COMMISSIONER OF INCOME TAX Vs. SHIVSAGAR ESTATES AOP

JUDGEMENT

(1.) THESE two cross references involving, inter alia, a common point of dispute, are disposed of together for the sake of convenience.

(2.) THE assessment years involved are 1970 71, 1971 72 and 1972 73 and the relevant previous years are the corresponding financial years ended on 31st March, 1970, 31st March, 1971 and 31st March, 1972 respectively.

(3.) THE material facts are : sixty five members of three families of Dhanwatay, Patel and Shah jointly purchased a vast area of land at Worli, in November, 1963. This was divided into eight plots marked A to H. Plots A to F were given on lease to M/s Shivsagar Estates Ltd., in April, 1966, on an annual rent of Rs. 15 lakhs payable separately to each of the lessors in accordance with their respective shares. In the asst. yrs. 1967 68, 1968 69 and 1969 70, the lease rent from the said property which was renamed as Shivsagar Estates, was the only source of income and it was assessed to tax in the hands of an AOP comprising of these sixty five individuals. This status was upheld by the AAC but the held that there was no Association vis a vis the lease rent and that the sixty five persons were individually assessable on their respective shares. Broadly stated, this decision was based on the finding that the sixty five co owners each had a specific and definite share and that none of the necessary and essential ingredients for the formation of an Association, namely, volition, joint enterprises, joint management, joint accrual and joint receipt of income was present in the case. One of the circumstances on which the Revenue had laid considerable stress was that these sixty five persons had not merely purchased the vast area and given it on lease, but they had also set about developing their estate as a first class commercial and business locality, including plans for setting up of a hotel of an international standard in collaboration with the world famous Hilton Hotel International Incorporated. The proposed hotel was to be named 'The Metropolitan Hotels Ltd.' It may be mentioned that this proposed hotel was to be constructed on Plot H, which we have to consider separately while dealing with the reference preferred by the assessee.