Association of persons status upheld where assessees jointly earned commission through shared arrangements and expenses.

Two assessees were validly assessed as an association of persons under the Indian Income-tax Act, 1922 because the income arose from a joint assignment of a commission agreement, a partnership arrangement to share the commission, and jointly incurred expenses in earning it. Those facts showed combined action and a common object of earning and sharing income, which satisfied the statutory concept of an association of persons. The argument that mere acquisition of income-producing rights without joint management was insufficient was rejected on the facts, as the arrangement disclosed active cooperation for a shared income-producing purpose. The assessment in that status was therefore legally valid.

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Issues: Whether the two assessees were rightly assessed in the status of an association of persons under the Indian Income-tax Act, 1922.

Analysis: The income arose from a joint assignment of the benefit of a commission agreement, followed by a partnership arrangement for sharing the commission. The assessees also incurred expenses jointly in earning the commission. On these facts, they combined in joint action to secure and share income, which satisfied the statutory concept of an association of persons. The contention that mere acquisition of income-producing property without joint management was insufficient was rejected on the facts, because the arrangement disclosed joint action and a common object of earning income.

Conclusion: The assessee-applicants constituted an association of persons, and the assessment in that status was held to be legally valid, against the assessee.

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