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T. Periaswamy Gounder Vs. Agrl. Income-tax Officer, Pollachi and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Petition No. 644 of 1978
Judge
Reported in[1982]134ITR155(Mad)
ActsTamil Nadu Agricultural Income-tax Act, 1955 - Sections 9(2) and 65A(3)
AppellantT. Periaswamy Gounder
RespondentAgrl. Income-tax Officer, Pollachi and anr.
Appellant AdvocateS. Ramalingam, Adv.
Respondent AdvocateR. Lokapriya, Adv. for Addl. Govt. Pleader
Cases ReferredIn A. M. C. Muthuvaithilingam Chettiar v. Government of Madras
Excerpt:
.....under s. 2. according to the petitioner, there was a partition on december 15, 1959, evidenced by a registered deed in the family and thereafter the extents acquired under the partition by the different shares are being enjoyed by them separately and even otherwise if the petitioner has been managing such extents, it would not amount to holding or enjoyment by an association of individuals, within the meaning of the act. the mere fact that the affairs of a group of persons or individuals are managed by a common manager or managers by itself is not enough to bring those persons into the net of taxation as 'association of individuals'.an element of investiture or an express grant of authority to look after, manage or conduct the affairs of the association of individuals by them to some..........bench of this court laid down the dictum as follows: 'the mere fact that the affairs of a group of persons or individuals are managed by a common manager or managers by itself is not enough to bring those persons into the net of taxation as 'association of individuals'. an element of investiture or an express grant of authority to look after, manage or conduct the affairs of the association of individuals by them to some amongst themselves or to others is an essential sine qua non to determine whether persons constituting such an association are indeed an association of individuals within the meaning of the madras agricultural income-tax act, 1955.' 3. the tests laid down in the above decisions do not stand satisfied in the instant case. further, one of the sons has been assessed in his.....
Judgment:

Nainar Sundaram, J.

1. The petitioner was assessed under the Tamil Nadu Agricultural Income-tax Act, V of 1955, hereinafter referred to as the Act, for an extent of 26.43 ordinary acres from 1972-73 onwards under composition application basis. Subsequently, in 1977, the first respondent, on the premises that certain landed properties enjoyed commonly by the petitioner, his wife and his sons were omitted to be assessed at the hands of the petitioner, took action under s. 65A(3) read with s. 9(2) of the Act and issued a show-cause notice as to why these properties should not be clubbed and taxed treating the petitioner as 'association of persons'. The petitioner did not respond to the notice and the first respondent passed a revised assessment order on September 24, 1977, for the years 1972-73 to 1976-77 treating the petitioner as 'association of persons', clubbing the properties which stand in the names of his wife and his sons with those which stand in the name of the petitioner. As against this order of the first respondent, the petitioner preferred a revision to the second respondent, which has been rejected by the second respondent and the present writ petition is directed against the orders of the respondents.

2. According to the petitioner, there was a partition on December 15, 1959, evidenced by a registered deed in the family and thereafter the extents acquired under the partition by the different shares are being enjoyed by them separately and even otherwise if the petitioner has been managing such extents, it would not amount to holding or enjoyment by an association of individuals, within the meaning of the Act. The factum of the partition is not being disputed by the respondents. The second respondent points out that the properties alleged to have been partitioned in 1959 are in common enjoyment and the members of the family are living under one roof. If in fact there has been a partition in the family, specific shares having been allotted to the individuals, the petitioner being in management of such extents for convenience sake, will not bring the situation within the mischief of being assessed as association of individuals. As pointed out by the Bench of this court in State of Madras v. S. Subramania Iyer : [1966]61ITR613(Mad) , in order that persons owning lands may be assessed to tax as an 'association of individuals', the essential requirement is that, as between themselves, they should have associated together and decided upon the common exploitation of the lands for their common benefit and the mere fact that all of them had appointed the same person as manager or given the lands on lease to the same person and the manager or lessee was jointly cultivating all the lands would not make the owners liable to be assessed as an 'association of individuals'. In the present case, apart from the properties allocated to the different sharers in the partition of 1959, the sharers themselves have come to acquire different extents subsequently. In A. M. C. Muthuvaithilingam Chettiar v. Government of Madras : [1968]69ITR330(Mad) , another Bench of this court laid down the dictum as follows:

'The mere fact that the affairs of a group of persons or individuals are managed by a common manager or managers by itself is not enough to bring those persons into the net of taxation as 'association of individuals'. An element of investiture or an express grant of authority to look after, manage or conduct the affairs of the association of individuals by them to some amongst themselves or to others is an essential sine qua non to determine whether persons constituting such an association are indeed an association of individuals within the meaning of the Madras Agricultural Income-tax Act, 1955.'

3. The tests laid down in the above decisions do not stand satisfied in the instant case. Further, one of the sons has been assessed in his individual capacity. Assessment having been made individually on one of the members of the erstwhile family, it is no longer possible to treat the members of the family as a single unit and pass an assessment order on the basis of 'association of individuals'. A similar view has been expressed in CIT v. Dandayutham : [1978]113ITR602(Mad) . If the ratio of the above decisions are applied to the facts of this case, I do not find that the orders passed by the respondents 1 and 2 can be upheld. Accordingly, this writ petition is allowed, but there will be no order as to costs.


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