1991 (6) TMI 23

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....ivered by K. SHIVASHANKAR BHAT J. -The following question referred under section 256(1) of the Income-tax Act, 1961, requires to be answered by us : "Whether, on the facts and in the circumstances of this case, the Tribunal was right in holding that no assessment on the association of persons could be validly made ? " Under an agreement between two companies, Messrs. Manjunatha Motor Serv....

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....Officer having exercised the option under section 4 of the Income-tax Act, 1961, to assess the members of the association of persons directly, a second assessment treating the two companies as an association of persons cannot be validly made. The Appellate Assistant Commissioner cancelled the assessments made by the Income-tax Officer in the status of an association of persons. Objecting to the sa....

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.... references, the contention of the assessee has been that the Income-tax Officer having assessed the members of the association of persons individually cannot proceed to assess the same income treating them jointly as association of persons again ; the assessee contended that the circular dated August 24, 1966, issued by the Board is quite clear in this regard and the said circular binds the Reven....

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....n of persons earlier. This view is based not on the interpretation of section 4 of the new Act, but on the binding nature of the circular. This view is fully supported by the observations of the Supreme Court made while rejecting an appeal filed against the decision of the Madras High Court following CIT v. Blue Mountain Engineering Corporation [1978] 112 ITR 839. The report of the Supreme Court's....