Section 67A — 'Method of computing a member's share in income of AOP or BOI' — Chapter VI.
02. Sub-section structure
(1) Profit / loss apportionment; (2) Head-wise apportionment.
03. Operative trigger
Member of AOP / BOI where shares determinate and known.
04. Persons affected
AOP / BOI members.
05. Time anchor — PY / AY
Annual.
06. Income anchor
AOP / BOI income passes through to members.
07. Residential-status nexus
Each member independently.
08. Rate / charge mechanism
Member's slab; Chapter VII rebate available.
09. TDS / TCS interaction
Allocation per share.
10. Advance-tax obligation
Per member.
11. Presumptive provisions
Not applicable.
12. Exemption / deduction mechanism
Section 86 rebate at member level.
13. Refund / credit
Standard.
14. Return / disclosure reporting
AOP ITR-5; member's ITR with share disclosure.
15. Penalty exposure
Section 270A on incorrect share allocation.
16. Prosecution exposure
Section 277.
17. Cross-statute interplay
Indian Contract Act / Trust Act / partnership laws.
18. Repeal & saving — 1961 → 2025
Preserved.
HISTORICAL CONTEXT
Section 67A provides the operational framework for taxation of AOP / BOI members where shares are DETERMINATE AND KNOWN. The architecture: (a) AOP / BOI income is first computed at entity level; (b) Remuneration / interest paid to any member is deducted from entity income; (c) The balance is apportioned per share; (d) Member's share = apportioned profit PLUS the remuneration / interest paid to him.
This pass-through architecture is conceptually parallel to firm taxation under section 184-189A — but for AOP / BOI, which have different legal status. The head-wise apportionment under section 67A(2) preserves the character of income (if AOP earns HP + PGBP, members get their share head-wise).
Where shares are NOT determinate and known, section 167B kicks in — entire AOP income taxed at MMR (30% + surcharge + cess). The 'determinate' requirement is operationally important — preserve explicit share documentation.
Section 86 — Chapter VII rebate — operates at member level. The member's share of AOP income (which has already been taxed at AOP level) is rebated to avoid double taxation. The rebate is the proportionate AOP-level tax attributable to the member's share.
The transition to the Income-tax Act, 2025 preserves section 67A architecture.
Facts. The Department sought to apply a surcharge provision retrospectively to block-period assessments. The assessee contended that the amendment was substantive and could not have retrospective operation absent express legislative direction.
Issue. Whether amendments to taxing statutes operate prospectively unless the legislature has expressly or by necessary implication conferred retrospective effect.
HELD. The Constitution Bench reaffirmed the general rule against retrospectivity of taxing statutes. A taxing provision must be construed prospectively unless the language compels otherwise; mere insertion or substitution by amendment is not sufficient to deny vested rights.
“Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.”
Relevance. Anchor authority for any argument that an amendment to a charging or computational provision must apply only from the AY notified — useful in transitional disputes around FA 2025 and the 1961 → 2025 changeover.
▸ Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 ; (2000) 1 SCR 1 (Supreme Court)
Facts. A municipal levy was challenged on the ground that the charging provision did not clearly specify the rate, the persons charged, and the measure of tax.
Issue. Whether a tax can be imposed in the absence of a clear, unambiguous charging provision identifying the subject, measure, rate, and incidence.
HELD. Article 265 demands that tax be levied only by clear authority of law. The four components — taxable event, person, rate, and measure — must be clearly discernible from the charging provision; ambiguity is fatal to the levy.
“The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions, particularly when the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose other than what is given expression to.”
Relevance. Foundational authority on the rigour required of charging sections — underpins arguments that ambiguous deeming fictions, surcharge formulas, and rate prescriptions must be strictly construed.
Facts. Section 52(2) (since deleted) deemed sale consideration to be FMV where FMV exceeded the declared consideration by 15%. The Department applied it on a literal reading even when the assessee had not in fact received more than the declared price.
Issue. Whether a deeming provision in a charging schema can be construed literally where its plain reading produces a result manifestly contrary to legislative object.
HELD. The Court read down section 52(2) to apply only where the assessee had actually received consideration in excess of the declared sum. A literal construction yielding absurd or unjust results must yield to an object-based interpretation; the CBDT's contemporaneous Circular No. 96 was held binding on the Revenue.
“It is well settled that a literal construction of a statutory provision ought not to be adopted if it produces a manifestly unjust result… Where a literal construction creates an anomaly, the courts will adopt that construction which avoids the anomaly.”
Relevance. Anchor authority for purposive construction of deeming fictions across the 1961 Act — applies wherever a deeming clause (e.g., s. 50C, s. 56(2)(x), s. 2(22)(e)) yields a result contrary to legislative purpose.
▸ Commissioner of Income-tax v. B.C. Srinivasa Setty (1981) 128 ITR 294 ; (1981) 2 SCC 460 (Supreme Court)
Facts. The assessee transferred goodwill of a self-generated nature. The Department sought to tax the consideration as capital gains; the assessee contended that no cost of acquisition could be ascertained, hence the computation provisions failed.
Issue. Whether capital gains arises where the asset has no ascertainable cost of acquisition — i.e., whether the charging provision can be invoked independently of a workable computation provision.
HELD. The charging section and the computation provisions form an integrated code; if the computation provisions cannot apply (because the cost is incapable of ascertainment), the charge itself fails. Self-generated goodwill is not taxable as capital gains.
“The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.”
Relevance. Anchor for the 'charge fails when computation fails' doctrine — useful in valuation impasses, self-generated assets, and computational ambiguity (though now largely overtaken by section 55(2)(a)(i) deeming cost as nil).
▸ Commissioner of Income-tax v. Excel Industries Ltd. (2013) 358 ITR 295 ; (2014) 2 SCC 1 (Supreme Court)
Facts. The assessee, an export-oriented unit, received DEPB licences and Advance Licences. The Department sought to tax the value of these incentives on accrual at the time of issue; the assessee contended that no income accrued until the licence was actually used or sold.
Issue. When does income accrue under the mercantile system — at the moment a right is created, or at the moment the right becomes enforceable as a debt?
