The judgment of the court was delivered by

HEGDE J.---These companion appeals by certificate under section 66A(2) of the Indian Income-tax Act, 1922 (in short " the Act "), are directed against the decision of the Madras High Court in a tax reference under section 66(1) of the Act, relating to the assessment years 1958-59 and 1959-60.

Messrs. N. V. Shanmugham and Co., a firm, was carrying on business in the manufacture and sale of snuff under a deed of partnership dated April 20, 1955. Its partners were S. P. Ramiah Nadar, Murugavel Nadar and Shanmughavel Nadar. S. P. Mohan, a minor, had been admitted to the benefits of the partnership, his share in the net profits being 1/5th. The deed of partnership provided that the partnership could not be dissolved before August 31, 1955. But it was open to the partners to continue the partnership or enter into a fresh partnership on fresh, terms and conditions. On September 17, 1956, Ramiah Nadar filed a suit in the City Civil Court, Madras, for the dissolution of the partnership with effect from August 31, 1956, and for taking of accounts. He also applied for the appointment of a receiver to take charge of the business. On September 21, 1956, the court appointed three receivers two of whom were the partners of the firm, namely, Ramiah Nadar and Murugavel Nadar, and the third was an advocate by name Ram Mohan. The business of the firm had been stopped from September 1, 1956, to September 21, 1956. The court directed the receivers " to reopen and conduct the snuff business for the purposes of winding up, with powers to realise the outstandings and discharge the dues of the firm " subject to the following among other terms.

Clause 4.

The receivers can carry on the business of the partnership normally.

Clause 6.

All parties to have access to the books of the firm and to the business premises.

Clause 7.

All parties are entitled to get information relating to the conduct of the business from the receivers.

Clause 8.

The profits if any earned from September 1, 1956, will be treated as an asset of the firm subject to be divided between the parties in the manner set out in paragraph 10 of the deed dated April 20, 1955. The receiver or receivers shall not be entitled to any share in the profits of the management.

Clause 9.

The receivers will pay every month Rs. 1,500 to the plaintiff, Rs. 1,500 to the 1st defendant, Rs. 750 to the 2nd defendant and Rs. 750 to the 3rd defendant by his guardian from November 1, 1956 (owners of the dissolved firm).

Some time later the court appointed a commissioner for taking the accounts of the firm and for arranging the sale of the business as a going concern, but no sale took place. In the assessment year 1958-59, the business yielded a profit of Rs. 93,739. In the assessment year 1959-60, there was a profit of Rs. 1,54,393. In response to a notice from the Income-tax Officer, the receivers filed " nil " returns but showed the profits earned in the business in section D of the return. But they asserted that the income should be assessed in the hands of the beneficiaries as they are already assessees having other sources of income. The Income-tax Officer rejected that contention. He came to the conclusion that the business was carried on by an " association of persons " and as such no question of assessing the individual partners on their share of income at the rate applicable to them would arise, as contended by the receivers. The Appellate Assistant Commissioner rejected the appeal of the assessees and confirmed the order of the Income-tax Officer ; but, on a further appeal, the Tribunal came to the conclusion that the profits earned should be assessed to tax in the hands of the individual partners at the rates applicable to them. At the instance of the Commissioner of Income-tax, Madras, the Tribunal submitted the following question under section 66(1) of the Act for the opinion of the High Court :

" Whether the income of the business in snuff could be assessed on the receivers as an association of persons under section 10 or under section 41 of the Act ? "

The High Court answered that question in favour of the revenue.

The real point in controversy between the revenue and the assessees is whether the profits earned in the business should be considered as profits earned by an " association of persons " or whether it should be considered as having been earned by individuals. The receivers appointed by the court were merely the representatives of the real owners of the business, i.e., the erstwhile partners of the firm. The primary liability to pay the tax due was that of the real owners. The tax may be levied and recovered from the receivers under section 41(1) of the Act. To borrow the expression from the Income-tax Act, 1961, they are only representative assessees. The fact that there were three receivers did not make them an association of receivers. The three receivers jointly represented the real owners. The circumstance that there were three receivers was wholly irrelevant for the purpose of the assessment. There was no question of assessing the receivers as an " association of persons ". The real question is whether the persons whom the receivers represented constituted an " association of persons ". Further, in respect of business profits, all assessments to tax are done under section 3 read with section 10 of the Act. Section 3 imposes the charge and section 10, to the extent relevant for our present purpose, provides that tax shall be payable by the assessee under the head " profits and gains of business " in respect of the profits or gains of business carried on by him subject to the allowances allowed under sub-section (2) of that section. Section 41 empowers the revenue to levy the tax that could have been levied on the person who earned the profits of one or the other of his representatives mentioned in that section and recover the same from that representative " in the like manner and to the same amount as it would be leviable upon and recoverable " from the person on whose behalf such profits are recoverable and all the provisions of the Act shall apply accordingly. Section 41 of the Act does not impose any separate charge. It only empowers the revenue to levy and collect a tax due from a person or persons, from his or their representatives. Hence, there is no question of either the receivers being an " association of persons " or their being liable under section 10 or section 41 of the Act ". The liability of the receivers arose under section 41 read with section 10. The Tribunal wanted the opinion of the High Court on the question whether the profits in question should be considered to have been earned by an " association of persons " or by individuals. We shall proceed to answer that question.

Mr. M. C. Chagla, learned counsel for the assessee, contended that the liability of receivers is co-extensive with that of the beneficiaries and cannot in any case be a larger or wider liability. If the assessment is made on a receiver, whatever the nature of the profit, whatever the mode of computation, his liability to pay tax must be determined in accordance with section 41 of the Act ; that section is mandatory ; the tax payable by him on the profits earned can only be ascertained in accordance with the special provisions laid down in that section ; it is not open to the department to ignore the provisions of section 41 and levy tax on receivers in the same way as on an assessee who does not fulfil the character of a receiver. According to the counsel when an assessment is made under section 41 of the Act, it must be done under one of the heads mentioned in Chapter III of the Act and the provisions laid down with regard to computation of the income-tax must be carried out ; section 41 will come into play after the income has been so computed. In support of this contention, he relied on the decision of the Bombay High Court in Commissioner of Income-tax v. Balwantrai Jethalal Vaidya, which decision has been approved by this court in C. R. Nagappa v. Commissioner of Income-tax. Proceeding further the counsel urged that the assessment of the receivers should have been on the same basis as the erstwhile partners of the firm would have been assessed in respect of the p