COMMISSIONER OF INCOME TAX Vs. JOHNY P P
HIGH COURT OF KERALA
COMMISSIONER OF INCOME-TAX
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Narayana Pillai, J. -
(1.) IN this reference made by the INcome-tax Appellate Tribunal, Madras Bench, the question referred is:
" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the income from the Trichur Vegetable Stores ? "
(2.) THE facts are as follows :
Two persons, P.P. Johny and P.P. Devassikutty, constituted an " association of persons ". This association conducted two businesses known as " Trichur Vegetable Stores " and " Trichur Grocery ". P. P. Johny filed a return on December 6, I960, of his personal income for the assessment year 1960-61. He included in it his half share of the income from the " Trichur Vegetable Stores " as Rs. 257'09. THE Income-tax Officer, after calling for and examining the separate books of account of the " Trichur Vegetable Stores ", fixed its income for the relevant period as Rs. 2,724 and Johny's share of it as Rs. 1,362. THE assessment on Johny was accordingly completed on December 17, 1960. THEreafter, the Income-tax Officer proceeded to assess separately for the assessment year 1960-61 the income of the " association of persons " consisting of Johny and Devassikutty. He fixed the income of that association of persons at Rs. 16,164 from the " Trichur Vegetable Stores " and Rs. 1,911 from the " Trichur Grocery " for the assessment year 1960-61. From that order of the Income-tax Officer an appeal was filed by " the association of persons" to the Appellate Assistant Commissioner. THE Appellate Assistant Commissioner deleted the income from the " Trichur Vegetable Stores " in assessing the income of the " association of persons " on the ground that the income from that business had been determined already in assessing the income of Johny. From the decision of the Appellate Assistant Commissioner the department filed an appeal before the Tribunal. THE Tribunal, in disposing of the appeal, agreed with the views of the Appellate Assistant Commissioner. It was thereafter that this reference was made by the Tribunal.
The question that arises for consideration is whether after the Income-tax Officer had assessed the income of one business of the " association of persons " and assessed on that basis the share of that income of one of the two persons who constituted the " association of persons " he was justified in assessing separately the income of the same business for the purpose of assessing separately the income of the " association of persons " and whether the deleting of that income by the Tribunal from the income of the " association of persons " for the purpose of assessment was not right. The Act applicable in the instant case is the Indian Income-tax Act, 1922. The main charging section in that Act is Section 3, It is in the following terms :
" Where any Central Act enacts that income-tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually."
It is clear from the section that the same income cannot be charged repeatedly in the hands of different persons or in the hands of the same person. In the present case the income from the " Trichur Vegetable Stores " for the relevant period was determined once and a share of it in the hands of Johny was charged. To allow the same income to be charged separately for the assessment of the " association of persons " would be to offend the rule that the same income cannot be charged more than once.
(3.) THE section quoted above shows that in the case of an " association of persons " it is open to the Income-tax Officer to assess the income of that association and charge the same or after calculating the total income of the association to fix the share of each of the persons constituting that association and charge the share of the income of the association in his hands. THE department has to elect whether for a particular income of the association it should charge the association itself treating it as one entity or each of the persons constituting the association separately for the share of the income of the association in his hands.
The option is one entirely with the department. When once the election is made and the option is exercised for the assessment of income for a particular period in a particular manner it is not open to the department to assess the same income in a different manner.;
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