Even though in this appeal by assessee there are several grounds raised which are unnecessarily full of arguments and narrative, contention raised therein is only one and that is that loss which had been suffered by assessee between 1-4-1977 to 22-9-1977 during which agreement dated 1-4-1977 between assessee and his brother namely Shri Gurbachan Singh Bawa, was operative was loss suffered in sole proprietary business of assessee which ought to have been determined as such and carried forward to be see of against future income of assessee. According to appellant agreement dated 1-4-1977 between him and his brother had brought above relationship of employer and employee or principal and agent and, therefore, ITO and for that matter Commissioner (Appeals) had no justification in holding that there was joint venture or AOP which had come into existence as result of agreement dated 1-4-1977. 2. Before we adjudicate upon arguments for and against contentions of assessee, we might briefly state facts and reproduce agreement in question dated 1-4-1977. 3. Till assessment year 1977-78 (accounting year ended on 31-3-1977) Balwant Singh Bawa was carrying on business in manufacture and sale of stainless steel articles and hospital equipments under name and style of Junu Rubber & General Industries at New Rohtak Road Industrial Area, New Delhi. On 1-4-1977 he entered into agreement with his brother, namely Gurbachan Singh Bawa. As per preamble necessity for entering into agreement arose on account of preoccupation with certain litigation which was going on in Madras. It was, accordingly, decided between two parties, namely, assessee and his brother that affairs of Junu Rubber & General Industries would be managed and looked after by Gurbachan Singh Bawa for 'mutual common advantage' on following terms and conditions: "1. That this deed of agreement shall be deemed to have come into effect from 1st April, 1977. 2. That party of second part shall manage business affairs of firm Junu Rubber & General Industries from date above mentioned to best interest of firm for mutual common advantages. 3. That in consideration of second party having been entrusted to look after affairs of firm profit and loss arising from business to be carried out during year ending 31st March, 1978 shall be divided and or borne by respective parties in equal proportions. 4. That for purposes of carrying out business of firm party of second part shall not be entitled to any fixed remuneration, commission or payment in any other manner except his share of profit in accordance with preceding clause. 5. That finances required for business of firm shall be managed and arranged by party of first part, who shall continue to operate bank account of firm. 6. That this agreement shall be in force initially for period of one year and will cease to have effect after 31st March, 1978 (the date of closing of accounts of firm). It may, however, be revoked by either party in accordance with mutual agreement to this effect. 7. That party of second part shall not have any right or claim in respect of assets, and other privileges belonging to firm which shall exclusively belong to party of first part. Similarly in respect of all liabilities and other obligations of firm it will be liability of party of first part only. This deed of agreement is executed on this day of April, 1977." In accordance with aforesaid agreement trading-cum-profit and loss account had been prepared for period beginning on 1-4-1977 and ending on 22-9-1977 when unfortunately Gurbachan Singh Bawa expired. As per accounts prepared loss of Rs. 3,58,683 had been suffered which had been equally distributed between assessee Balwant Singh Bawa and his brother Gurbachan Singh Bawa and accounts of two had been, respectively, debited by Rs. 1,79,341.50 each. ITO considered agreement dated 1-4- 1977 and other relevant facts and came to conclusion that there was AOP which was in existence between 1-4-1977 and 22-9-1977. In so holding he AOP which was in existence between 1-4-1977 and 22-9-1977. In so holding he had relied upon decisions of Hon'ble Supreme Court in cases of CIT v. Indira Balkrishna [1960] 39 ITR 546 and CIT v. Panipat Woollen & General Mills Co. Ltd. [1976] 103 ITR 66. After so holding ITO held that loss suffered by AOP was to be considered separately in its own assessment and could not be considered in hands of assessee. This finding of ITO had been upheld by Commissioner (Appeals). After analyzing terms of agreement dated 1-4-1977 Commissioner (Appeals) held that it was case of joint venture between Balwant Singh Bawa and Gurbachan Singh Bawa and that finding of ITO was duly supported by decision of Hon'ble Supreme Court in case of Panipat Woollen & General Mills Co. Ltd. (supra). 