Income-tax---

----Reference---Association of - persons---Finding that there was no association of persons---Finding of fact---No question of law arose---Indian Income Tax Act, 1961, S.256(2).

There should be definite acts of management on the part of members to hold that there was an association of persons liable to assessment.

Held, dismissing the 'application to direct reference, that a conclusion based on appreciation of facts does not give rise to any question of law. In the instant case, the Tribunal found that there was no evidence for formation of an association of persons and. therefore, it was not correct to assess in the hands of association of persons. The Tribunal also noticed that one of the members of the alleged association of persons was already assessed to tax and, therefore, the income was not liable to be assessed again in the status of association of persons. The conclusion of the Tribunal was a pure finding of fact. No question of law arose from it. .

CIT v. Ashoka Marketing Ltd. (1976) 103 ITR 543 (SC); CIT v. Banno E. Cowasji (Mrs.) (1984) 147 ITR 744 (MP); CIT v. Indira Balkrishna (1960) 39 ITR 546 (SC) arid CIT v. Kotrika Venkataswamy & Sons (1971) 79 ITR 499 (SC) ref.

A.M. Mathur and A.K. Shrivastava for Appellant.

B. K. Joshi for Respondents.

JUDGMENT

A.R. TIWARI, J.---The applicant-Revenue. has filed this application under section 256(2) of the Income Tax Act, 1961 (for short "the Act seeking a direction to the Tribunal to state the case and refer the questions, as extracted below, arising out of the order, dated October 25, 1993, .passed in I.T.A. No.206/Ind of 1993, after rejection of the application, presented under section 256(1) of the Act, and registered as R.A- No.23/Ind of ,1994, on September 26, 1994, for the assessment year 1987-88:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no evidence of constitution of association of persons?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income once assessed in the hands of the partner cannot be again assessed in the hands of the association of persons?"

Briefly stated, the facts of the case are that, a plot of land was taken on lease by Shardaprasad, his wife, Smt Janakdulari, and his two minor sons by a registered lease deed, dated July 1, 1993, On that plot a house was constructed. These four persons, thus, became co-owners. The income from the said property was assessed in the hands of Shri Shardaprasad to the extent of his share in the property, The two sons are Devendrakumar and Yogendrakumar the income from the said property was also assessed in the hands of Devendrakumar in the same manner vide assessment order, dated March 20, 1981, for the assessment year 1987-88. Similarly, the income from the said property for the assessment year 1983-84 was assessed in the hands of the aforesaid four co-owners individually to the extent of their shares. The Assessing Officer issued notices under section 148 of the Act for the assessment years 1970-80 to 1987-88 in the status of association of persons (AOP) and assessments were completed in this status. On appeal, the order of the Assessing Officer was confirmed by the Commissioner of Income-tax (Appeals). The Tribunal, there was therefore, was not liable to be assessed again in the status of association of persons. I.T.A: No.206/Ind of 1993, filed by the non-applicant/assessee, was allowed by a common order, dated October 25, 1993. The applicant-Revenue filed the application under section 256(1) of the Act, which was dismissed. The application was, thus, filed under section 256(2) of the Act.

We have heard Shri A.M. Mathur, learned senior counsel, with Shri A.K. Shrivastava, for the applicant-Revenue and Shri B.K. Joshi, learned counsel for the non-applicant/assessee.

We find that the Tribunal allowed the appeals as under:

"There is yet another aspect of the matter, namely, that the income of Shri Devendraprasad for the assessment year 1978-79 was assessed as individual in respect of his share in the said property vide assessment order, dated March 20, '1982 That assessment order stands valid. It has been held by the jurisdictional High Court in CIT v. Mrs. Banno E. Cowasji (1984) 147 ITR 744 (MP), that the principle that is applicable in taxing statutes is that the income is subject to tax in the hands of the same person only once. If an association or a firm is taxed in respect of its income, the same cannot be charged again in the hands of the members individually and vice versa. The income has been since charged in the hands of Shri Devendrakumar individually and as such option has been exercised by the Department, it cannot be now assessed in the status of association of persons."'

In CIT v. Indira Balkrishna (1960) 39 ITR 546, the apex Court has held that there should be definite acts of management on the part of members to hold that there was an association of persons liable to assessment.

The Tribunal declined to state the case and refer the questions as under:,

"The above finding of the Tribunal is based on consideration of the facts brought on record. The Tribunal's finding, in our opinion, is a finding of fact and does not give rise to a question of law.

Since the order of the Tribunal is based on the decision of the jurisdictional High Court, we are of the opinion that the question proposed by the Revenue is not a referable question of law. Moreover, as already stated above, we have denied reference on question No. 1. That being so the reference on question No.2 will be only academic. " ,

In CIT v. Ashoka Marketing Ltd. (1976) 103 ITR 543 (SC), and in CIT v. Kotrika Venkataswamy & Sons (1971) 79 ITR 499 (SC), it is held that the conclusion based on appreciation of facts does not give rise to any question of law.

'The conclusion of the Tribunal is based on appreciation of facts and is a pure finding of fact. This does not give rise to a referable question of law. As regards the question of association of persons, it is answered on the basis of the aforesaid decisions. In view of this position, there is no question worth being referred.

In view of the aforesaid factual matrix and legal position, we are satisfied that there is no ground to make the direction and call upon the Tribunal to state the case.

Accordingly, this miscellaneous civil case is dismissed, but with no orders as to costs.

Counsel fee for each side is, however, fixed at Rs.750, if certified.

M.B.A./3066/FCOrder accordingly.