HELD. Income accrues only when there is a corresponding liability of the other party. Mere creation of a contingent or unmatured right does not amount to accrual; the right must crystallise into a debt before tax incidence.
“Income accrues when there arises in favour of the assessee a debt — when there is a corresponding liability of the other party to pay the amount. It is not enough that the right has come into being; the right must ripen into a debt.”
Relevance. Anchor for accrual-vs-receipt timing disputes under section 5 / section 145 — relevant for retention monies, export incentives, contingent claim settlements, milestone-based contracts.
CBDT CIRCULARS — ECOSYSTEM
▸ CBDT Circular No. 14(XL-35) of 1955 dated 11 April 1955
Subject. Duty of officers to assist assessees in claiming and securing relief
Substance. Foundational circular directing that the AO should not exploit assessee ignorance to deny legitimate reliefs; officer is required to draw attention to refunds or reliefs to which the assessee is entitled. The circular has been judicially noted in several appellate decisions and remains operative for first-appellate practice.
Substance. Explained the FA 1987 / FA 1989 amendments unifying the previous year with the financial year preceding the AY, including transitional provisions for assessees with different accounting years. Useful in any controversy on the timing of accrual / chargeability for early post-1989 AYs.
▸ CBDT Circular No. 5 of 2014 dated 11 February 2014
Subject. Section 14A — dis-allowance even where no exempt income earned (since modulated)
Substance. Initially directed AOs to apply Rule 8D disallowance under section 14A even where no exempt income was earned in the year; subsequently modulated by Cheminvest (Del HC) and Maxopp (SC). FA 2022 amendment to section 14A re-asserted the position but remains under litigation.
WORKED EXAMPLES
Illustration — Illustration 1 — Standard AOP computation
Facts. ABC AOP — 3 members (1/3 each); PGBP income Rs 30 L; Member A paid Rs 6 L salary.
Computation.
S. 67A(1)(a) — Deduct Rs 6 L salary; balance Rs 24 L.
Apportion Rs 24 L / 3 = Rs 8 L per member.
S. 67A(1)(b) — Member A: Rs 8 L + Rs 6 L (salary) = Rs 14 L share.
Members B, C: Rs 8 L each.
S. 67A(2) — Head-wise apportionment (PGBP).
S. 86 — Rebate for each member proportionate to AOP-level tax.
Result. Section 67A pass-through with explicit member-level allocation.
Illustration — Illustration 2 — AOP with mixed-head income
Facts. DEF AOP — HP income Rs 5 L + PGBP Rs 10 L = total Rs 15 L. Two members (50:50).
Computation.
Each member's share — Rs 2.5 L HP + Rs 5 L PGBP = Rs 7.5 L total.
S. 67A(2) — Head-wise apportionment preserved.
Each member's HP head and PGBP head separately reported.
Result. Section 67A(2) head-wise allocation preserves character of income.
SECTION 67A — METHOD OF COMPUTING A MEMBER'S SHARE IN INCOME OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
STATUTORY TEXT (as in force, Income-tax Act, 1961)
Marginal heading: Method of computing a member's share in income of association of persons or body of individuals.
67A. (1) In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a cooperative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :—
(a) any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body;
(b) where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member's share in the income of the association or body;
(c) where the amount apportioned to a member under clause (a) is a loss, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the member's share in the income of the association or body.
(2) The share of a member in the income or loss of the association or body, as computed under sub-section (1), shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the association or body has been determined under each head of income.
(3) Any interest paid by a member on capital borrowed by him for the purposes of investment in the association or body shall, in computing his share chargeable under the head 'Profits and gains of business or profession' in respect of his share in the income of the association or body, be deducted from his share.
Explanation.—In this section, 'paid' has the same meaning as is assigned to it in clause (2) of section 43.
A. SECTION COMMENTARY
A.1 Structural position
Section 67A is the computation companion to section 86. Where section 86 governs whether a member's share in the income of an AOP/BOI is taxable in the member's hands, section 67A prescribes how that share is computed. It applies where the shares of the members are determinate and known and the AOP/BOI is not a company, a co-operative society or a registered society. It operates with section 86 (relief from tax on the member's share), section 167B (the rate at which the AOP/BOI is itself charged, including the maximum marginal rate where members' shares are indeterminate or where a member's other income exceeds the basic exemption) and section 2(31)(v)/(vi).
The provision is the AOP/BOI analogue of the now-omitted section 67 (which computed a partner's share in a firm before the firm-taxation regime changed in 1992-93). Its essential function is to translate the AOP/BOI's computed total income into each member's share, after first stripping out and then re-attributing the interest, salary, bonus, commission or remuneration paid to members.
A.2 Provision taxonomy
Sub-section (1) lays down a three-step mechanism. Clause (a): deduct from the AOP/BOI's total income the interest, salary, bonus, commission or remuneration paid to any member, and apportion the balance among members in their profit-sharing proportions. Clause (b): if the apportioned amount is a profit, add back to that member the remuneration/interest etc. paid to him — the sum is his share. Clause (c): if the apportioned amount is a loss, adjust (set off) against that loss the remuneration/interest etc. paid to him — the result is his share.
Sub-section (2) preserves the head-wise character of the share: the member's share is apportioned under the various heads in the same manner as the AOP/BOI's income or loss was determined head-wise. Sub-section (3) allows a member a deduction, against his business-head share, of interest paid by him on capital borrowed for investment in the AOP/BOI. The Explanation imports the meaning of 'paid' from section 43(2).
The interaction with section 40(ba) at the AOP/BOI level is important: amounts of interest, salary, bonus, commission or remuneration paid by the AOP/BOI to a member are disallowed in computing the AOP/BOI's income under section 40(ba); section 67A then re-attributes those very amounts to the member's share. The two provisions are mirror images and must be applied consistently.
