Commr. of Income Tax, Kerala vs Estate of late C. Cherutty

M.S. Menon C. J

This is a reference by the income tax Appellate Tribunal, Madras Bench, u/s 66 (1) of the Indian income tax Act, 1922. The question referred is:

Whether the assessees did constitute an Association of Persons carrying on business for gain

and it is common ground that the only controversy in this case is as to whether the sale of the trees concerned was by an association of persons consisting of the widow, the four sons and the three daughters of the deceased Cherutty. An association of persons is a unit of assessment under the Indian income tax Act, 1922. As stated by Beaumont C.J. in Commissioner of income tax v Laxmidas Devidas--(1937) 1. T. R. 584, the only limit to be imposed on the words "is such as naturally follows from the fact that the words appear in an Act imposing a tax on income, profits and gains, so that the association must be one which produces income, profits or gains".

Counsel for the Department submits that the fact that the heirs of Cherutty constitute an association of persons will be evident from a power of attorney produced before the Appellate Tribunal. That document, however, has not been made part of the Statement of the Case. It is essential that the said document should be scrutinised and that we should have the benefit of a Statement of the Case taking into account that document as well. We have, therefore, no option but to refer the case back to the Appellate Tribunal for a fuller Statement of the Case incorporating the power of attorney mentioned above and the tribunal''s comments thereon. We do so, under sub-section (4) of section 66 of the Indian income tax Act, 1922.