or not Lr vil a Iocalauthority and I viil eveiy artificialjuridical person not falling within t3 anyof thepreceding subwclauses rl Z 12 Under clause 01of Section 2 personincludes an ClO individual whereas under clause Il thereof it speciOes Association of vmo Z persons ora body of individuals whetherincorporated or not For the justdecision of these appealsit would be essential to examine the meaning of the expression an associationof persons 13 The Act no where deOnes Association of Persons Reference shall have to be made to judicial precedents to discern the meaningof the said expression The Honble ApexCourt in Indira Bal Krishnas case supral delving into the meaning of Association of Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 73 ITA No63 of 2009 m8e Persons noticedin para 9 as underl e NOw 3 imposes a tax in respect of the total income of every individual HUF company and Iocalauthority and of every firmand other association of persons or the partners of the firm or membersof the association individuail In the absence of any definition as to what constitutes m an association of persons we must construe the words in their plain ordinary meaning and we must 0 also bear in mind thatthe words occur in a section 0 I which imposes a tax on thetotal income of each 0 one of the units of assessment mentioned therein I including an associationof persons The meaning to Z be assigned to the words must take colour from the context in which they occur4 number of I decisions have been cited at the bar bearing on the L2 quesUon and our attention has been drawn to the Z controversy as to whether the words association 00 of individuals which occurred previously in the 7 Z section should be read ejusdemgeneris with the word immediately precedingviz Orm or with ail the othergroups of persons mentionedin the section Intothat controversy it is unnecessary to enter in the presentcase Nor do we pause to consider the widely differing characteristics of the three other associations mentioned in the section viz Hindu Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 74 ITA No63 of 2009 e9n undividedfamily a companyand a firm and whether in view of the amendments made in 1939 the words in question can be readejusdem generis with Hindu undividedfamily or company It is enoughfor our purpose to refer to three decisions In rel B N Elias 19351 3 ITR 408 Call TC44R 913 CIT VS Laxmidas Devidas 19371 5 ITR 584 Bomll TC44R14 and In re Dwarakanath 0 Harishchandra Pitale 193715 ITR 716 Bomll 0 TC44915 In rel B N Elias lpral Derbyshir C I C J rightly pointed out thatthe word associate ll C5 means according to the Oxford dictionary Il to join I in common purpose or to join in an action Il Z Therefore AOP must be one in which two or more persons Join in a common purpose or common I action and as the words occur in a section which imposes a tax on income the association must be Z one the object of which IS to produce income rlo profits or gains This was the view expressed by 7 Z Beaumont C J in ClT v Laxmidas Devidas and Another 11 at page 589 and also in In rel DwarakanathHarishchandraPitale Jpral In re B N Elias supral Costello J put the test in more forceful Ianguage4e said It may well be that the intentionof the Iegislature was to hit combinationsof individualswho were engaged together in some joint Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 75 ITA No163 of 2009 4 0 enterprise but did not in Iawconstitute partnership lNhen we find that there is a combination of persons formed for the promotion of a joint enterprise then I think no difficulty arises in the way of saying that these persons did constitute an association Il We think that the aforesaid decisions correctly Iay 1 down the crucial test for determining what is an r association of persons withinthe meaning of s 30f 0 the Incometax Actand they have been accepted 0 I and followedin a number of Iater decisions of C5 different HighCourts to all of which it is unnecessanj to call attention It is however necessary to add Z some words of caution here There is no formulaof universal application as to what facts how many of them and of whatnature are necessary to come to a L conclusion that there is an association of persons Z within the meaning of s 3 it must dependon the m particular facts and circumstances of each case as 7 Z to whethertheconclusion can be drawn or not 14 The Honble Supreme Court in Mohamed Noorullahs case supral following its earlier decision in Indira Bal Krishnas case Isupral observed as underl e This Court in Commissioner of Income4ax Bombay V Indira Balkrishna 19601 39 ITR 546 SCll TC44RJl 6 considered the question as to Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 76 ITA No63 of 2009 41e what an AOP means The test Iaid down in three casesl In re B N Elias 8 Others In re 19351 3 ITR 408 Calll TC44R1 3 ClT vs Laxmidas Devidas 193715 ITR 584 Bomll TC44R14 and In re DwarkanathHarischandra Pitale 9371 5 ITR 716 Bomll TC44R15 was acceptedbythis Court as Iaying down the crucial test for whatis an AOP and that in each case e the conclusion has to be drawn from the 0 circumstancesIn the first case the test was Iaid 0 I down as applyingto combinations of individuais 0 who were engagedtogether in some joint I enterprise but not constituting a partnershipSuch Z a combinationof persons formedfor the promotion m C of a joint enterprise bandedtogether as if they were Il coadventurersit was held wouid constitute an I C3 association of individuals In the second case that Z is Commissioner of Income4axl Laxmidas Devidas 0 and Another 19371 5 ITR 584 3on TC44R014 3 1 44e BeaumontC at page 5891aid down the test as Z 1 followsl Om Il In my opinionthe onlyIimitto be imposed on the words other association of individuals is such as naturally followsfromthefact thatthe words appear in an Act imposing a tax on income profits and gains so that the association must be one which Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 77 ITANo63 of 2009 12 produces