4. It is in background of aforementioned facts that assessee is in appeal. Shri R. Ganeshan, learned counsel of assessee has taken us through agreement and then contended that relationship that was created between Balwant Singh Bawa and Gurbachan Singh Bawa as result of agreement was that of principal and agent. According to him, present case was akin to case of managing agent who agrees to share losses in event of managed company suffering them. substance of agreement, according to Shri Ganeshan, was that during its subsistence business was to belong entirely to Balwant Singh Bawa who was to provide finances and who was to bear liabilities of business. terms of agreement were, according to learned counsel, clearly indicative of fact that business of Junu Rubber & General Industries which was sole proprietary business of Balwant Singh Bawa had continued to be so during 1-4- 1977 to 22-9-1977 also. Assailing findings of lower authorities that AOP or joint venture had come into existence as result of agreement, Shri Ganeshan contends that essential traits of AOP which is joint ownership of assets being absent in this case, there was no question of treating arrangement as one which brought into existence any AOP or joint venture. Shri Ganeshan further assails findings of lower authorities from another angle and says that party of first part of agreement, i.e., Balwant Singh Bawa having completely dissociated himself from business on account of his indifferent health and preoccupation with litigation outside Delhi, there was no joining of hands between two parties and, therefore, one again essential traits of AOP were absent in present case. In support of his contentions Shri Ganeshan had relied on authorities in Lakshminarayan Ram Gopal & Sons Ltd. v. Government of Hyderabad [1954] 25 ITR 449 (SC), CIT v. Buldana District Main Cloth Importers Groups [1961] 42 ITR 172 (SC), Dharamvir Dhir v. CIT [1961] 42 ITR 7 (SC) and Mohamed Noorullah v. CIT [1961] 42 ITR 115 (SC). He has extensively read out of these decisions in course of his valiant effort to persuade us that findings of lower two authorities were not tenable in law and that agreement between Balwant Singh Bawa and Gurbachan Singh Bawa was only agreement between principal and agent. Shri Ganeshan has also taken us through decision of Hon'ble Supreme Court in Panipat Woollen & General Mills Co. Ltd.'s case (supra) in order to contend that that decision did not support case of lower authorities. 5. On other hand Shri J. R. Malhotra, learned departmental representative has also taken us through agreement dated 1-4-1977 and contended that it had been entered into for mutual common advantage of two parties to agreement and as in partnership profit and loss arising from business was to be divided and/or borne by two parties in equal proportions. According to learned departmental representative mere fact that second party to agreement, i.e., Gurbachan Singh Bawa had not been given any rights in assets of firm or joint venture did not militate against finding of ITO and Commissioner (Appeals) that business had been carried on as joint venture between 1-4-1977 and 22-9-1977. Shri Malhotra has submitted that all traits of AOP were present and decision of lower authorities was unassailable being based on decision of Hon'ble Supreme Court in case of Panipat Woollen & General Mills Ltd. (supra). 6. We have very carefully considered rival submissions ably made by S h r i Ganeshan, learned authorized counsel of assessee and Shri Malhotra, learned departmental representative. We have equally carefully gone through authorities of Hon'ble Supreme Court relied upon on two sides. We have very minutely perused agreement dated 1-4-1977 and we find therefrom that business erstwhile carried on by assessee we find therefrom that business erstwhile carried on by assessee Balwant Singh Bawa as sole propriety business in name and style of Junu Rubber & General Industries was converted into arrangement under which affairs of same were to be looked after by Gurbachan Singh Bawa, brother of assessee, for 'mutual common advantage' of two brothers. It was provided in clauses 2 to 7 of agreement dated 1-4-1977 that in consideration of Gurbachan Singh Bawa, i.e., party of second part of agreement having been entrusted to look after affairs of 'firm' profit and loss arising from business to be carried out during financial year 1-4- 1977 to 31-3-1978 were to be divided between or borne by parties of first art and second part in equal proportion. After it has been so provided in clauses 3 of agreement, it had been clarified in clause 4 thereof that