M/S. MEERA AND COMP ANY, LUDHIANA ETC. vs. COMMISSIONER OF INCOME TAX, PUNJAB, J&K AND CHANDIGARH PATIALA

CIVIL APPEAL No. 1297/1980Supreme Court[1997] 2 S.C.R. 99111 March 1997Bench: 3 JudgesAuthor: B.P. JEEVAN REDDY, S.C. SEN, G.T. NANAVATI MEERA AND COMP ANY, LUDHIANA ETC.21 pages
AI SummaryDismissed

What were the facts?

Shri Prem Narain carried on business as Mis Meera & Co. and died intestate in August 1962, leaving behind his mother, widow, and three minor children. His assets, including the business, devolved upon his five legal heirs. The mother relinquished her interest. The widow continued the business as a single unit under the same name, on her behalf and on behalf of the three minor children, maintaining accounts and dividing profits annually. For assessment years 1963-64 to 1967-68, returns were filed describing the status as 'association of persons'. Later, it was contended that income should be apportioned among the four heirs. The Income-Tax Officer assessed the business as a 'body of individuals'. The Appellate Assistant Commissioner held the income assessable in the widow's individual capacity. The Income Tax Appellate Tribunal, with a Third Member's opinion, held the entity assessable as a 'body of individuals' under Section 4 r/w Section 2(31)(v) of the Act, dismissing the assessee's appeals. The High Court affirmed this, holding that 'body of individuals' has a wide interpretation and minors can be constituents even without legal capacity to contract.

What did the Supreme Court hold?

The Supreme Court dismissed the appeals. On the first issue, the Court held that when several individuals join together for the purpose of making profit, they can be described as a 'body of individuals'. The intention of the legislature is to tax combinations of individuals engaged in a joint enterprise, whether incorporated or not. A profit-yielding joint venture must be taxed as a single unit. The continuation of the business by the widow on behalf of herself and the minor sons, after inheriting it, demonstrated an organised activity jointly carried on to produce income, constituting a joint business venture. A minor can be a member of such a body. On the second issue, the Court held that Section 161 is an enabling provision. The charge imposed by Section 4 can be computed and recovered as laid down in the Act, including Sections 160, 161, and 166. When minors and their mother form a body to generate income, the levy of tax under Section 4 is on that body. The mother cannot insist on separate assessment of the joint venture's income when a joint business is carried on. The Court referred to and affirmed the principles laid down in Hotz Trust Simla v. The Commissioner of Income Tax and J. V. Saldhana v. The Commissioner of Income-tax, Madras.

What were the issues?

1. Whether, on the facts and in the circumstances, the Tribunal was correct in law in holding that Mis Meera & Co. constituted a 'body of individuals' and was assessable as such? (Question of law) 2. Whether, on the facts and in the circumstances, the Tribunal was correct in holding that the assessment of the body of individuals identified as Mis Meera & Co. should be made under Section 4 read with Section 2(31)(v) of the Income Tax Act, 1961, and not under Sections 160, 161, or 166? Assessee's contentions: The appellant argued that the mother and minor children did not form a 'body of individuals' and the business profits should have been apportioned and assessed in the hands of each heir individually. They contended that the special provisions relating to minors (Chapter XV) should override general provisions, and assessment should have been done under Sections 160 and 161 of the Act. Revenue's contentions: The judgment does not explicitly record the revenue's specific arguments on these issues, but their stance was in favour of assessing the entity as a 'body of individuals'.

Which sections of the Income-tax Act were involved?

Section 4,Section 2(31)(v),Section 160,Section 161,Section 166,Section 8,Section 164,Section 64(1)(i),Section 64(1)(iii)

AI-generated summary — verify with the full judgment below

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 1963-6

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 4

All 1,127 judgments and leading authorities on Section 4 →

Recent GST High Court judgments

Search GST case law →