income profitsor gains Itseems to me that an association of two or more persons for acquisition of property which is to be managed for the purpose of producing income proOts or gains falls within the words other association of individuals in s 3 and under s 9 of theAct the Association of individualsis the owner of the property 1 and as such is assessable Il In that case it was also held that the fact that one of 0 the assessees was a minor during the year of the 0 I assessment did not affect the question In In re 0 Dwarkanath Harischandra Pitale lpral the I assessees were two brothers who became entitled Z to cettain house propeities as tenants in common tr and held and managed the properties as such and I derived proflt therefrom Itwas held thatthough the assessees in the first instance did not constitutean Z association of individuals they became so when OO they elected to retainthe property and manageit as a m Z joint venture producing income The test there Iaid Om down was that as soon as there was election to retainthe property and manage it as a joint venture the persons SO electing became an association of individuals The Rangoon HighCourt in The ClT VS Baporia19391 7 ITR 225 Rangl also Iaiddown the same of the words association of Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 78 ITA No163 of 2009 43e individuals That was a case of Mohammedan co heirs and it was held that by merely inheriting a share of property no person can become a member of an association of individualsunless there is some forbearance or act upon his part to show that his intentionand will accompanied the new status that is an associationof individualsne of the coleirs 1 in that case was appointed an agent to realise the income fromthe properties Ieftto the coeheirsbytheir 0 fatherand motherunder Mohammedan Law and 0 I that was held to be sufficientto constitutethem an C5 association of individuals 11 I 15 Relying upon itsearlierdecision in Indira Bal Krishna and Z Mohamed Noorullahs cases Isupral the Honble Supreme Coun Ill Raja Ratan Gopals case supral in para 2 notedas underl I The tlrst question is whether the High Court was right in holdingthat the respondent should be Z assessed on his share of the income and not on the 00 income of the four brothers as association of a7 Z individuals Under s 30f the Act for the Onancial QU yearcommencing on Ist April 1950 and for every subsequent financiai year agricultural incomeax shall be charged in accordance with and subject to the provisions of the Act on the total agricultural income of the previousyear of every person Person has been defined in scl of the Act to Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 79 ITA No63 of 2009 14m mean any individual or association of individuals owning or holding propeny for himself or for any other or partly for his own benefit and partly for another either as owner trustee receiver common manager administrator or executor or in any capacityrecognizedby Iaw and includes an undivided Hindu Family Orm or company A 1 combined reading of these two provisions indicates Q that assessment can be made on an individualor an 0 associationof individuals The question is whether C I the should be assessed as an individual C5 or along with his cosharers as an association of I individuals The expression association of Z individuals was found in the Indian ITAct before the 0 words AOP were substitutedbythe amendmentAct I of 1939The word person is more comprehensive than the word individua But the meaning given to Z that expression as a unit of assessment under the OO Indian IT Act by the Court will equally apply to the 7 Z 31 expression association of individuals under the 1 Il Hyderabad Agrl ITAct This Court in CIT vs Indira Balkrishna 19601 39 ITR 546 SCll TC44R16 construedthe said expression used in the Indian IT Act and held that it did not apply to covwidowsof a Hindu in the circumstance of that case The three coewidows succeeded as co41eirs to the estate of Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 80 ITANo63 of 2009 45m theirdeceased husband and took a joint tenancy with the right of survivorship and equal beneOcial enjoyment They were entitled as between themselvesto an equal share of the income Either of them could not enforce an absolute partition though for the purposeof convenience of enjoyment they could divide the property and enjoy their 1 respective shares of the income therefrom The question arose whethertheyshould be assessed as 0 0 individuals or as an AOP Das J speaking for the I Court acceptedthe followingtest to ascertain 0 whether two or more persons constituted an association of individuals withinthe meaning of the Z ITActl An AOP must be one in which two or more persons I joinin a common purpose or common action and as L the words occur in a section which imposes a tax on Z income the association must be one the object of m which is to produce income profits or gains l3 7 Z The Iearnedjudge thengives the cautionthatthere is no formula of universai application and that the question must depend on the particular facts and circumstances of each case On the facts found in that case the Court held that the widows were oniy coleirs of the estate of the deceased husband and thatthey could not be assessed as an AOP withinthe Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 81 ITA No63 of 2009 1 6m meaning of s 3 of the Indian IT Act This Cou againin Mohamed Noorullah vs CIT 3611 42 ITR 115 SCl TC44R5 considered the question in the context of an income realized byreceivers appointed by consent of the heirs to run the business of the deceased Khan Saheb Mohmed Oomer Sahib Kapur J speaking for the Couit Iaid down the same 1 test accepted by this Court in the earlier judgment r and held that on the facts of that case the co4leirs 0 who carried on the business byconsent as one unit C3 I formed an AOP within the meaning of 3 of the t5 Indian IT Act for the purpose of producing income I profits or gains The