Aop
This query is : Resolved
11 October 2013
there are 3 members in the AOP , among them 2 are retiring and another 2 members are admitting . what are the consequences under imcometax act
13 October 2013
Hi
Since Income Tax Act has no definition , the meaning of Association of Person has to be understood from the meaning assigned to the term by Hon’ble Supreme Court which observed in the case of CIT v Indira Balkrishna (39 ITR 546) that an ‘association of persons’, must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section, which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains.
The Andhra Pradesh High Court, in the case of Deccan Wine and General Stores vCIT (106 ITR 111), laid down the principles governing an AOP by stating that it is clear that an association of persons does not mean any and every combination of persons; it is only when they associate themselves in income-producing activity that they become an association of persons. They must combine to engage in such an activity; the engagement must be pursuant to the combined will of the persons constituting the association; there must be a meeting of the minds, so to speak. In a nutshell, there must be a common design to produce income. If there is no common design, there is no association. Common interest is not enough. Production of income is not enough
The meaning , as culminates from different decision of Supreme Court and High court , of AOP is that an association of persons exist when following conditions are satisfied :
(i) Two or more persons joins ;
(ii) Voluntarily for ;
(iii) A common purpose or common action with object to produce profit or gains. However, the object to produce profit or gains is no longer a sine qua non with the explanation as discussed above;
(iv) and combine for in joint enterprise; and
(v) creates some kind of scheme for common management.
Since Income Tax Act has no definition , the meaning of Association of Person has to be understood from the meaning assigned to the term by Hon’ble Supreme Court which observed in the case of CIT v Indira Balkrishna (39 ITR 546) that an ‘association of persons’, must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section, which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains.
The Andhra Pradesh High Court, in the case of Deccan Wine and General Stores vCIT (106 ITR 111), laid down the principles governing an AOP by stating that it is clear that an association of persons does not mean any and every combination of persons; it is only when they associate themselves in income-producing activity that they become an association of persons. They must combine to engage in such an activity; the engagement must be pursuant to the combined will of the persons constituting the association; there must be a meeting of the minds, so to speak. In a nutshell, there must be a common design to produce income. If there is no common design, there is no association. Common interest is not enough. Production of income is not enough
The meaning , as culminates from different decision of Supreme Court and High court , of AOP is that an association of persons exist when following conditions are satisfied :
(i) Two or more persons joins ;
(ii) Voluntarily for ;
(iii) A common purpose or common action with object to produce profit or gains. However, the object to produce profit or gains is no longer a sine qua non with the explanation as discussed above;
(iv) and combine for in joint enterprise; and
(v) creates some kind of scheme for common management.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ITR 2 Short Term gain & Long term gain
- Itr 1 processing
- Reporting Income under Section 44ADA
- Off Market debit and credit transaction
- ITR returnFY25-26
- Share accounting-->fifo - capital gain - period as per fifo?
- ITR validation error - Balance sheet is not filled
- Form 10E u/s 89(1). Need clarification because experts opinions differ !!!!
- Bank Accounts in Balance Sheet for ITR 3
- INCOME TAX ON REDEVELOPEMENT OF FLAT
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
