Separate assessment of co-owners' lease income upheld where common lease deed did not create an association of persons.

Lease income from the cinema theatre was separately assessable in the hands of the two co-owners where the rent under the lease deed was fixed individually in proportion to their respective shares. The common lease deed was treated as a convenient method of letting one property with machinery and furniture, not as proof of a joint venture or common intention to earn income together. As each co-owner had acquired a distinct share from different sources, the facts negatived an association of persons. The income was therefore assessable separately in each co-owner's hands, not as income of an association of persons.

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Issues: Whether the lease income derived from the cinema theatre was assessable separately in the hands of the two co-owners or as the income of an association of persons.

Analysis: The rent payable under the lease deed was separately fixed for each co-owner according to their respective shares. The common lease deed was treated only as a convenient mode of letting a single property with machinery and furniture, and not as evidence of a common venture to earn income. The facts also showed that each co-owner had acquired a distinct share from different sources, which negatived any common intention to combine for a joint enterprise producing income.

Conclusion: The lease income was separately assessable in the hands of the two co-owners and not as the income of an association of persons, in favour of the assessees.

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