A.3 Core doctrinal themes
Three themes recur. (i) The threshold of AOP/BOI existence — section 67A presupposes a genuine AOP/BOI within section 2(31); a mere co-ownership or joint receipt of income is not an AOP, and section 67A does not arise. (ii) Determinate and known shares — section 67A applies only where the members' shares are determinate; where they are indeterminate, section 167B(1) charges the AOP at the maximum marginal rate and the section 67A/section 86 mechanism is displaced. (iii) Single-point taxation — AOP/BOI income is assessed either in the AOP's hands or, where appropriate, in the members' hands, and section 67A is the device that quantifies the member's share so that section 86 can relieve it from a second incidence of tax.
A.4 Legislative evolution / FA amendment trail
Section 67A was inserted as part of the AOP/BOI rationalisation that accompanied the introduction of sections 86 (recast), 167B and the firm-taxation reforms (the Direct Tax Laws (Amendment) Act, 1989 and the Finance Act, 1992, broadly w.e.f. 1-4-1993), replacing the earlier scheme. Since then the computation mechanism has been stable. Section 67A was not amended by the Finance Act, 2023, 2024, 2025 or 2026. (Editors should verify precise insertion/commencement dates against the bare-Act footnotes before publication.)
A.5 CA practitioner pointers
(1) Compute at the AOP/BOI level first. Determine the AOP/BOI's total income head-wise, disallow member remuneration/interest under section 40(ba), then run the section 67A(1)(a)-(c) mechanism to arrive at each member's share.
(2) Preserve head-wise character (sub-section 2). The member's share retains the head-wise composition of the AOP/BOI's income; this matters for set-off, for the member's own deductions, and for rate.
(3) Claim the member's borrowing-interest deduction (sub-section 3) only against the business-head share, and only where the capital was borrowed for investment in the AOP/BOI.
(4) Read section 67A with section 86 and section 167B together: MMR on the AOP under section 167B triggers section 86 proviso (a) (full exclusion of the share); normal-rate assessment triggers proviso (b) (inclusion for rate). Members that are companies, co-operative societies or registered societies are outside the section 67A relief-scheme and their share remains taxable.
B. FA 2026 IMPACT NOTE
Section 67A of the Income-tax Act, 1961 is NOT amended by the Finance Act, 2026. The FA 2026 changes operate on unrelated provisions and leave the AOP/BOI share-computation mechanism untouched.
Consequence for case law: the authorities below continue to be good law for assessments under the 1961 Act, including AY 2025-26 and AY 2026-27. The companion section 86 (Chapter VII) is likewise unamended.
Transition note: the Income-tax Act, 2025 (Act No. 7 of 2025) commences on 1 April 2026 and repeals the 1961 Act subject to the saving and transitional provisions. Pending proceedings, assessments and appeals for assessment years up to AY 2026-27 continue to be governed by the 1961 Act; the authorities digested below remain good law for those years. Practitioners should map the provision to its corresponding section in the 2025 Act when advising for tax years governed by the new Act.
C. CASE LAW — CLUSTERED BY ISSUE
Cluster C-1 : Whether an AOP/BOI exists — the threshold for section 67A
CIT v. Indira Balkrishna (1960) 39 ITR 546 (SC)
Facts: On her husband's death, the assessee (one of three widows) succeeded jointly to an estate yielding income from shares, deposits and house property; the Revenue assessed the three widows together as an association of persons.
Issue: The meaning of 'association of persons', and whether co-heirs who merely receive income jointly constitute an AOP.
Held: The Supreme Court held that an association of persons means an association in which two or more persons join in a common purpose or common action with the object of producing income, profits or gains; co-heirs merely receiving income from property held in common are not an AOP.
Ratio: Common purpose / common action with the object of producing income is the defining feature of an AOP.
Relevance: Section 67A computes a share only where a genuine AOP/BOI exists; absent a common income-producing purpose there is no AOP and no section 67A computation.
G. Murugesan & Bros. v. CIT (1973) 88 ITR 432 (SC)
Facts: Shares were held jointly and dividends received jointly by members of a family group, whom the Revenue sought to assess as an AOP.
Issue: Whether mere joint holding of shares and joint receipt of dividends, without volitional combination, makes the co-holders an AOP.
Held: The Supreme Court held that an AOP can be formed only where two or more persons voluntarily combine for a common purpose to produce income; volition is an essential ingredient. Joint receipt of dividends without joint income-producing activity does not create an AOP.
Ratio: Volition — a voluntary combination for a common income-producing purpose — is the sine qua non of an AOP.
Relevance: Fixes the outer boundary of section 67A: without volitional combination there is no AOP/BOI to whose members section 67A applies.
CIT v. Govindbhai Mamaiya (2014) 367 ITR 498 (SC)
Facts: Three brothers inherited agricultural land which was compulsorily acquired; enhanced compensation with interest was awarded. The Assessing Officer assessed the brothers as an AOP.
Issue: Whether co-heirs receiving acquisition compensation are an AOP, and the correct status of assessment.
Held: The Supreme Court held that, no association having been formed by the volition of the parties for the purpose of generating income, the brothers were assessable as 'individuals' (co-owners with definite and ascertainable shares), not as an AOP.
Ratio: Inheritance and co-ownership, absent a volitional income-producing combination, yield individual status, not an AOP.
Relevance: A mis-characterised co-ownership defeats both the AOP assessment and the section 67A share computation premised upon it.
Meera & Co. v. CIT (1997) 224 ITR 635 (SC)
Facts: On the death of a sole proprietor, the business was continued by his widow and minor children; the status in which the continuing concern was to be assessed was in question.
Issue: The tests for an AOP, and whether a 'body of individuals' is something wholly distinct from an 'association of persons'.
Held: The Supreme Court (11 March 1997) reiterated that an AOP is an association formed by the volition of the parties to produce income; where organised activity is jointly carried on to earn income, it is assessable as that of an AOP/BOI, and a BOI is not something entirely distinct from an AOP for this purpose.
Ratio: Reaffirms the volition / common-purpose test and clarifies the overlap between AOP and BOI.
Relevance: Identifies precisely the entities whose members' shares fall to be computed under section 67A.
Cluster C-2 : Single-point taxation — the right person to be assessed (the premise of section 67A/section 86)
ITO v. Ch. Atchaiah (1996) 218 ITR 239 (SC)
Facts: In respect of an association's income the Assessing Officer in some years assessed the members and later sought to assess the association itself, raising the question of the officer's power to choose the assessee under the 1961 Act.
