Law:

Section:

Section 4 of the Income-tax Act, 1961 (Corresponding to section 3 of the Indian Income-tax Act, 1922) - AOP - Assessable as - Assessment years 1957-58 to 1962-63 - One 'N' purchased shares in joint names of grandsons i.e., assessee's who were all brothers - Dividend income therefrom were returned in initial two years for assessment in status of AOP but later on income from dividend was offered for tax in capacity as individuals - Assessing Officer however made assessment for all assessment years as AOP - Whether an association of persons can be formed only when two or more individuals voluntarily combine together for certain purpose and hence volition on part of members of association is an essential ingredient - Held, yes - Whether, therefore, in instant case, when after expiry of initial two assessment years in question, assesses i.e., members of association chose to realise their dividend as individuals, there was an end of association and as such thereafter, they could not be assessed in status of AOP rather they were to be assessed as individuals - Held, yes FACTS 'N' executed a settlement deed in favour of his four grandsons, namely, 'G.M.' 'G.K.' 'G.R.' and 'G.V.' 'N' purchased a number of shares injoint stock companies in the name of 'G.M. & Brother's. For each of such purchase, a debit entry was made in the books of the firm. The share applications addressed to the companies for the transfer of the shares from the prior owners to the name of G.M. & Brothers were signed by 'P', the mother of the donees as their guardian. The donees were minors at the time most of these transactions took place. 'GM' became a major on 3-3-1955. After 1959, 'G.M.' himself signed all transfer applications both on his behalf as well as on behalf of his brothers. The youngest of the brothers became a major on 15-12-1962. The income from the house property and the dividend income from shares were credited to an account called 'G. M. & Brothers' in the books of N's firm. In those books, there are separate accounts for 'G.M.', 'G.K.', 'G.R.' and 'G.V.' Private income and expenses of these persons were credited or debited to those individual accounts. At the end of…

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