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 years 1959-60 and 1960-61 - Deceased had taken on lease certain land for planting of pepper, coffee, etc. - He derived income by selling felled trees that were cut to make land cultivable - After his death, heirs of deceased executed a power of attorney under which they transferred all properties owned by deceased to possession of 'D', one of heirs of deceased - Each heir took a specific share and they enjoyed properties of deceased as tenant-in-common - Whether, on facts, income derived from sale of felled trees could not be assessed as income of AOPs - Held, yes FACTS Deceased 'C' had taken on lease certain land for purpose of planting pepper, coffee, etc. He extracted timber from said land and derived income after selling it. In 1956 after deceased's death, his heirs executed a power of attorney in favour of 'D' who was also one of the heirs of 'C' under which they handed over the possession and custody of all the property, movable and immovable, owned by the aforesaid deceased 'C' and to carry on the business for the common benefit of all of them. For the assessment years in question, the Assessing Officer held that income from the aforesaid business was assessable in the hands of AOP. On second appeal, the Tribunal held that there was no reason to held that the heirs of the deceased 'C' formed an 'association of persons' to be assessed as such in relation to the income. On reference: HELD In the instant case from the material it appeared that, the income was what had been derived from the felled trees that were cut to make the land cultivable. It was not possible to spell out any joint venture solely from this operation. All that was said in the power of attorney, which incidentally was the only documentary evidence in this regard and the only material, was that immovable properties must be in the custody and possession of the power-holder. Each of the heirs took a specific share and the heirs enjoyed the property as tenants-in-common was not disputed. The Tribunal had not found that there had been an…

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