Issue: Whether, under the Income-tax Act, 1961, the Assessing Officer retains the 1922-Act 'option' to assess either the AOP or its members.
Held: The Supreme Court held that, unlike under the 1922 Act, the Assessing Officer has no option under the 1961 Act: he must tax the 'right person' — the person who, according to law, is liable in respect of the particular income — and that person alone. Where the income is that of the AOP, it must be assessed in the AOP's hands.
Ratio: Under the 1961 Act the correct assessee must be taxed; AOP income belongs to and must be assessed in the AOP's hands.
Relevance: The doctrinal premise of section 67A read with section 86: AOP income is assessed in the AOP's hands and the member's computed share is then relieved from a second incidence of tax.
Facts: Three persons carried on a joint venture; the officer first assessed each on his one-third share and thereafter sought to assess the same income in the hands of the unregistered firm/association.
Issue: Under the 1922 Act, may the same income be taxed both in the members' hands and in the AOP's hands?
Held: The Supreme Court held that under the 1922 Act the officer had an option to assess either the AOP/unregistered firm or the members, but having assessed the members he could not tax the same income again in the firm/association's hands. The same income cannot be taxed twice.
Ratio: Single-point taxation — the same income cannot be charged in both the AOP's and the members' hands.
Relevance: Establishes the historical baseline of single-point taxation that section 67A (computation) and section 86 (relief) now secure by statute.
Editorial note on sourcing
Statutory text reproduced from the bare Act (Income-tax Act, 1961 as amended by the Finance Act, 2025; no Finance Act, 2026 change to this section). Case citations verified against public law databases (Indian Kanoon / ITAT Online / LiveLaw / Taxscan / Taxmann) on 29 May 2026. The FA 2026 position is verified against the project Finance Act 2026 Amendment Tracker. No authority has been included that the editor could not source.
STATUTORY ARCHITECTURE — 18-ROW MAP
01. Section & marginal note
Section 67A — 'Method of computing a member's share in income of AOP or BOI' — Chapter VI.
02. Sub-section structure
(1) Profit / loss apportionment; (2) Head-wise apportionment.
03. Operative trigger
Member of AOP / BOI where shares determinate and known.
04. Persons affected
AOP / BOI members.
05. Time anchor — PY / AY
Annual.
06. Income anchor
AOP / BOI income passes through to members.
07. Residential-status nexus
Each member independently.
08. Rate / charge mechanism
Member's slab; Chapter VII rebate available.
09. TDS / TCS interaction
Allocation per share.
10. Advance-tax obligation
Per member.
11. Presumptive provisions
Not applicable.
12. Exemption / deduction mechanism
Section 86 rebate at member level.
13. Refund / credit
Standard.
14. Return / disclosure reporting
AOP ITR-5; member's ITR with share disclosure.
15. Penalty exposure
Section 270A on incorrect share allocation.
16. Prosecution exposure
Section 277.
17. Cross-statute interplay
Indian Contract Act / Trust Act / partnership laws.
18. Repeal & saving — 1961 → 2025
Preserved.
HISTORICAL CONTEXT
Section 67A provides the operational framework for taxation of AOP / BOI members where shares are DETERMINATE AND KNOWN. The architecture: (a) AOP / BOI income is first computed at entity level; (b) Remuneration / interest paid to any member is deducted from entity income; (c) The balance is apportioned per share; (d) Member's share = apportioned profit PLUS the remuneration / interest paid to him.
This pass-through architecture is conceptually parallel to firm taxation under section 184-189A — but for AOP / BOI, which have different legal status. The head-wise apportionment under section 67A(2) preserves the character of income (if AOP earns HP + PGBP, members get their share head-wise).
Where shares are NOT determinate and known, section 167B kicks in — entire AOP income taxed at MMR (30% + surcharge + cess). The 'determinate' requirement is operationally important — preserve explicit share documentation.
Section 86 — Chapter VII rebate — operates at member level. The member's share of AOP income (which has already been taxed at AOP level) is rebated to avoid double taxation. The rebate is the proportionate AOP-level tax attributable to the member's share.
The transition to the Income-tax Act, 2025 preserves section 67A architecture.
FINANCE ACT AMENDMENT TIMELINE
■ FA 1962 — Section 67A came into force.
■ FA 1989 — AOP / BOI framework refined.
■ FA 2002 — Section 167B MMR framework.
■ FA 2025 — No substantive change.
■ Income-tax Act, 2025 — Section 67A successor, operative 1-4-2026.
JUDICIAL EVOLUTION — VERIFIED LANDMARK AUTHORITIES
▸ Commissioner of Income-tax v. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 ; (2015) 1 SCC 1 (Supreme Court — 5-Judge Constitution Bench)
Facts. The Department sought to apply a surcharge provision retrospectively to block-period assessments. The assessee contended that the amendment was substantive and could not have retrospective operation absent express legislative direction.
Issue. Whether amendments to taxing statutes operate prospectively unless the legislature has expressly or by necessary implication conferred retrospective effect.
HELD. The Constitution Bench reaffirmed the general rule against retrospectivity of taxing statutes. A taxing provision must be construed prospectively unless the language compels otherwise; mere insertion or substitution by amendment is not sufficient to deny vested rights.
“Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.”
Relevance. Anchor authority for any argument that an amendment to a charging or computational provision must apply only from the AY notified — useful in transitional disputes around FA 2025 and the 1961 → 2025 changeover.
▸ Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 ; (2000) 1 SCR 1 (Supreme Court)
Facts. A municipal levy was challenged on the ground that the charging provision did not clearly specify the rate, the persons charged, and the measure of tax.
Issue. Whether a tax can be imposed in the absence of a clear, unambiguous charging provision identifying the subject, measure, rate, and incidence.
HELD. Article 265 demands that tax be levied only by clear authority of law. The four components — taxable event, person, rate, and measure — must be clearly discernible from the charging provision; ambiguity is fatal to the levy.
“The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions, particularly when the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose other than what is given expression to.”
