Business income charging rules: guardians managing minors' business are not an association of persons for assessment purposes.

Liability for business income under the Indian Income-tax Act, 1922 falls on the person legally entitled to carry on the business, and a court order authorising guardians to manage minors' business does not make the minors the persons carrying on that business. Sections 40 and 41 operate as machinery provisions for vicarious assessment in specified cases; they do not create a fresh charging basis or convert beneficiaries into business operators. Income received by guardians on behalf of minors is distinct from profits earned by the guardians in carrying on the business, so the business income was not assessable in the hands of the guardians as an association of persons and had to be separately assessed through the minors' guardians.

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Issues: Whether the income arising from the business carried on by guardians of minors under a court order was liable to be assessed in the hands of the guardians as an association of persons, or was required to be separately assessed in the hands of the minors through their guardians.

Analysis: The charging provision under Section 3 of the Indian Income-tax Act, 1922, read with Section 10, fastens liability on the person who carries on the business. The minors had no legal capacity or right to carry on the business, and the court order authorised only the guardians to do so. Sections 40 and 41 are machinery provisions that impose vicarious liability in specified situations and do not create a new charging basis for taxing business income as if the minors themselves had carried on the business. The income received by the guardians on behalf of the minors was distinct from the business profits earned by the guardians in the course of carrying on the business under the court order. The assessment, therefore, could not be supported on the basis that the minors were the persons carrying on the business or that the guardians were taxable as a substitute for such business income under the machinery provisions.

Conclusion: The income was not rightly assessable in the hands of the guardians as an association of persons under the cited machinery provisions, and the question was answered in favour of separate assessment of the minors through their guardians.

Final Conclusion: The reference was answered for the assessee, with the business income attributable to each minor required to be separately assessed through her guardians.

Ratio Decidendi: Liability under the business-income charging provision falls on the person who is legally entitled to carry on the business, while guardianship-based machinery provisions impose only vicarious liability for income received on behalf of beneficiaries and do not convert the beneficiaries into persons carrying on the business.

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