THE COMMISSIONER OF INCOME-TAX, POONA vs BULDANA DISTRICT MAIN CLOTH IMPORTERS GROUP

The Supreme Court held that a group of persons can be classified as an 'Association of Persons' under Section 3 of the Indian Income-tax Act, 1922, if they carry on business and share profits based on capital contributions, regardless of whether their formation was compelled by external authority. The Court clarified that the nature of their relationship does not change simply because they were appointed by the Deputy Commissioner. The High Court's view that partnership-like characteristics were necessary for such classification was rejected, affirming the assessments made by the Income-tax Officer.