Relevance. Foundational authority on the rigour required of charging sections — underpins arguments that ambiguous deeming fictions, surcharge formulas, and rate prescriptions must be strictly construed.
▸ K.P. Varghese v. Income-tax Officer, Ernakulam (1981) 131 ITR 597 ; (1981) 4 SCC 173 (Supreme Court — 3-Judge Bench)
Facts. Section 52(2) (since deleted) deemed sale consideration to be FMV where FMV exceeded the declared consideration by 15%. The Department applied it on a literal reading even when the assessee had not in fact received more than the declared price.
Issue. Whether a deeming provision in a charging schema can be construed literally where its plain reading produces a result manifestly contrary to legislative object.
HELD. The Court read down section 52(2) to apply only where the assessee had actually received consideration in excess of the declared sum. A literal construction yielding absurd or unjust results must yield to an object-based interpretation; the CBDT's contemporaneous Circular No. 96 was held binding on the Revenue.
“It is well settled that a literal construction of a statutory provision ought not to be adopted if it produces a manifestly unjust result… Where a literal construction creates an anomaly, the courts will adopt that construction which avoids the anomaly.”
Relevance. Anchor authority for purposive construction of deeming fictions across the 1961 Act — applies wherever a deeming clause (e.g., s. 50C, s. 56(2)(x), s. 2(22)(e)) yields a result contrary to legislative purpose.
▸ Commissioner of Income-tax v. B.C. Srinivasa Setty (1981) 128 ITR 294 ; (1981) 2 SCC 460 (Supreme Court)
Facts. The assessee transferred goodwill of a self-generated nature. The Department sought to tax the consideration as capital gains; the assessee contended that no cost of acquisition could be ascertained, hence the computation provisions failed.
Issue. Whether capital gains arises where the asset has no ascertainable cost of acquisition — i.e., whether the charging provision can be invoked independently of a workable computation provision.
HELD. The charging section and the computation provisions form an integrated code; if the computation provisions cannot apply (because the cost is incapable of ascertainment), the charge itself fails. Self-generated goodwill is not taxable as capital gains.
“The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.”
Relevance. Anchor for the 'charge fails when computation fails' doctrine — useful in valuation impasses, self-generated assets, and computational ambiguity (though now largely overtaken by section 55(2)(a)(i) deeming cost as nil).
▸ Commissioner of Income-tax v. Excel Industries Ltd. (2013) 358 ITR 295 ; (2014) 2 SCC 1 (Supreme Court)
Facts. The assessee, an export-oriented unit, received DEPB licences and Advance Licences. The Department sought to tax the value of these incentives on accrual at the time of issue; the assessee contended that no income accrued until the licence was actually used or sold.
Issue. When does income accrue under the mercantile system — at the moment a right is created, or at the moment the right becomes enforceable as a debt?
HELD. Income accrues only when there is a corresponding liability of the other party. Mere creation of a contingent or unmatured right does not amount to accrual; the right must crystallise into a debt before tax incidence.
“Income accrues when there arises in favour of the assessee a debt — when there is a corresponding liability of the other party to pay the amount. It is not enough that the right has come into being; the right must ripen into a debt.”
Relevance. Anchor for accrual-vs-receipt timing disputes under section 5 / section 145 — relevant for retention monies, export incentives, contingent claim settlements, milestone-based contracts.
CBDT CIRCULARS — ECOSYSTEM
▸ CBDT Circular No. 14(XL-35) of 1955 dated 11 April 1955
Subject. Duty of officers to assist assessees in claiming and securing relief
Substance. Foundational circular directing that the AO should not exploit assessee ignorance to deny legitimate reliefs; officer is required to draw attention to refunds or reliefs to which the assessee is entitled. The circular has been judicially noted in several appellate decisions and remains operative for first-appellate practice.
▸ CBDT Circular No. 549 dated 31 October 1989
Subject. Explanatory notes — Finance Act 1989 amendments (incl. PY unification)
Substance. Explained the FA 1987 / FA 1989 amendments unifying the previous year with the financial year preceding the AY, including transitional provisions for assessees with different accounting years. Useful in any controversy on the timing of accrual / chargeability for early post-1989 AYs.
▸ CBDT Circular No. 5 of 2014 dated 11 February 2014
Subject. Section 14A — dis-allowance even where no exempt income earned (since modulated)
Substance. Initially directed AOs to apply Rule 8D disallowance under section 14A even where no exempt income was earned in the year; subsequently modulated by Cheminvest (Del HC) and Maxopp (SC). FA 2022 amendment to section 14A re-asserted the position but remains under litigation.
WORKED EXAMPLES
Illustration — Illustration 1 — Standard AOP computation
Facts. ABC AOP — 3 members (1/3 each); PGBP income Rs 30 L; Member A paid Rs 6 L salary.
Computation.
S. 67A(1)(a) — Deduct Rs 6 L salary; balance Rs 24 L.
Apportion Rs 24 L / 3 = Rs 8 L per member.
S. 67A(1)(b) — Member A: Rs 8 L + Rs 6 L (salary) = Rs 14 L share.
Members B, C: Rs 8 L each.
S. 67A(2) — Head-wise apportionment (PGBP).
S. 86 — Rebate for each member proportionate to AOP-level tax.
Result. Section 67A pass-through with explicit member-level allocation.
Illustration — Illustration 2 — AOP with mixed-head income
Facts. DEF AOP — HP income Rs 5 L + PGBP Rs 10 L = total Rs 15 L. Two members (50:50).
Computation.
Each member's share — Rs 2.5 L HP + Rs 5 L PGBP = Rs 7.5 L total.
S. 67A(2) — Head-wise apportionment preserved.
Each member's HP head and PGBP head separately reported.
Result. Section 67A(2) head-wise allocation preserves character of income.
Illustration — Illustration 3 — Indeterminate shares — s. 167B framework
Facts. GHI AOP — shares unclear / informal arrangement.
Computation.
S. 67A — Not applicable (shares not determinate).
S. 167B — Entire AOP income taxed at MMR (30% + surcharge + cess).
Members do not get s. 67A pass-through.
Documentation of share arrangement is critical for preserving s. 67A.
