Law:

Section:

Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of the Indian Income-tax Act, 1922] - Association of Persons - Assessable as - Assessment year 1950-51 - Assessees, who were wives of deceased husband, were assessed as association of persons in respect of income from properties inherited by them as legal heirs - As far as income was concerned, each widow was entitled to one-third share of income of her husband - Whether mere fact that they had received income jointly was not sufficient to make them liable to be assessed as association of persons - Held, yes - Whether since in property owned by three widows, their shares were definite and ascertainable, they could not be assessed as an association of persons but share of each of them was to be included in her own individual assessment - Held, yes FACTS One B died on 11-1-1947, leaving behind three widows. The widows filed returns of income from the property which they inherited from their husband for the assessment year 1950-51. The ITO assessed the widows as an association of persons. He, however, held that as far as their income from property was concerned the case fell under section 9(3) and that income must be assessed separately to each of the three widows. On appeal, the AAC as also the Tribunal upheld the view taken by the ITO. On reference : HELD The Act only refers to an association persons as an assessable entity under section 3, but it does not anywhere provide as to when an association of persons can be assessed to tax. The expression 'association of persons' occurs along with other assessable entities, viz., individual, HUF, company and local authority and firm, and all these entities must stand on the same footing and the test of the liability must be whether they have earned income in the capacity in which they are sought to be assessed. That must be the test with regard to an individual or with regard to an HUF or company and local authority, or firm or association of persons. Property which an association of persons may own jointly may produce income, but even so the question that will have to be considered is where these persons who are associated together have done any act…

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