Association of persons assessment failed where a court receiver managed the property and beneficiaries held defined shares.

Income from leased property could not be treated as business profits of an association of persons, because mere letting is not carrying on a trade or business. The beneficiaries had defined shares in the colliery income, the estate remained under a civil court receiver, and the co-owners took no part in management, so there was no combination justifying treatment as an association of persons. The receiver, being in possession and managing the business under the court's control, was the proper person for assessment. Section 41 was only a machinery provision, so the income could be assessed on the receiver or separately in the hands of each beneficiary according to their shares.

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Issues: Whether the receiver could validly be assessed in one amalgamated assessment as the principal officer of an association of persons, and whether the assessment should instead be made on the receiver or on the beneficiaries separately according to their defined shares.

Analysis: The income from the leased property could not be treated as the profits of a business carried on by an association of persons, because letting property is not carrying on a trade or business. In respect of the colliery income, the beneficiaries had defined shares, the estate remained under a receiver appointed by the civil court, and the co-owners took no part in the management or conduct of the business. On those facts, the Trigunaits had not combined in any manner that could justify treating them as an association of persons. The receiver, who alone was in possession, managed the business, engaged contractors, received the income, and was accountable through the court, was the proper person in relation to the assessment. Section 41 was a machinery provision, and the income could be assessed on the receiver or, if the department chose, separately in the hands of each beneficiary in respect of his share.

Conclusion: The amalgamated assessment on the receiver as the principal officer of an association of persons was invalid, and the assessment was to proceed under section 41 on the receiver or separately on the beneficiaries' respective shares.

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