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Commissioner of Income-tax Vs. S.B. Sugar Mills - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Application Nos. 83 and 98 of 1983
Judge
Reported in(1985)44CTR(All)129; [1985]156ITR273(All); [1985]22TAXMAN277(All)
ActsIncome Tax Act, 1961 - Sections 3, 4 and 256
AppellantCommissioner of Income-tax
RespondentS.B. Sugar Mills
Appellant AdvocateM. Katju and ;Bharatji Agrawal, Advs.
Respondent AdvocateR.K. Agrawal, Adv.
Excerpt:
- .....of persons for a common cause or that there was any unity for some common tie or occupation. that being the position, the assessee mills through the receiver could not be taxed in the years under consideration in the status of an ' association of persons/body of individuals'.'5. the aforesaid finding is essentially a finding of fact and in view of the said finding, the question of law sought to be referred to this court for its opinion does not arise.6. both these applications are accordingly dismissed. there shall, however, be no order as to costs.
Judgment:

Ojha, J.

1. Aggrieved by the appellate order of the Income-tax Appellate Tribunal, Delhi Bench 'B', Delhi, in regard to the assessment years 1973-74 and 1974-75, the Commissioner made applications before the said Tribunal under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act') for referring the following question of law to this court for its opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee, M/s. S. B. Sugar Mills, through the receiver could not be taxed in the year under consideration in the status of an ' association of persons' or 'body of individuals' as held by the Income-tax Officer '

2. The Tribunal rejected these applications on the ground that the finding recorded by it in the appellate order was a finding of fact and the aforesaid question of law did not arise. The Commissioner has filed these two applications under Section 256(2) of the Act with a prayer that the Tribunal may be required to draw up a statement of case and refer the aforesaid question of law to this court for its opinion.

3. Having heard counsel for the applicant, we are of the opinion that the aforesaid question of law does not arise in any of these two cases from the appellate order of the Tribunal. In CIT v. Indira Balkrishna. : [1960]39ITR546(SC) , it was held by the Supreme Court that the word 'associate' means 'to join in common purpose, or to join in an action'. Therefore, 'association of persons', as used in Section 4 of the I.T. Act, means an association in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains.

4. The Tribunal in its appellate order dated February 5, 1982, which is a common order for both the assessment years mentioned above has recorded the following finding :

'......the aforesaid mills has certain co-owners. There are disputesamongst those co-owners. That has resulted in the induction of the official receiver who in the years under consideration carried on the business of manufacture and sale of sugar. There is no material and evidence on record to prove that in the carrying on of the aforesaid business by the receiver of the assessed mills in the years under consideration, the aforesaid co-owners of the said mills have joined together in a common purpose or in a common action, the object of which is to produce income, profits and gains or they come together as an association of persons for a common cause or that there was any unity for some common tie or occupation. That being the position, the assessee mills through the receiver could not be taxed in the years under consideration in the status of an ' association of persons/body of individuals'.'

5. The aforesaid finding is essentially a finding of fact and in view of the said finding, the question of law sought to be referred to this court for its opinion does not arise.

6. Both these applications are accordingly dismissed. There shall, however, be no order as to costs.


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