COMMISSIONER OF INCOME TAX Vs. KARUNAKARAN C

JUDGEMENT

(1.) The following question has been, at the instance of the revenue, referred to us by the Income Tax Appellate Tribunal, Cochin Bench:

(2.) It cannot be, and it is not, disputed that the sons were coowners of the assets left by their deceased father. The question, however, is whether as coowners they were liable to be assessed as an association of persons (or a body of individuals) in respect of the business admittedly carried on by them after the death of their father. If the minor sons did not participate in the business and the business was carried on only by the major son, he alone would then be the sole proprietor of the business and assessable as such in respect of the income derived from the business. This would be the position even when the other sons were coowners of the premises in which the business was carried on or of the assets which were lent to the business without participating in it. But that is not the case of the assessees. Their case is that they were also participants in the business, entitled to the income therefrom and liable for its losses, if any, but assessable only as individuals and not as an association of persons.

(3.) Lindley in his treatise on the Law of Partnership (15th Edn. p. 81) says: