Law:

Section:

Section 4 of the Income-tax Act, 1961 - Association, of persons - Assessability of - Whether after assessing share income from joint venture of an AOP in hands of a member of AOP, it would be open to revenue to assess it in AOP's hands as such -Held, no Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to revenue - Whether ITO's order assessing member of an AOP individually instead of assessing AOP, is prejudicial to revenue - Held, no Facts The assessee-firm was carrying on business of its own. It was also engaged in a joint venture in association with certain other firms. While returning its income for the relevant assessment year the asses-see showed therein its share income from the joint venture. The ITO accepted it and completed the assessment. However, the Commissioner set aside the assessment under section 263 holding that the ITO's action insofar as he brought to charge the assessee's share income from the joint venture was prejudicial to the interests of the revenue and directed the ITO to first make an assessment on the AOP as such and then follow it up with the assessment of the share income of the assessee as a member of that association. On appeal the Tribunal upheld the order of the Commissioner. On reference: Held It is now fairly well settled that once an ITO makes an assessment of the share of a member of an association, thereafter, he could not proceed to assess the income of the AOP as such. All that would remain to be done in such a case would be for the ITO to proceed to deal with the other members, share income in their respective individual assessments. In this respect the position is the same under the 1961 Act as it was under the 1922 Act. This position has been laid down as the pattern of assessment in the cases where an AOP as such earns income in which the members thereof would be entitled to their aliquot shares. When once the officer has followed a particular mode of reaching the income to be taxed, then that per se puts the entire department out of reach of the other mode of making an assessment on the self same income. As regards the jurisdiction of the Commissioner to act under section 263, it is quite…

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