TaxTMI 
TaxTMI 
1961 (1) TMI 13
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....on the business of manufacture and sale of Spade Clover brand beedies, died on December 17, 1942, leaving a minor son, Mohamed Noorullah (the appellant), by his pre-deceased wife, a widow, Luthfunnissa Begum, and four children by her who were all minors at the date of the death of Oomer Sahib. Noorullah through his next friend applied to sue in forma pauperis and during the pendency of those proceedings two advocates of the Madras High Court were appointed joint receivers of the properties of the deceased on March 17, 1943. This appointment was by consent of parties. On May 10, 1943, the widow, Luthfunnissa, filed a suit for partition and also applied for the continuance of the joint receivers. Noorullah opposed this application but by an order dated May 25, 1943, the receivers were ordered to be continued and they carried on the business as before In due course a preliminary decree for partition was passed. The High Court has observed that none of the parties wanted to break the continuity of the business after the death of the father. In the beginning Luthfunnissa and Dawood carried on the business and from the date of their appointment, i.e., May 17, 1943, the joint receivers co....
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....hen he applied earlier for the appointment of receivers to conduct the business among other things. Despite Noorullah's opposition when Luthfunnissa asked for the continuance of receivers in her application No. 1162 of 1943, the existence of the desire of all the co-sharers including Noorullah for the continuance of the business with proper persons to take charge of the business under the orders of court was clear. That intention was material on which the departmental authorities and the Tribunal which agreed with them could find that the co-sharers did constitute an " association of persons '. " From the finding of the Tribunal it is obvious that the business was such that it was not capable of division, it being the manufacture and sale of beedies of a particular brand and the finding of the Tribunal was that the business was carried on with the consent of the parties. On this finding it has to be decided whether the business was the business of an " association of persons " and its profits are assessable as such. The contention of counsel for the appellant was (1) that on the death of Md. Oomer his estate including the business devolved upon his heirs in specific share....
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....sociation of individuals ' in section 3 ; and under section 9 of the Act, the association of individuals is the owner of the property and as such is assessable. " In that case it was also held that the fact that one of the assessees was a minor during the year of the assessment did not affect the question. In In re Dwarkanath Harischandra Pitale the assessees were two brothers who became entitled to certain house properties as tenants in common and held and managed the properties as such and derived profit therefrom. It was held that though the assessees in the first instance did not constitute an association of individuals, they became so when they elected to retain the property and manage it as a joint venture producing income. The test there laid down was that as soon as there was election to retain the property and manage it as a joint venture the persons so electing became an association of individuals. The Rangoon High Court in Commissioner of Income-tax v. Baporia a also laid down the same interpretation of the words " association of individuals ". That was a case of Mohamedan co-heirs and it was held that by merely inheriting a share of property no person can become a ....
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....business carried on by or on behalf of the assessees and it was held that letting out property was not a trade or business. With regard to the income received by the receiver who employed contractors to carry on the business of coal cutting and raising it on the pit head, it was held that that was not the income of an association of persons on the grounds (1) that the receiver was in possession and he employed contractors for coal cutting and raising of coal ; (2) that the assessees had no hand in the business which produced royalty and (3) that the assessees had dissociated themselves from each other because of this partition suit. In our opinion the case so far as it relates to the carrying on of the business and in so far as it is contrary to the opinion expressed by this court in Indira Balkrishna's case is not correctly decided. Another case relied upon by the counsel for the appellant was Buldana District Main Cloth Importers' Group v. Commissioner of Income-tax. In that case a certain group of persons were directed to import cloth in the district and had to work a scheme for the distribution and sale of cloth which had been evolved by the district authorities. That w....