TMI Blog1983 (8) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... erties ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law and had any material before it for holding that the Malavaram properties were also partitioned into 18 shares and that, therefore, the Hindu undivided family had ceased to exist ? The short facts necessary to appreciate the question at issue are as follows? The assessee, Smt. Parukutty, Mooppilamma, was a member of Marumakkathayam tarwad. The tarwad was in possession of vast properties. Some of them were Malavaram properties. Including minors, there were 18 members, entitled to a share on a partition at the relevant time. The properties of the tarwad were divided into 18 shares. To the extent possible, they were also divided by metes and bounds. The partition deed is annexure A (document No. 1283/1957, dated 21st of June, 1957). The properties left out of division were mentioned in paragraph 5 of the said deed and enumerated in Ex. A Schedule. They were specified as " Malavaram properties marked not yet surveyed ". It was specifically mentioned in the deed that it was not proper to divide these Malavaram properties then and so it would be kept as common prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f persons " for the various reasons given in his consolidated order for both the years, annexure D, dated February 28, 1972. The assessee filed second appeals from the consolidated order of the AAC, dated February 28, 1972, before the Appellate Tribunal, Cochin Bench, as I.T.A. Nos. 22 and 23 Cochin 1972-73. The Appellate Tribunal passed a consolidated order in both the appeals dated October 31, 1975, evidenced by annexure-E. Various contentions were taken before the Appellate Tribunal. But in these two references we are concerned only with the status assigned to the assessee. The Appellate Tribunal, after an exhaustive consideration of the matter in paragraphs 9 to 11 of its order, held " that the individual members should be assessed direct " and " the capital gains computed has to be divided into 18 shares as each individual member has that much right therein. " (para 10). The Appellate Tribunal also categorically found that the status of " body of individuals " cannot be assigned. The Revenue has, in the above circumstances, pursued further proceedings under s. 256(2) of the Act to refer the questions of law mentioned hereinabove. The sole question that falls for consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Wine and General Stores v. CIT [1977] 106 ITR 111, of the Gujarat High Court in CIT v. Harivadan Tribhovandas [1977] 106 ITR 494 and that of the Punjab and Haryana High Court in Meera and Company v. CIT [1979] 120 ITR 564. On the other hand, counsel for the assessee, Mr. K. P. Radhakrishna Menon, contended that in this case the Appellate Tribunal found, on an evaluation of the entirety of facts and circumstances, including annexure A, partition deed, that the status to be assigned cannot be a " body of individuals " and this is normally a question of fact, not open to be canvassed in these proceedings. Counsel also contended that the term " body of individuals ", occurring in s. 2(31) of the I.T. Act, should be understood in the context and in the collocation of words and, so understood, it cannot be that in all cases of co-owners enjoying the property, the co-owners could be assigned the status of "body of individuals". It is only in a case where the co-owners joined together by volition for the specific purpose of enjoying the income, it could be considered to be an instance of a " body of individuals ". In other words, something more than merely enjoying the property together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially. The income goes directly to the members and it was only for the sake of convenience that one of them receives it on behalf of himself and others. We will, therefore, hold that the status cannot be body of individuals." (emphasis supplied). We agree with the aforesaid reasoning and conclusion of the Appellate Tribunal. Section 2(31) of the I.T. Act states : " 'person' includes (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of Persons or body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses;" It is trite law that the word " body of individuals " occurring in the definition section 2(3l)(v) should be understood in the context and collocation of the words and not in isolation. In the words of Blackburn J., in Rein v. Lane [1867] 36 LJQB 81, quoted by M. S. Menon J. in K. V. Varkey v. Agri. I.T. Rural STO (1954] 5 STC 348 at p. 351 (Trav-Cochin): "It is, apprehend, in accordance with the general rule of construction in every case, that you are not only to look at the words, but you are to to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that when two or more words which are susceptible of analogous meaning are coupled together noscuntur a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is, the more general is restricted to a sense analogous to the less general. "(Maxwell-Interpretation of Statutes-10th edn. p. 332). In construing the word " body of individuals " occurring in s. 2(31), alongside the words " association of persons ", we should bear in mind the aforesaid well-settled principles of interpretation laid down by courts. It is now well-settled by decisions of the Supreme Court that in order to constitute an association, persons must join in common purpose or action and the object of the association must be to produce income. It is not enough that the persons receive the income jointly. The words " body of individuals " occurring in s. 2(31) of the Act, alongside " association of persons ", should be understood in the said background and context. The meaning to be given to the words " association of persons ", above referred to, was first laid down by the Supreme Court in CIT v. Smt. Indira Balkrishna [1960] 39 ITR 546, a decision r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which we are concerned in this case is a Property owned by two persons as tenants-in-common, each one having a definite share." In CIT v. T. V. Suresh Chandran [1980] 121 ITR 985 (Ker) at p. 995, speaking for the Bench, Subramonian Poti J. (present C.J.) observed : " We are at the question whether the purchase is by an association of persons and not whether an association of persons came into existence after the purchase to run a joint venture. We have already indicated the element required to find a combination styled 'association of persons'. Some element of volition is necessary even for ' a body of individuals '. What exactly would be the distinction between 'a body of individuals' and 'an association of persons' is a matter on which we need not speak further, for, that may not be relevant for the purpose of this case. A body of individuals is different from individuals and if they are treated as a, person because they are a 'body', there must be joining by volition ". (emphasis supplied) In CIT v. Deghamwala Estates [1980] 121 ITR 684, the Madras High Court, after adverting to the legislative history of s. 2(31) of the I.T. Act, the deviation made by the parliamentary d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of road traffic at all times of public processions, rejoicings or illuminations, and in any case when the streets are thronged or liable to be obstructed. It was held that the direction that the traffic in a street would be one-way for six months, went far beyond the power given to the authority under s. 21 of the Act, and the words " in any case " should be read only to cover cases of traffic dislocation under the specified circumstances and not in cases of day-to-day jam. We need not multiply instances where courts have adopted the said principle of interpretation by reference " to the context ". The decisions of the Kerala and Madras High Courts, referred to above, have reviewed the entire case law on the point and have also applied the test laid down by the Supreme Court in R. Valsala Amma's case [1971] 82 ITR 828, and are in conformity with the well-settled principles of interpretation. We hold that in the light of the above judicial pronouncements and the principles of interpretation to be borne in mind, the reasoning and the conclusion of the Tribunal holding that the status of the assessee in the instant case cannot be a body of individuals is well justified. It should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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