said decisions Iaid down the Z test that to constitute an association of individuals 1 two or more individuals should have been joinedIll I the promotion of a jointenterprise with the object of producing income profits or gainsn the present Z case the said test is not satisfied The four nephews C10 of RajaKhajaPershad succeeded to the estate as 7 Z cosharers and each one of them was entitled to Llm share of the income from the estate Theydid not forma unitfor the promotion of anyjoint enterprise to earn income profits or gains The collection of the entire income from the estate by one of the sharers or even bya common employee will not make that Income an income from a jointventure Each of the Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 82 ITA No163 of 2009 47m sharers getshis income as an individualand not as an association of individuals1 this view the High Court was rightin answering the first question in favourof the respondent Similarview was taken bythe Honble ApexCourt in GMurugesan and Bross case supral 16 The Kerala High Court in R Valsala Ammas case Isupral 1 held that a jointgiftmade bytwo sisters to their brothersbya common giftdeed the sisters having separate interestin the property would not 0 0 makethem taxable as an associationof persons The KeraIaHigh Court I held that the two sisters who have conveyed the title to their brothers C5 through a common giftdeed could not be held to form an associationof I persons as the title did not belong to the association of personst was Z observed as underl In otherwords the individualswho make the giftmust I be associated in respect of the title or ownership of the L2 property which is transferretl To putit diHerently a gift Z must be one made bytwo or more individualswho own CQ the property as an association of individuals In our 7 Z view if two or more persons execute one deed of giftin Qm favourof the same person in respect of properties which belong to them individually or in which they have separate and distinct rights it cannot make them an associationof individuals It would be a jointgiftby different individuals between whom there is no association of interest in respect of the gifted Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 83 ITANo63 of 2009 e18e propenies Il 17 Dealing with identical issue Bombay HighCoun in Shiv SagarEstates case Isupral where 65 persons purchased property not as an AOP but as coowners and there was no changein their statusas coowners qua the propeny it was held that the 65 persons whohad purchased the property having definiteand determinateshares could not be heid as an AOP onlyon the ground that the Iease was m executed bya single document While adjudicating the issue in favourof the assessee itwas observed 0 We have carefully considered the rival submissions C I We have already set out thefacts of the case and also 0 given our observations in regard thereto at diHerent I placesSo far as the Iaw is concernedit is well settled Z bythe decision of the Supreme Coun in ClT v Indira m Balknhna 1 960139 ITR 546l this case the SupremeCourt considered what constitutes an L3 association of personst was held that an association Z of persons must be one in which two or more persons C join in a common purpose or common action and as 3 Z the words occur in a section which imposes a tax on income the association must be one the object of which is to produceincome profitsor gains The Supreme Court however made it clear that there IS no formula of universal application as to what facts how many of them and of what nature are necessanj to come to a conciusion thatthere is an association of Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 84 ITANo63 of 2009 e19n persons It must depend on the particular facts and circumstances of each case as to whether the conciusion can be drawn or not The Court made it further clear that no test is conciusive or determinative 18 Civil appealagainst the aforesaid decision was dismissed by the Honble SupremeCourt as reported in Commissioner of 1 Income Tax v Shiv SagarEstate I20021 257 ITR 59 1SCl r 19 From the above it emerges that in order to assess 0 individuals to be formingassociation of persons the individual cov 0 I owners should have joinedtheir resources and thereafter acquired C5 in the name of association of persons and the propeny should I have been commonly managed onlythen it could be assessed in the Z hands ofassociations ofpersonsl Converselythe mere accruing of m r incomejointly to more persons than one would not constitutethereon an I association of persons Ill respect of such incon In other words t0 unless the associates have done some acts or performed some Z operations togetherwhich have helpedto producethe income in C0 question and have resulted in that income theycannot be termed as Z association of persons UnIess the members combine or Join in a tl common purpose it cannot be held thatthey have formed themselves into an association of person In the present case the coeowners had inheritedproperty from their ancestors and there was nothing to show thatthey had acted as associationof persons The income was thus to be assessed in the status of individual and theAssessing Omcer CIT Al and the Tribunal were not right in treating the income arising to Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document 85 ITA No63 of 2009 e20m Associationof Persons Once it is held that the income was to be assessed as individual and not an association of persons therefore Section 167B oftheAct is not attracted 20 In view of the above the conclusion of the Tribunal cannot be Iegally sustained The income in the hands of the appellants could not be assessed in status ofassociation of persons Accordinglythe appeals are allowed in the manner indicatedabove C JUDGE 0 ev C rpi I July26 2012 C5 gbs J Z I L2 Z CQ 7 Z Parkash Om 2012.11.17 12:25 True Scanned Copy Of Original PHHC,Chandigarh JOYTI RANI 2016.03.28 15:57 I attest to the accuracy and integrity of this document "