Result. Indeterminate-share AOP faces MMR taxation; documentation discipline essential.
Illustration — Illustration 4 — Section 86 Chapter VII rebate
Facts. JKL AOP — Member J's share Rs 5 L; AOP-level tax on Rs 5 L proportionate.
Computation.
S. 86 — Rebate at member level for AOP-level tax already paid.
Member J pays own slab tax on Rs 5 L; rebate reduces by AOP-level tax allocated.
Prevents double taxation.
Result. Section 86 rebate operationalises pass-through nature.
Illustration — Illustration 5 — AOP loss apportionment
Facts. MNO AOP — net loss Rs 6 L. Three members (1/3 each).
Computation.
S. 67A — Apportion loss Rs 2 L per member.
Each member can set off Rs 2 L AOP-share loss against own income under s. 70-71.
Loss carry-forward — at AOP level (s. 72).
Result. AOP losses pass through to members for current-year set-off.
PRACTITIONER PLANNING NOTES
■ Books of accounts maintenance discipline — comprehensive ledger / cash book / bank book.
■ Identity-genuineness-creditworthiness of source — three-prong burden under s. 68-69D.
■ PAN + bank statements + ITR copies of creditors — preserve for source verification.
■ Section 115BBE — 60% flat rate + 25% surcharge + cess = effective ~77% (FA 2016 onwards).
■ Section 271AAC — penalty in s. 68-69D additions when not voluntarily disclosed.
■ Section 270A under-reporting / mis-reporting penalty.
■ Search assessment — section 132 read with s. 115BBE.
■ Demonetisation deposits — special scrutiny framework (Operation Clean Money + circulars).
■ Cash deposits > Rs 2.5 L per single deposit — AIS-flagged; preserve source evidence.
■ Share-capital / share-premium scrutiny — section 56(2)(viib) angel tax overlay.
■ Documentation discipline — 7-17 years for foreign-asset related; standard 7 years for domestic.
■ Bank statements + cash book + voucher reconciliation — quarterly review.
■ Section 273B reasonable-cause defence for procedural lapses.
■ Counter-party affidavits / confirmations — preserve.
■ Annual practitioner review of s. 68-69D exposure.
■ Determinate-and-known shares — explicit documentation; AOP deed / MOU.
■ Section 67A vs s. 167B — share-determination drives the outcome.
■ Member-level remuneration — preserve for s. 67A(1)(b) addition.
■ Section 86 rebate — preserve AOP-level tax allocation evidence.
■ Head-wise apportionment — important for HP / PGBP / OS character.
■ AOP ITR-5 + member's ITR — separate filings.
■ Loss apportionment — AOP / BOI losses pass through.
LITIGATION DEFENCE
■ Three-prong test — identity / genuineness / creditworthiness; burden on assessee initially, shifts to AO.
■ Strict construction — Mathuram Agrawal anchor.
■ Object-based interpretation — K.P. Varghese.
■ Prospective amendment — Vatika Township for FA 2016 / FA 2017 enhanced rates.
■ Reliance Petroproducts anchor — bona-fide claim not concealment.
■ Excel Industries accrual — for receipt-timing defences.
■ GKN Driveshafts — for s. 148 reassessment-procedure defence.
■ Calcutta Discount Article 226 — for jurisdictional challenges.
■ Documentary evidence defence — bank statements / PAN / ITR / affidavit.
■ Source-of-source — preserve creditor's source documentation.
■ Section 115BBE retrospectivity — defend pre-FA 2016 transactions.
■ Section 271AAC penalty defence — preserve voluntary disclosure evidence.
■ Section 273B reasonable-cause defence.
■ Section 270A bona-fide-claim defence.
■ Beneficial circulars — UCO Bank anchor.
■ Demonetisation context defence — preserve bank deposit reconciliation evidence.
■ Determinate-share defence — produce AOP / BOI deed.
■ Section 67A(1)(b) member remuneration — preserve evidence.
■ Section 86 rebate — preserve AOP tax payment evidence.
■ Head-wise apportionment defence.
■ Section 167B MMR challenge — argue shares are determinate.
■ Family settlement / partnership distinction — case-fact specific.
PROCEDURE
Step 1. Confirm AOP / BOI status
Per legal documentation.
Step 2. Verify shares determinate + known
Section 67A vs s. 167B.
Step 3. Compute AOP / BOI total income
Head-wise.
Step 4. Deduct member remuneration / interest
s. 67A(1)(a).
Step 5. Apportion balance per share
s. 67A(1)(a).
Step 6. Add back member-specific remuneration
s. 67A(1)(b).
Step 7. Head-wise apportionment
s. 67A(2).
Step 8. AOP / BOI files ITR-5
At entity level.
Step 9. Each member's ITR includes share
Head-wise.
Step 10. Section 86 rebate at member level
Avoid double taxation.
Step 11. TDS allocation per share
Form 26AS.
Step 12. Advance tax per member + AOP
Separate quarterly.
Step 13. Self-assessment u/s 140A
Per member.
Step 14. Documentation 7 years
AOP / BOI deed + share evidence.
Step 15. Annual review
FA changes.
PRACTITIONER CHECKLIST
☐ AOP / BOI status confirmed.
☐ Shares determinate + known.
☐ AOP total income computed.
☐ Member remuneration deducted.
☐ Per-share apportionment.
☐ Member remuneration added back.
☐ Head-wise apportionment.
☐ AOP ITR-5 filed.
☐ Each member's ITR with share.
☐ Section 86 rebate claimed.
☐ TDS allocation per share.
☐ Advance tax per member + AOP.
☐ Self-assessment u/s 140A.
☐ Documentation 7 years.
☐ Section 167B alternative considered.
☐ Section 270A disclosure.
☐ Section 273B defence prepared.
☐ Loss apportionment if applicable.
☐ Annual FA update.
CROSS-REFERENCES
▸ Section 2(31) — Person definition.
▸ Section 4 — Charge.
▸ Section 14 — Heads.
▸ Section 28(v) — Partner remuneration parallel.
▸ Section 40(b) — Firm-level limits parallel.
▸ Section 67A — THIS SECTION.
