COMMISSIONER OF INCOMETAX Vs. GOOL C DALAL

JUDGEMENT

(1.) At the instance of the Revenue the Income tax Appellate Tribunal has sent up its statement of the case and referred the following question of law for our opinion, viz:

(2.) Mr. Peston Cooverjee Dalai was a Parsi who has settled down in Kerala. He was possessed of several properties by way of rubber estates and others. He executed a will on 30 9 1954. By the said Will he made certain bequests to persons and institutions named in the Will. With regard to residue he gave the following direction:

(3.) The Income tax Officer calculated capital gains at Rs. 1,35,008/-. In doing so, he rejected the claim of the assessees with respect to their status as Association of Persons and treated them only as individuals. The Appellate Assistant Commissioner confirmed the said order in so far as it related to the status of the assessee. But differing from the Income tax Officer he took the view that the property was agricultural and therefore no question of capital gain would arise. For the said conclusion he relied upon the decision of this Court in Venugopala Varma's case which was subsequently reversed by the Supreme Court. On further appeal to the Tribunal by the Revenue, the Tribunal pointed out that there had been no joint dealing or joint management by the two sisters which had led to generating income by them from the properties. There was no association in any profit making activity. The Tribunal was of the view that unless there was association for common purpose or action with the object of producing income the status of association of persons cannot be obtained or granted. It therefore held that the ladies could be assessed only as individuals.