ITA No. 463 of 2009
Date of Decision: 26.7.2012 Sudhir Nagpal and others
The core question that arises for adjudication in these appeals is whether the appellants are to be assessed as 'Association of Persons' or as 'Individuals'. 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 defined in Section 2(31) of the Act. 19. From the above, it emerges that in order to assess individuals to be forming 'association of persons', the individual coowners should have joined their resources and thereafter acquired property in the name of association of persons and the property should have been commonly managed, only then it could be assessed in the hands of 'associations of persons'. Conversely, the mere accruing of income jointly to more persons than one would not constitute thereon an association of persons in respect of such income. In other words, unless the associates have done some acts or performed some operations together, which have helped to produce the income in question and have resulted in that income, they cannot be termed as association of persons. Unless the members combine or join in a common purpose, it cannot be held that they have formed themselves into an association of person. In the present case, the co-owners had inherited property from their ancestors and there was nothing to show that they had acted as association of persons. The income was, thus, to be assessed in the status of 'individual' and the Assessing Officer, CIT
(A) and the Tribunal were not right in treating the income arising to Association of Persons'. Once it is held that the income was to be assessed as individual and not an 'association of persons', therefore, Section 167B of the Act is not attracted. 20. In view of the above, the conclusion of the Tribunal cannot be legally sustained. The income in the hands of the appellants could not be assessed in status of association of persons
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