Association of persons test in property transfer failed where brothers bought defined shares separately, defeating acquisition proceedings.

A property transfer made to four brothers in separate defined shares was considered for acquisition proceedings under section 269F of the Income-tax Act, 1961. On the facts, the purchasers were found not to constitute an association of persons, because the sale deed reflected individual acquisitions of defined plots or shares rather than a collective purchase by a single taxable unit. The transaction therefore could not be characterised as a sale in favour of an association of persons, and acquisition proceedings on that basis were not sustainable.

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Issues: Whether the property transfer could be treated as a sale in favour of an association of persons for the purpose of acquisition proceedings under section 269F of the Income-tax Act, 1961.

Analysis: The transfer was made to four brothers in separate defined shares under the sale deed. The Tribunal and the High Court found, on the facts, that the purchasers did not constitute an association of persons and that the transaction represented individual purchases of defined plots/shares rather than a collective purchase by a single taxable unit.

Conclusion: The sale could not be treated as one in favour of an association of persons, and the acquisition proceedings were not sustainable on that basis.

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