LexM/S. MEERA AND COMP ANY, LUDHIANA ETC. versus COMMISSIONER OF INCOME TAX, PUNJAB, J&K AND CHANDIGARH PATIALA
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MIS MEERA AND COMP ANY, LUDHIANA ETC. v. COMMISSIONER OF INCOME TAX, PUNJAB, J&K AND CHANDIGARH PATIALA MARCH 11, 1997 [B.P. JEEVAN REDDY, SUHAS C. SEN AND G.T. NANAVATI, JJ.) A B Income Tax Act, 1961-Sections 4 rlw S 2 (31)(v), 160, 161, 166-As- sessment as 'body of individuals'-A minor can be a member of such a body or association-Business inherited by widow and minor children-Business C continued by widow on her own behalf and on behalf of her minor children-Assessmelll in status of 'body of individuals' proper. One p, an individual, carried on business under the name Mis Meera & Co. He died intestate survived by his mother, widow and three minor D children. All the assets of the deceased including the business devolved on his five legal heirs. The mother of the deceased relinquished her interest in the assets of the deceased. The business of Mis Meera & Co. was continued as a single unit in the same name by the widow of the deceased on her behalf and on behalf of all the three minor children. The accounts were maintained in the name of Mis Meera & Co. The yearly profits were E ascertained and divided. In the Income Tax Return for the assessment years 1963-64 to 1967-68, the status of the assessee was described as 'association of persons'. Subsequently it was contended that the-income from the business should be assessed in equal shares in the hands of four legal heirs of the deceased. The minor children of the deceased also filed p separate returns where the share of profit from the Company was included for rate purposes only. However, the Income-Tax Officer held that the business was for one common unit and the same was assessable in the status of 'body of individuals'. In appeal, the Appellate Assistant Commis- sioner held that the entire income was assessable in the hands of the widow as a person carrying on business in individual capacity. In appeals filed G by both the Revenue and the assessee, the Accountant Member of the Appellate Tribunal held that on the death of P, his estate fell to his legal heirs u/s 8 of the Hindu Succession Act as tenants-in-common and that the special provisions regarding the minors and guardians contained in Section 160, 161 or 166 of the Income Tax Act shall apply and will override H 991 992 SUPREME COURT REPORTS [ 1997] 2 s. C.R. A the general provisions contained in Section 4 and 2 (31)(v) of the Act. According to the Judicial Member, the entity was liable to the assessed u/s 4 r/w S 2 (31) (v) of the Act. On reference, a third Member agreed with the view taken by the Judicial Member and the appeals of the assessee were con~e11uently dismissed. B In Reference the High Court held that the expression 'body of individuals' should receive wide interpretation to include a combination of individuals who have unity of interest and were actiwly engaged in the business carried on for the benefit of all of them by one of them and in the instant case, on the death of P, business passed on to his widow and her C three children and the fact that the minors had 110 legal capacity to enter into an agreement was irrelevant for determining their status as a con· stituent in the 'body of individuals' in terms of Sec. 2 (31)(v) of the Act. This appeal had been filed against the order passed by the Division Bench of the High Court. The appellant contended that in the facts of this case, it could not be said that the mother and three minor children had formed 'body of individuals' -and were assessable as a unit and the business 1irofit should have been apportioned and assessed in the hands of each of the heirs separately and in the status of individual; that the special provisions E relating to the minor contained in Chapter XV of the Act will override the general provisions relating to assessment in other parts of the Act and when the income of the firm accrued to the minor, assessment should have been done in accordance with the provisions of Section 160, 161 of the Act. F Dismissing the appeals, this Court HELD : 1.1. When several individuals are found to have joined together for the purpose of making profit, the group of individuals may be conveniently described as "a body of individuals". "An association of per- sons" or "a body of individuals", whether incorporated or not, has been O brought within the net of taxation. The intention of the legislature is clearly to hit combination of individuals or other persons wbo are en
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