2006 (5) TMI 85

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....85 and 1987-88, was referred to this court for opinion : "Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal is right in law in holding that the Departmental authorities were not justified in framing the assessment for the assessment years 1983-84, 1984-85 and 1987-88 in the name of M/s. Sehgal Oil and General Mills as an association of persons ?" 2. The facts found by the Tribunal as mentioned in the statement of the case are extracted below : "4. The firm, M/s. Sehgal Oil and General Mills, Jalandhar, was in existence in accordance with the partnership deed dated July 28, 1961, which was amended subsequently from time to time on the attaining of majority by some of the minor partners,....

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....decided the issue in favour of the assessee and gave finding that the Revenue was not justified in framing the assessments for all the three years in the name of Sehgal Oil and General Mills as association of persons because no such association of persons was in existence." 3. It is further evident from the reply filed by the assessee, in response to the show-cause notice issued by the Revenue, that after the death of Sh. D. D. Sehgal there were disputes pending for succession amongst the legal heirs and further that neither dividend nor interest were factually received by the assessee or by any of the co-partners of the alleged association of persons, namely, Sehgal Oil and General Mills. The Tribunal while deciding the case of the assess....

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....73] 88 ITR 432 (SC) is extracted below (page 437) : "For forming an 'association of persons', the members of the association must join together for the purpose of producing an income. An 'association of persons' can be formed only when two or more individuals voluntarily combine together for a certain purpose. Hence, volition on the part of the members of the association is an essential ingredient. It is true that even a minor can join an 'association of persons' if his lawful guardian gives his consent. In the case of receiving dividends from shares, where there is no question of any management, it is difficult to draw an inference that two or more share-holders function as an 'association of persons' from the mere fact that they jointly ....