MOHAMED NOORULLAH, REPRESENTING THE ESTATE OF LATE KHAN SAHIB MOHD. OOMER SAHIB versus THE COMMISSIONER OF INCOME-TAX, MADRAS.

Citation: [1961] 3 S.C.R. 515 · Decided: 18-01-1961 · Supreme Court of India · Bench: J.L. KAPUR · Disposal: Dismissed

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Judgment (excerpt)

3 S.C.R. 
SUPREME COURT REPORTS 
515 
MOHAMED NOORULLAH, REPRESENTING THE 
ESTATE OF LATE KHAN SAHIB 
1961 
MOHD. OOMER SAHIB 
January ;8. 
v. 
THE COMMISSIONER OF INCOME-TAX, MADRAS. 
(J. L. KAPUR, M. HIDAYATULLAH and J.C. SHAH, JJ.) 
lnconte.tax-Assess111ent of an association of persons-Business 
ca,rried on by M ohaniedan-Continuance by hei1's-Receivers appoint-
ed by consent of parties-Asscss111ent on the receivers as income of an 
association of persons-· Validity-Indian Income-tax Act, r922 (II 
of I922). S. 3· 
The business of manufacture and sale ol a particular brand 
of beedies was carried on by 0, a Mohamedan, who died in 1942 
leaving a minor son, the appellant, by his pre-deceased wife, his 
widow L, and four children by her. 
Proceedings were taken first 
by the appellant and later on by L in connection with the parti-
tion of the properties left by 0, including the business, and 
during the pendency of the proceedings the business was carried 
on by receivers who had been appointed by the court by consent 
of parties on May lJ, 1943· The receivers continued the business 
till November 25, 1946, when during the course of the proceed-
ings the business was put up for sale by auction between the 
co-heirs and was purchased by the appellant. For the years 
of assessment, 1944-45 to 1947-48, for which the accounting 
years were 1943 to 1946, the profits of the business were assessed 
to income-tax in the hands of the receivers as the income of an 
association of persons, and the claim of the appellant that the 
shares of the profits of each of the co-heirs should have been 
separately taxed was rejected by the income-tax authorities. 
The facts showed that the business was inherited by the heirs of 
0 and was carried on without break during the accounting years 
first by Land another and then by the receivers, that the nature 
of the business was such that it could not be divided up and that 
all the parties desired that the business should be carried on as 
one whole with a unity of control. 
Held, that on the finding that the business was carried on by 
the consent of all parties as one unit with unity of control, the 
co-heirs did form an association of persons within the meaning of 
s. 3 of the Indian Income-tax Act, 1922, and that the income of 
the business was assessable as the income of an association of 
persons ; and the mere fact that a suit was pending at the time 
for the administration of the estate of the deceased or for the 
separation of the shares of the co-heirs did not affect the 
incidence of taxation in the case. 
Commissioner of Income-tax, Bombay v. Indira Balkrishna, 
[1960] 3 S.C.R. 513, followed. 
z96z 
Mohamed 
Noor1'llah 
v. 
Commissioner of 
Jn,ome-tax, 
.'Madras 
Kapu• J. 
516 
SUPREME COURT REPORTS 
[1961] 
S. C. Mazumdar, Receiver, Trigunait Brothers' Estate v. Com-
missioner of Income-tax, (1947) 15 I.T.R. 484, disapproved in so 
far as it was contrary to the above decision of the Supreme 
Court. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeals 
Nos. 303 to 307 of 1960. 
Appeals by special leave from the judgment and 
order dated May 14, 1957, of the Madras High Court, 
in Case Referred No. 111of1953. 
R. Ganapathy Iyer and G. Gopalakrishnan for the 
appellant. 
K. N. Rajagopal Sastri and D. Gupta, for the 
respondent. 
1961. January 18. The Judgment of the Court was 
delivered by 
KAPUR, J.-These appeals are brought by special 
leave against the judgment and order of the High 
Court of Madras in an Income-tax reference under 
s. 66(1) of the Indian Income-tax Act, hereinafter 
termed the " Act". The question referred was :-
"Whether the income-tax assessment of the busi-
ness of ' Spade Clover Beedies ' belonging to the 
estate of the deceased and carried on during the 
previous years 1943 to 1946 as an association of 
persons for the assessment years 1944-45 to 1947-48 
is valid?!' 
And this question was decided in the affirmative and 
therefore against the appellants. 
The facts leading to the appeals are that one Khan 
Sahib Mohamed Oomer Sahib, who was carrying on 
the business of manufacture and sale of Spade Clover 
brand BeeG.ies, died on December 17, 1942, leaving a 
minor son Mohamed Noorullah (the appellant) by his 
pre-deceased wife, a widow, Luthfunnissa Begum, and 
four children by her who were all minors at the date 
of the death of Oomer Sahib. Noorullah through his 
next friend applied to sue in forma pauperis and duri1tg 
the pendency of those proceedings two

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