Gurbachan Singh Bawa, i.e., party of second part shall not be entitled to any remuneration, commission or other payment excepting 'his share of profit in accordance with preceding clause'. In clause 5 it was provided that finances required for business will be provided by party of first part and he shall continue 'to operate bank account of firm'. Clause 6 had fixed duration of agreement and in clause 7 it had been made explicit that Gurbachan Singh Bawa, i.e., party of second part shall not have any rights or claims in respect of assets of business which exclusively belonged to party of first part. It was further provided in clause 7 that 'liabilities and other obligations of firm' will be liability of first part, i.e., assessee Balwant Singh Bawa. We further find from trading-cum-profit and loss account which had been prepared for period 1-4-1977 to 22-9-77, i.e., till date up to which Gurbachan Singh Bawa was alive, that loss of Rs. 3,58,683 had been suffered which had been equally divided between Balwant Singh Bawa, party of first part of agreement and Gurbachan Singh Bawa, party of second part of agreement. In these facts and circumstances, it appears to us that none of decisions dried upon by Shri Ganeshan, learned counsel for appellant, is of any avail. In decision of Hon'ble Supreme Court in case of Lakshminarayan Ram Gopal & Sons Ltd. (supra), facts were wholly different. That was case of private limited company which has various objects including that of acting as agents for Governments or authorities or for any joint stock companies. In April 1920 it had been appointed as agent of D. B. R. M. Co. Ltd. under agreement. terms of agreement provided that general management of business of company was to be looked after by agents subject to control and supervision of directors of D. B. R. M. Co. Ltd. directors of abovenamed mills were entitled to give such directions to agents in regard to management of business as they considered necessary. assessee agents were entitled by way of commission to certain percentage on sale profits effected by D. B. R. M. Co. Ltd. In these facts and circumstance, question arose as to whether agents of above named company were merely servants of company or were carrying on any business. It was held by their Lordships of Supreme Court that activities of agents constituted business and remuneration which was received by them under terms of agency agreement was liable to excess profit tax. According to us this decision of Hon'ble Supreme Court delivered on entirely different set of facts has no application to facts which have been found by us and which have been stated by us in some detail as above. reliance placed by Shri Ganeshan on above decision of Hon'ble Supreme Court to us to be wholly futile. Similarly, decision of Hon'ble Supreme Court in case of Dharamvir Dhir (supra) also does not help case which is sought to be made on behalf of assessee. In that case assessee had entered into agreement with trust named Mohini Thapar Charitable Trust in order to carry on coal raising business. business was to be carried on with help of funds of trust which were to be advanced to extent of Rs. 1,50,000. It was to be carried on in accordance with policy settled between Dharamvir Dhir and above named trust. In consideration of trust having agreed to finance said business, Dharamvir Dhir had agreed to pay to trust interest on amount borrowed at thereat of 6 per cent per annum in addition to sum equivalent to 11/16th of net profits of business. It had been held by Tribunal in that case that arrangement amounted to joint venture and view thus taken has upheld by Patna High Court. Subsequently, on appeal before Supreme Court, decision of Patna High Court was reversed and their Lordships held that it was not case of joint venture. In so holding their Lordships took into account very important fact that loss, if any, which was to be suffered in business was not to be shared at all but was to be exclusively borne by assessee in that case. In other words, finding given by Hon'ble Supreme Court in case of Dharamvir Dhir (supra) will show that if over and above profits to be shared between assessee in that case and trust, losses were also to be shared between two parties, arrangement would have been joint venture. This decision cited on side of assessee, therefore, will, if at all, operate against proposition canvassed by assessee. other two decisions of Hon'ble Supreme Court on which reliance has been placed by learned counsel stand in Mohamed Noorullah's case (supra) and Buldana District Main Cloth Imporers Group's case (supra) we have gone through these decision and it appears to us that guidelines which had been