1984 (9) TMI 20 - HC - Income Tax

High Court dismisses Commissioner's applications on tax status of S. B. Sugar Mills.

The High Court of Allahabad dismissed the Commissioner's applications to refer a question of law regarding the taxation status of M/s. S. B. Sugar Mills ... Taxability as an association of persons/body of individuals - object to produce income, profits or gains as test for an association - distinction between question of law and finding of fact - reference of question of law under Section 256(1) of the Income-tax Act, 1961Taxability as an association of persons/body of individuals - object to produce income, profits or gains as test for an association - distinction between question of law and finding of fact - Whether the question of law as to taxation of the assessee through the receiver in the status of an association of persons/body of individuals arises for reference to the High Court. - HELD THAT: - The Tribunal recorded a factual finding that the co-owners of the mills, though having disputes and the induction of an official receiver who carried on the business, did not join together in a common purpose or common action with the object of producing income, profits or gains, nor did they come together with unity or common tie or occupation. Relying on the principle that an 'association of persons' requires persons to join in a common purpose or action to produce income, the court held that the Tribunal's conclusion is essentially a finding of fact. Because the appellate order answers the factual question against the existence of an association, the legal question sought to be referred under Section 256(1) does not arise from that order.The question of law sought to be referred does not arise because the Tribunal has reached a factual finding that there was no association of persons; the applications are dismissed.Final Conclusion: Applications under Section 256(2) for a statement of case are dismissed as the Tribunal's appellate order contains a factual finding that no association of persons existed in the years 1973-74 and 1974-75, and therefore the question of law for reference does not arise; no order as to costs. The High Court of Allahabad dismissed the Commissioner's applications seeking to refer a question of law to the court regarding the taxation status of M/s. S. B. Sugar Mills as an 'association of persons' or 'body of individuals'. The Tribunal's finding that the mills could not be taxed in that status was considered a finding of fact, and the question of law did not arise. The applications were dismissed with no order as to costs. (Case citation: 1984 (9) TMI 20 - Allahabad High Court)