Association of Persons requires voluntary combination to earn income; joint shareholding and dividend receipt alone are insufficient for later years.

An association of persons exists only where two or more persons voluntarily combine in a common purpose or common action to produce income. For 1957-58 and 1958-59, the assessees' own returns in that status, left unwithdrawn and unrevised, were treated as important evidence and were not displaced; assessment as an association of persons was upheld. For 1959-60 to 1962-63, mere joint ownership of shares and joint receipt of dividends, without joint management or other proof of a voluntary combination, was insufficient; assessment in that status was rejected and the income was treated as individually assessable.

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Issues: (i) Whether the assessees were assessable as an association of persons for the assessment years 1957-58 and 1958-59 on the basis of their own returns and the surrounding circumstances. (ii) Whether the assessees were assessable as an association of persons for the assessment years 1959-60 to 1962-63 in respect of dividend income derived from jointly held shares.

Issue (i): Whether the assessees were assessable as an association of persons for the assessment years 1957-58 and 1958-59 on the basis of their own returns and the surrounding circumstances.

Analysis: The expression "association of persons" requires a voluntary combination of two or more persons joining in a common purpose or common action for the production of income. In the relevant earlier years, the assessees themselves had filed returns in that status and had not withdrawn those returns or filed revised returns asserting individual status. Their admission as to the character of the association was treated as an important piece of evidence, and no material was shown to displace it.

Conclusion: The assessees were rightly assessed as an association of persons for the assessment years 1957-58 and 1958-59, against the assessee.

Issue (ii): Whether the assessees were assessable as an association of persons for the assessment years 1959-60 to 1962-63 in respect of dividend income derived from jointly held shares.

Analysis: Mere joint ownership of shares and joint receipt of dividends, without any act of joint management or any voluntary combination to produce income, does not by itself establish an association of persons. The assessees asserted that they were no longer functioning as an association and were realising dividends in their individual capacity. That assertion was unrebutted, and the surrounding facts were not inconsistent with individual ownership and receipt.

Conclusion: The assessees were not assessable as an association of persons for the assessment years 1959-60 to 1962-63, in favour of the assessee.

Final Conclusion: The liability of the assessees depended on the relevant assessment years: the earlier years were sustained on the existing record, while the later years were held to be assessable only in the individual status.

Ratio Decidendi: An association of persons exists only where persons voluntarily combine in a common purpose or common action to produce income, and mere joint ownership or joint receipt of dividend income, without joint management or other evidence of such combination, is insufficient to establish that status.

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