laid down by their Lordships of Supreme Court as to when arrangement amounts to 'association of persons' also go against case of assessee. We have in particular gone through those particular pages of citation on which learned counsel placed great emphasis but we have not been able to discern any support that can be provided to case of assessee from these two decisions. There is catena of decisions of Hon'ble Supreme Court as to when combination of persons can be said to be AOP within meaning of section 2(31) (v) of Income-tax Act, 1961 or similar provisions of Indian Income-tax Act, 1922. law has been uniformly reiterated and it is to effect that AOP comes into existence when two or more persons jointed hands for common purpose or for common action, object of which is to produce income, profits or gains. If these guidelines laid down by Hon'ble Supreme Court were to be applied to facts of present case, it would immediately appear that here also was combination of two brothers who had joined hands in given circumstances to f o r m combination for 'mutual common advantage'. profits or losses resulting from venture were to be equally shared between two brothers. If n arrangement like present one which is under consideration and which came into existence as result of agreement dated 1-4-1977 between assessee and his brother cannot be described to be 'association of persons or joint venture', then perhaps there can be no other situation when such entity would be said to exist. assessee having joined hands with his brother for mutual common advantage of earning profits from business named Junu Rubber & General Industries and profits or losses therefrom having been stipulated to be shared equally and having in fact been shared so, it cannot be said that AOP or joint venture was not in existence between 1-4-1977 and 22-9-1977. In background of these facts decision of Hon'ble Supreme Court in case of Panipat Woollen & General Mills Co. Ltd. (supra) becomes wholly germane and was rightly relied upon by lower authorities and by learned departmental representative. In that case Panipat Woollen & General Mills Co. Ltd. (supra) has entered into agreement with one Saligram Prem Nath appointing latter as sole selling agents. agents were to invest full amount for working of worsted plant of company. program for running of plant and manufacture of goods was to be made jointly or in consultation with each other by Panipat Woollen & General Mills Co. Ltd. and its agents. account of worsted plant were to be separately maintained. agreement further provided that agents were to be entitled to interest of 6 per cent on all advances, commission of 1/4 per cent on net sale and 50 per cent of profits. In event of loss, agents were to bear it to extent of 50 per cent. In assessment years 1956-57 and 1957-58 Panipat Woollen & General Mills Co. Ltd. paid Rs. 37,175 and Rs. 73,787 to agents as their 50 per cent share of net profit of worsted plant and question arose as to whether above two amounts were admissible business deductions. Their Lordships of Hon'ble Supreme Court held reversing decision of Hon'ble High Court that on account of above mentioned terms of agreement and on account of sharing of profits and losses to extent of 50 per cent agents became completely equated with Panipat Woollen & General Industries Co. Ltd. and that contract of agency was nothing but sort of partnership. facts in above case have striking resemblance to facts in case presently before us and, therefore, according to us conclusion is inescapable that it was case of joint venture or AOP between assessee and his brother during period 1-4-177 to 22-9-1977. There is no substance in argument of learned counsel that there was in fact no joining of hands between Balwant Singh Bawa and Gurbachan Singh Bawa. We find from agreement of joint venture that while day-to-day management of business was to be looked after by Gurbachan Singh Bawa for mutual common advantage, finances had to be arranged by Balwant Singh Baws, i.e., assessee, and he was also in charged of operating bank accounts of joint venture. There was, therefore, jointing of hands for exploiting business to 'mutual common advantage' of two parties of agreement and, therefore, argument of learned counsel that Balwant Singh Bawa had dissociated himself from business is not acceptable to us. In above view of matter, treatment to adjustment of losses suffered by joint venture in period 1-4-1977 to 22-9-1977 is held to have been correctly given by income- tax authorities. Since we are in agreement with their decisions for reasons given above, we uphold them and dismiss appeal of assessee. *** BALWANT SINGH BAWA v. INCOME TAX OFFICER