Syndicate profit taxable only in AOPs' hands when members' shares determinate u/ss 86 and 67A

SC upheld the HC and lower appellate authorities (CIT(A) and ITAT), holding that the assessee's share of profit from various syndicates, constituted as Association of Persons (AOPs) or Body of Individuals (BOIs), could not be taxed in the assessee's hands. The members' shares in the AOPs/BOIs were determinate and known, and the AOPs/BOIs were independently chargeable to tax at the maximum marginal rate or higher. Applying clause (a) of the first proviso to section 86 read with section 67A of the Income-tax Act, SC ruled that the syndicate income is taxable only in the hands of the AOPs, dismissing the revenue's petitions.

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The Supreme Court condoned the delay and proceeded to hear the petitioner, the revenue authorities, challenging the High Court's decision on the taxability of income arising from Association of Persons (AOP) (Syndicates). The core issue concerned whether the "Income of the Association of the Persons (Syndicates) can be clubbed with the assessees." The Court held in categorical terms that such income "cannot be clubbed with the assessees." On this basis, it affirmed that the High Court "has not erred in passing the impugned order." Consequently, the petitions filed by the revenue were dismissed, and all pending applications were disposed of in line with this determination.

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