Association of persons test: absence of common purpose or common action meant no referable question of law arose.

The Tribunal's finding that co-owners acting through a receiver were not taxable as an association of persons or body of individuals was treated as a finding of fact. Applying the settled test that an association of persons requires a common purpose or common action to earn income, the court held that the record showed no unity or common tie sufficient to constitute such an association. As the issue did not raise a referable question of law under section 256 of the Income-tax Act, 1961, the reference applications were dismissed.

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Issues: Whether the Tribunal's finding that the assessee, through the receiver, was not taxable in the status of an association of persons or body of individuals gave rise to any referable question of law under section 256 of the Income-tax Act, 1961.

Analysis: The Tribunal had recorded that the co-owners had not joined together in a common purpose or common action with the object of producing income, profits or gains, and that there was no unity or common tie showing an association of persons. The governing test for an association of persons is that two or more persons must join in a common purpose or common action to earn income. On that basis, the finding reached by the Tribunal was treated as a finding of fact, and no question of law was shown to arise from the appellate order.

Conclusion: No referable question of law arose, and the applications were dismissed.

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