Law: Income Tax Act, 1922

Section: 66

[Income Tax Act, 1922 (XI of 1922)].......Section 66 Reference to High Court- Question of law or fact-Question weather assessees were carrying on business together or not Whether pre-eminently a question offset--Held yes. ORDER [The judgment of the Court was delivered by MUSHTAQ HUSSAIN.] Darbar Hazrat Shah Daula Sahib, a shrine situated in the District of Gujrat, Was managed by the descendants or Behwan Shah who claims to be the first Sajjadanashin of the Darbar. He admittedly receives Nazrana from the devotees in proportionate to his share in the estate of his predecessors. He is one of the several decessors. He is one of such of the three sons of Bahwan Shah. 2. When the matter regarding the assessment of his income to tax for the years 1953-54 to 1957-58 came up before the Income Tax Officer he treated these shareholders in the Nazrana as association of persons and assessed them to tax despite protests by the assessees. The reasons which impelled him to come to this conclusion were: (a) The assessees being the descendants of the three brothers are grouped into three separate Dehris each Dehri comprising of a large number o persons. (b) each Dehri gets its turn for sharing in the Nazrana according to a specified and agreed method; (c) during the period that the members of a particular Dehri are receiving the Nazrana, the expenditure to be incurred in connection w1th the maintenance of the shrine etc. is also borne by that Dehri; (d) that the shares Of these recipients have been subjected to mortgage and sale from time to time. The assessees felt aggrieved and appealed successfully to the Appellate Assistant Commissioner who held- "In View of the foregoing discussion, the assessments framed in the case of this artificial combines or Dehri, cannot be sustained and must be annulled". The Department was dissatisfied with this decision and consequently knocked the doors of the Income Tax Appellate Tribunal which heard the appeals for the assessment years 1953-54 to 1958-59 together and disposed them of by one order. It held that: "The facts of the case as they have emerged leave no manner of doubt that the descendants of M, Bahwan Shah received their share of…

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