▸ Section 70-71 — Set-off (pass-through losses).
▸ Section 72 — Carry-forward (AOP level).
▸ Section 86 — Chapter VII rebate.
▸ Section 139 — Return.
▸ Section 167B — AOP MMR (indeterminate shares).
▸ Section 184-189A — Firm framework parallel.
▸ Section 199 — TDS credit.
▸ Section 270A — Penalty.
▸ Income-tax Rules — Rule 16 / ITR-5.
▸ ITR-5 — AOP / BOI return.
▸ Form 26AS — TDS reconciliation.
▸ Indian Contract Act, 1872 — AOP framework.
▸ Indian Trusts Act, 1882.
▸ Income-tax Act, 2025 — Section 67A (successor), operative 1-4-2026.
▸ Income-tax Act, 2025 — Section 536 (saving).
Case Laws & Commentary
SECTION 67A — METHOD OF COMPUTING A MEMBER'S SHARE IN INCOME OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
STATUTORY TEXT (as in force, Income-tax Act, 1961)
Marginal heading: Method of computing a member's share in income of association of persons or body of individuals.
67A. (1) In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a cooperative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :—
(a) any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body;
(b) where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member's share in the income of the association or body;
(c) where the amount apportioned to a member under clause (a) is a loss, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the member's share in the income of the association or body.
(2) The share of a member in the income or loss of the association or body, as computed under sub-section (1), shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the association or body has been determined under each head of income.
(3) Any interest paid by a member on capital borrowed by him for the purposes of investment in the association or body shall, in computing his share chargeable under the head 'Profits and gains of business or profession' in respect of his share in the income of the association or body, be deducted from his share.
Explanation.—In this section, 'paid' has the same meaning as is assigned to it in clause (2) of section 43.
A. SECTION COMMENTARY
A.1 Structural position
Section 67A is the computation companion to section 86. Where section 86 governs whether a member's share in the income of an AOP/BOI is taxable in the member's hands, section 67A prescribes how that share is computed. It applies where the shares of the members are determinate and known and the AOP/BOI is not a company, a co-operative society or a registered society. It operates with section 86 (relief from tax on the member's share), section 167B (the rate at which the AOP/BOI is itself charged, including the maximum marginal rate where members' shares are indeterminate or where a member's other income exceeds the basic exemption) and section 2(31)(v)/(vi).
The provision is the AOP/BOI analogue of the now-omitted section 67 (which computed a partner's share in a firm before the firm-taxation regime changed in 1992-93). Its essential function is to translate the AOP/BOI's computed total income into each member's share, after first stripping out and then re-attributing the interest, salary, bonus, commission or remuneration paid to members.
A.2 Provision taxonomy
Sub-section (1) lays down a three-step mechanism. Clause (a): deduct from the AOP/BOI's total income the interest, salary, bonus, commission or remuneration paid to any member, and apportion the balance among members in their profit-sharing proportions. Clause (b): if the apportioned amount is a profit, add back to that member the remuneration/interest etc. paid to him — the sum is his share. Clause (c): if the apportioned amount is a loss, adjust (set off) against that loss the remuneration/interest etc. paid to him — the result is his share.
Sub-section (2) preserves the head-wise character of the share: the member's share is apportioned under the various heads in the same manner as the AOP/BOI's income or loss was determined head-wise. Sub-section (3) allows a member a deduction, against his business-head share, of interest paid by him on capital borrowed for investment in the AOP/BOI. The Explanation imports the meaning of 'paid' from section 43(2).
The interaction with section 40(ba) at the AOP/BOI level is important: amounts of interest, salary, bonus, commission or remuneration paid by the AOP/BOI to a member are disallowed in computing the AOP/BOI's income under section 40(ba); section 67A then re-attributes those very amounts to the member's share. The two provisions are mirror images and must be applied consistently.
A.3 Core doctrinal themes
Three themes recur. (i) The threshold of AOP/BOI existence — section 67A presupposes a genuine AOP/BOI within section 2(31); a mere co-ownership or joint receipt of income is not an AOP, and section 67A does not arise. (ii) Determinate and known shares — section 67A applies only where the members' shares are determinate; where they are indeterminate, section 167B(1) charges the AOP at the maximum marginal rate and the section 67A/section 86 mechanism is displaced. (iii) Single-point taxation — AOP/BOI income is assessed either in the AOP's hands or, where appropriate, in the members' hands, and section 67A is the device that quantifies the member's share so that section 86 can relieve it from a second incidence of tax.
A.4 Legislative evolution / FA amendment trail
Section 67A was inserted as part of the AOP/BOI rationalisation that accompanied the introduction of sections 86 (recast), 167B and the firm-taxation reforms (the Direct Tax Laws (Amendment) Act, 1989 and the Finance Act, 1992, broadly w.e.f. 1-4-1993), replacing the earlier scheme. Since then the computation mechanism has been stable. Section 67A was not amended by the Finance Act, 2023, 2024, 2025 or 2026. (Editors should verify precise insertion/commencement dates against the bare-Act footnotes before publication.)
A.5 CA practitioner pointers
(1) Compute at the AOP/BOI level first. Determine the AOP/BOI's total income head-wise, disallow member remuneration/interest under section 40(ba), then run the section 67A(1)(a)-(c) mechanism to arrive at each member's share.
(2) Preserve head-wise character (sub-section 2). The member's share retains the head-wise composition of the AOP/BOI's income; this matters for set-off, for the member's own deductions, and for rate.
(3) Claim the member's borrowing-interest deduction (sub-section 3) only against the business-head share, and only where the capital was borrowed for investment in the AOP/BOI.
(4) Read section 67A with section 86 and section 167B together: MMR on the AOP under section 167B triggers section 86 proviso (a) (full exclusion of the share); normal-rate assessment triggers proviso (b) (inclusion for rate). Members that are companies, co-operative societies or registered societies are outside the section 67A relief-scheme and their share remains taxable.
B. FA 2026 IMPACT NOTE
Section 67A of the Income-tax Act, 1961 is NOT amended by the Finance Act, 2026. The FA 2026 changes operate on unrelated provisions and leave the AOP/BOI share-computation mechanism untouched.
