Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment made on the receiver in the status of ‘AOP’ could not be sustained ?

High Court Of Madras

CIT vs. M.S. Menon

Sections 2(31), 22, 161

Asst. Year 1980-81

R. Jayasimha Babu & C. Nagappan, JJ.

T.C. No. 1002 of 1990

23rd August, 2001

Counsel Appeared

Mrs. Chitra Venkataraman, for the Revenue

JUDGMENT

C. NAGAPPAN, J. :

The substantial questions of law that arise in the present reference are as follows :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment made on the receiver in the status of ‘AOP’ could not be sustained ?

Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the letting out on hire Padmanabha Theatre for screening cinematograph films does not amount to carrying on of a business is sustainable in law ?

Whether, on the facts and in the circumstances and in the light of the return filed by the receiver himself for the asst. yr. 1980-81 admitting certain income as arising from business, the Tribunal was right in holding that there is no material to show that the receiver in fact has carried on any business ?

Whether, on the facts and in the circumstances of the case, the receiver could be said to have represented the individual interest of the various co-owners of the business and the assessment made on the receiver as a single unit is not sustainable ?”

2. A question of law similar to the above came up for consideration before this Court in the case of CIT vs. M.S. Menon in Tax Cases Nos. 1653 to 1665 of 1977 and 506 to 509 of 1981 and this Court has answered the reference against the Revenue. That decision is reported in (1987) 62 CTR (Mad) 160 : (1987) 168 ITR 125 (Mad) : TC 44R.477. The relevant portion in the headnote of that decision is extracted below : “The Court had appointed a receiver to realise the income from the theatre which was one of the assets of the partnership and to divide the same equally among the quondam partners. The order of the Court appointing the receiver directed the receiver not to carry on any business. The rents collected by the receiver by hiring the theatre could not be treated as income from property and not as income from business. In such circumstances, the receiver could not be assessed as an ‘AOP’ and he could be assessed only as an agent or as a trustee of the individuals who owned the theatre. Therefore, the assessment had to be made on the receiver on the individual shares of the quondam partners.”

Accordingly, we answer this reference against the Revenue and in favour of the assessee.

[Citation : 254 ITR 462]

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