TaxTMI 
TaxTMI 
1978 (9) TMI 27
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....a & Co., at Ludhiana. Assessments to income-tax were made on him in his trade name, M/s. Meera & Co. He died intestate on August 25, 1962, survived by his mother, widow and three minor children. All the assets of the deceased, including the business styled as Meera & Co., devolved on his five legal heirs. The mother of the deceased relinquished her interest in the assets of the deceased against a lump sum payment. For the purpose of these references, we are concerned with the widow and three minor children of the deceased. The business of M/s. Meera & Co. was continued as a single unit in the same name by Shrimati Krishna Gupta, widow of the deceased, obviously on her behalf and on behalf of all the three minor children as their guardian. The accounts were maintained in the name of M/s. Meera & Co. The yearly profits were ascertained and divided. The income-tax returns for the assessment years 1963-64 to 1967-68 were filed by Shrimathi Krishna Gupta on behalf of M/s. Meera & Co. The status of the assessee was described as " association of persons ". These returns reflected the entire income from business previously carried on by Shri Prem Narain, deceased. On January 25, 1968, Shri....
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.... the two members of the Tribunal differed, the matter was referred to a third Member who agreed with the view taken by the judicial Member and the appeals of the assessee were consequently dismissed. The assessee having approached the Tribunal for making a reference to the High Court on questions of law, the two questions detailed above have been referred. It is under these circumstances that this matter has come up before us. Section 4 of the Act is a charging section and sub-s. (1) thereof reads as under : " 4. (1) Where any Central Act. enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. " The term " person " is defined in s. 2(31) of the Act and it reads as under : 2. (31) ' person ' includes-- (i)....
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....or childern in running the business in the name, M/s. Meera & Co. The income from the business representing the share of the minors accrued to them or to their guardian representing them. It being the case, the mode of assessment as contained in Chap. XV of the Act shall get precedence and the assessee will be liable to be assessed thereunder. The learned counsel for the department has argued that after the death of Shri Prem Narain, his widow and three minor children shall constitute a body of individuals in terms of s. 2(31)(v) of the Act, liable to be assessed as such. The minors shall be treated as constituents of the body of individuals along with their mother who in fact was controlling the business on their behalf as also her own. It has further been argued that as the assessee is liable to be assessed under s. 4 of the Act as a person, being a body of individuals in terms of s. 2(31)(v), the special provisions contained in Chap. XV of the Act will have no application. In Deccan Wine & General Stores v. CIT [1977] 106 ITR 111 (AP), a similar situation arose. On the death of an individual, his widow and two minor children succeeded to the business as legal heirs. It was....
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....further no minor was involved in CIT v. Harivadan Tribhovandas [1977] 106 ITR 494 (Guj). The learned counsel has conceded that if the children of Shri Prem Narain, deceased, had been major at the time of his death, then they would have constituted a body of individuals in spite of the fact that their mother had carried on business in the name of Meera & Co. in the same fashion. According to him, the fact that the children of the deceased were minors at the time of his death and continued to be so thereafter would make the difference. We are unable to agree. The business being run by Shri Prem Narain, deceased, in the name of Meera & Co. devolved on his legal heirs after his death. The business which during the lifetime of the deceased was owned by him alone came to be owned by his legal heirs as a group after his death. The business was continued after the death of Shri Prem Narain by his widow, Shrimati Krishna Gupta. The share of the minors in the assets including the goodwill was continued to be utilised for producing income. The control of the business was in the hands of Shrimati Krishna Gupta. Moreover, there can be no manner of doubt that the business was carried on for thei....