Consequence for case law: the authorities below continue to be good law for assessments under the 1961 Act, including AY 2025-26 and AY 2026-27. The companion section 86 (Chapter VII) is likewise unamended.
Transition note: the Income-tax Act, 2025 (Act No. 7 of 2025) commences on 1 April 2026 and repeals the 1961 Act subject to the saving and transitional provisions. Pending proceedings, assessments and appeals for assessment years up to AY 2026-27 continue to be governed by the 1961 Act; the authorities digested below remain good law for those years. Practitioners should map the provision to its corresponding section in the 2025 Act when advising for tax years governed by the new Act.
C. CASE LAW — CLUSTERED BY ISSUE
Cluster C-1 : Whether an AOP/BOI exists — the threshold for section 67A
CIT v. Indira Balkrishna (1960) 39 ITR 546 (SC)
Facts: On her husband's death, the assessee (one of three widows) succeeded jointly to an estate yielding income from shares, deposits and house property; the Revenue assessed the three widows together as an association of persons.
Issue: The meaning of 'association of persons', and whether co-heirs who merely receive income jointly constitute an AOP.
Held: The Supreme Court held that an association of persons means an association in which two or more persons join in a common purpose or common action with the object of producing income, profits or gains; co-heirs merely receiving income from property held in common are not an AOP.
Ratio: Common purpose / common action with the object of producing income is the defining feature of an AOP.
Relevance: Section 67A computes a share only where a genuine AOP/BOI exists; absent a common income-producing purpose there is no AOP and no section 67A computation.
G. Murugesan & Bros. v. CIT (1973) 88 ITR 432 (SC)
Facts: Shares were held jointly and dividends received jointly by members of a family group, whom the Revenue sought to assess as an AOP.
Issue: Whether mere joint holding of shares and joint receipt of dividends, without volitional combination, makes the co-holders an AOP.
Held: The Supreme Court held that an AOP can be formed only where two or more persons voluntarily combine for a common purpose to produce income; volition is an essential ingredient. Joint receipt of dividends without joint income-producing activity does not create an AOP.
Ratio: Volition — a voluntary combination for a common income-producing purpose — is the sine qua non of an AOP.
Relevance: Fixes the outer boundary of section 67A: without volitional combination there is no AOP/BOI to whose members section 67A applies.
CIT v. Govindbhai Mamaiya (2014) 367 ITR 498 (SC)
Facts: Three brothers inherited agricultural land which was compulsorily acquired; enhanced compensation with interest was awarded. The Assessing Officer assessed the brothers as an AOP.
Issue: Whether co-heirs receiving acquisition compensation are an AOP, and the correct status of assessment.
Held: The Supreme Court held that, no association having been formed by the volition of the parties for the purpose of generating income, the brothers were assessable as 'individuals' (co-owners with definite and ascertainable shares), not as an AOP.
Ratio: Inheritance and co-ownership, absent a volitional income-producing combination, yield individual status, not an AOP.
Relevance: A mis-characterised co-ownership defeats both the AOP assessment and the section 67A share computation premised upon it.
Meera & Co. v. CIT (1997) 224 ITR 635 (SC)
Facts: On the death of a sole proprietor, the business was continued by his widow and minor children; the status in which the continuing concern was to be assessed was in question.
Issue: The tests for an AOP, and whether a 'body of individuals' is something wholly distinct from an 'association of persons'.
Held: The Supreme Court (11 March 1997) reiterated that an AOP is an association formed by the volition of the parties to produce income; where organised activity is jointly carried on to earn income, it is assessable as that of an AOP/BOI, and a BOI is not something entirely distinct from an AOP for this purpose.
Ratio: Reaffirms the volition / common-purpose test and clarifies the overlap between AOP and BOI.
Relevance: Identifies precisely the entities whose members' shares fall to be computed under section 67A.
Cluster C-2 : Single-point taxation — the right person to be assessed (the premise of section 67A/section 86)
ITO v. Ch. Atchaiah (1996) 218 ITR 239 (SC)
Facts: In respect of an association's income the Assessing Officer in some years assessed the members and later sought to assess the association itself, raising the question of the officer's power to choose the assessee under the 1961 Act.
Issue: Whether, under the Income-tax Act, 1961, the Assessing Officer retains the 1922-Act 'option' to assess either the AOP or its members.
Held: The Supreme Court held that, unlike under the 1922 Act, the Assessing Officer has no option under the 1961 Act: he must tax the 'right person' — the person who, according to law, is liable in respect of the particular income — and that person alone. Where the income is that of the AOP, it must be assessed in the AOP's hands.
Ratio: Under the 1961 Act the correct assessee must be taxed; AOP income belongs to and must be assessed in the AOP's hands.
Relevance: The doctrinal premise of section 67A read with section 86: AOP income is assessed in the AOP's hands and the member's computed share is then relieved from a second incidence of tax.
CIT v. Murlidhar Jhawar & Purna Ginning & Pressing Factory (1966) 60 ITR 95 (SC)
Facts: Three persons carried on a joint venture; the officer first assessed each on his one-third share and thereafter sought to assess the same income in the hands of the unregistered firm/association.
Issue: Under the 1922 Act, may the same income be taxed both in the members' hands and in the AOP's hands?
Held: The Supreme Court held that under the 1922 Act the officer had an option to assess either the AOP/unregistered firm or the members, but having assessed the members he could not tax the same income again in the firm/association's hands. The same income cannot be taxed twice.
Ratio: Single-point taxation — the same income cannot be charged in both the AOP's and the members' hands.
Relevance: Establishes the historical baseline of single-point taxation that section 67A (computation) and section 86 (relief) now secure by statute.
Editorial note on sourcing
Statutory text reproduced from the bare Act (Income-tax Act, 1961 as amended by the Finance Act, 2025; no Finance Act, 2026 change to this section). Case citations verified against public law databases (Indian Kanoon / ITAT Online / LiveLaw / Taxscan / Taxmann) on 29 May 2026. The FA 2026 position is verified against the project Finance Act 2026 Amendment Tracker. No authority has been included that the editor could not source.