Exempt receivership income may still count for tax rate purposes when statute requires inclusion in total income.

Income earned by court-appointed receivers for the real owners of a business was treated as attributable to the co-sharers, and the receivers' assessment as an association of persons did not alter that character. Even though the assessee's share was exempt from tax under the relevant exemption provision, it could still be included in computing total income for the limited purpose of fixing the applicable tax rate under section 16(1)(a). The exempt character of the income did not prevent its use for rate determination where the statute so provided, and the assessment was upheld.

---

---

Issues: Whether the assessee's share of income from a business carried on by court-appointed receivers, though assessed in the hands of the receivers as an association of persons and exempt from tax in the hands of the assessee under the relevant exemption provision, could nevertheless be included in computing his total income for the limited purpose of determining the rate of tax under section 16(1)(a).

Analysis: The business income was earned by receivers appointed by court, but the assessment in their hands was held to be an assessment in the hands of the real owners of the business, namely, the co-sharers. The receivers were not independent owners or independent earners of the income. On the scheme of the Act and the binding authorities on receivership income, the assessment in the hands of the receivers did not alter the character of the income as that of the real owners. Once the income fell within the exemption provision, its exempt character did not prevent its being taken into account under section 16(1)(a) for determining the rate applicable to the assessee's total income.

Conclusion: The assessee's share of the business income was rightly included for rate purposes, and the challenge failed.

Final Conclusion: The appeal failed on the merits and the assessment made by the revenue authorities was upheld.

Ratio Decidendi: Income earned by court-appointed receivers on behalf of the real owners of a business is attributable to those owners as an association of persons, and income exempt from tax may still be included in the owner's total income for the limited purpose of determining the applicable rate of tax where the statute so provides.

---