Lawmatters.in

Section 4 of the Income Tax Act is the charging Section and it has imposed a tax on the income earned by a person in the previous year. ‘Person’ as per Section 2(31)(v) has been defined as ‘an association of persons or a body of individuals whether incorporated or not.

M/s Meera and Co., Ludhiana v. CIT, Punjab, J&K, Chandigarh, Patiala (1997) 4 SCC 677 at Page 683, Para. 11:
In the case of CIT v. Salem Distt. Urban Bank Ltd. a Bench of three Judges of the Madras High Court took the view that “association of individuals” in Section 3 of the Income Tax Act, 1922 would apply even to a corporate body which for the most part was composed of cooperative societies. On behalf of the appellant reliance was placed on the judgment in the case of CIT v. Ahmedabad Millowners’ Assn. where it was held that the expression “association of individuals” in Section 3 meant an association of human beings. Leach, C.J., considered the opinion expressed in Trustees of Sir Currimbhoy Ebrahim Baronetcy Trust v. CIT preferable to that expressed in the case of Ahmedabad Millowners’ Assn. and held that “association of individuals” did not mean an association of human beings only. Leach, C.J., observed:
“… If a corporate body created by a statute is an individual within the meaning of the section and I hold that it is — a cooperative society registered under the Cooperative Societies Act must fall within the same category. It is a corporate body and has perpetual succession. I consider that it is not reasonable to suppose that the Legislature intended that there should be a difference in the meaning of the word ‘individual’ and the plural ‘individuals’. If the word ‘individual’ includes a corporation, the words ‘association of individuals’ must embrace an association of corporate bodies, and therefore, the assessee is an ‘association of individuals’.”

Shri Malaprabha Coop. Sugar Factory Ltd. v. Union of India, (1994) 1 SCC 648, at page 670:
In the State of Maharashtra initially an ex-field advance is fixed uniformly for all cooperative sugar factories. At the end of the season, the actual working results are assessed and the entire profits are passed on to the cane growers as additional cane prices. Thus, the farmers get profits in the form of additional cane prices and this fluctuates widely from factory to factory. In view of this it can be categorically stated that actual cane prices are not available in Maharashtra, particularly for cooperative (sic) as it is of a profit sharing nature (excess over the initial ex-field advance).

Mund and Samont Co. (P) Ltd. v. CIT, (1970) 3 SCC 859, at Page 861-862, Para 9:
Mr Chagla contends that in striking an average for three years the Tribunal erred. Counsel contended that under Section 10(4-A) of the Act, the Income Tax Officer must reach a conclusion that the allowance was excessive or unreasonable having regard to the legitimate business needs of the Company and the benefit derived by or accruing to it therefrom. It is however for the tax-payer to establish by evidence that a particular allowance is justifiable. Apparently no evidence was tendered by the assessee relating to the duties of the Managing Director and the Deputy Managing Director, the services rendered by them, the manner in which the profits earned by the assessee were enhanced by reason of their special aptitude or qualifications, the legitimate business needs of the assessee and the benefit derived by or accruing to the assessee in consequence of the services rendered by the Managing Director and the Deputy Managing Director. In the absence of any such evidence, the finding recorded by the Income Tax Officer and confirmed by the Appellate Assistant Commissioner and the Tribunal must be accepted. We are unable to agree with Counsel for the assessee that even if the tax-payer does not produce any evidence in support of the claim for allowance, the Income Tax Officer must independently collect evidence and decide that the allowance claimed is excessive or unreasonable having regard to the legitimate business needs of the assessee before the power under Section 10(4-A) may be exercised.

U.P. Coop. Cane Unions Federations v. West U.P. Sugar Mills Assn.,(2004) 5 SCC 430, at Page 479, Para 59:
Per Venkatarama Reddi, J. (Dissenting)
Turning to first question, I find no statutory basis for the “State- advised cane price”. The very expression “advised” connotes that the State- advised price has no statutory flavour. If the fixation has been done in exercise of statutory power traceable to any provision in the U.P. Act, it would be most inapt to describe it as “advised price”. The statutorily fixed price can never take the form of advice. It binds, enforces obedience by providing for punishment or penal consequences and does not look for volition of the persons concerned for its compliance. But, that is not the case here. From year to year, the State Government has been announcing the “advised price” in the hope and expectation that the sugar factories in the private sector will also agree to pay that price.

U.P. Coop. Cane Unions Federations v. West U.P. Sugar Mills Assn.,(2004) 5 SCC 430, at Page 470, Para. 39:
…under the 1966 Order the Central Government only fixes the minimum price and it is always open to the State Government to fix a higher price. Under the enactments made by the State Legislatures, areas are reserved for the sugar factories and the cane-growers therein are compelled to supply sugarcane to them and therefore the State Government has incidental power to fix the price of sugarcane which will also be the statutory price. They further lay down that the Cane Commissioner can direct the cane-growers and the sugar factories to enter into agreements for purchase of sugarcane at a price fixed by the State Government and such agreements cannot be branded as having been obtained by force or compulsion.