Law:

Section:

Section 4 of the Income-tax Act, 1961 - A ssociation of persons - A ssessability of - Proprietary business carried only muslim individual was, after his death, continued to be carried on by his widow and profits were credited in respective accounts of widow and her seven minor children according to their legal shares - W hether such profits could be assessed as income of AOPcomprising widow and her seven minor children - Held, no Section 161 of the I ncome-tax Act, 1961 - Representative assessee - Liability of - Whether on facts mentioned under 'Association of persons - Assessability of assessment was properly to be made on widow as representative assessee - H eld, yes Facts One IA, a Muslim, carried on business as a wholeseller in fish, as sole proprietor. He died leaving behind his widow and seven minor children. The widow continued the same business. The profits of the business were, at the end of each year, credited in the respective accounts of the widow and the seven minor children, according to their legal shares. The ITO assessed the income of the concern in the status of an AOP. This view was upheld by the AAC but reversed by the Tribunal. The Tribunal held that the assessment was properly to be made on the widow as a representative assessee, under section 161. On reference, the department claimed that the assessment as made by the ITO was valid, since the mother carried on business in a dual capacity-one as herself as an individual and the other as the natural guardian of her minor children - and as the natural guardian, she would be deemed to have agreed to carry on the business on behalf of the minors. On reference: Held To constitute an AOP there should be a common venture on activity with a view to produce income, by more than one person joining together, the concerned persons ought to be consenting parties to the scheme or arrangement. The consent may be express or implied by conduct. It follows that the persons joining to form or carry on an enterprise must be competent to do so. They should be qualified in law to act or give consent. A minor, a lunatic or an idiot is incompetent to act in respect of his property, or even to enter into a…

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