Representative assessee liability under section 161(1) must match the represented partners' liability, not just AOP income.

Section 161(1) makes a representative assessee's liability co-extensive with the liability of the persons represented, so tax must be levied and recovered in the same manner and to the same extent as those persons' liability. In the context of income received by joint receivers on behalf of erstwhile partners, the income could be assessed in the status of an association of persons, but the tax computation could not ignore the individual liability of the represented partners. The principle applied was that representative taxation depends on the liability of the persons represented, rather than on taxing the collective income of the AOP as a single unit.

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Issues: Whether, in the case of a representative assessee receiving income on behalf of erstwhile partners, the tax liability under section 161(1) of the Income-tax Act, 1961 is to be determined on the collective income of the association of persons at the AOP rate or in the same manner and to the same extent as the liability of the persons represented.

Analysis: The income of the business was accepted as assessable in the status of an association of persons, but the representative character of the joint receivers brought the case within section 161(1). That provision makes the liability of the representative assessee co-extensive with the liability of the person represented and requires tax to be levied and recovered in like manner and to the same extent. Relying on the principles applied in the decision concerning section 41 of the Income-tax Act, 1922, the determination of tax could not be divorced from the individual liability of the erstwhile partners whose interests were represented by the receivers.

Conclusion: The tax liability had to be computed in the same manner and to the same extent as that of the erstwhile partners represented by the receivers, and not by applying tax merely on the collective income of the AOP as a single unit.

Ratio Decidendi: The tax payable by a representative assessee under section 161(1) is co-extensive with the tax liability of the person represented and must be determined in the same manner and to the same extent as that person's liability.

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