TMI Blog1979 (7) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... sports for the use of the members and for such purpose to have a club house and to afford various facilities to its members. The petitioner is not registered under any enactment and it is, therefore, an unregistered association of its members being managed by the managing committee constituted under its constitution. It is a mutual association for the benefit of the members of the club and, at the time when this special civil application was filed, the number of members of the petitioner-club was more than 2,400. It is the case of the petitioner that prior to January 1, 1977, the club was carrying on its activities under its rules as then in force adopted by the members. Under cl. 67 of those rules, all properties of the club were to remain vested in the club as represented by the managing committee or such other committee as the said committee or the general body might appoint and members were to have an interest in the club property only so long as they continued to be memhers. Such interest was to be incapable of specific apportionment or enforcement except in a winding-up of the club decided by the members in a general meeting specifically summoned for that purpose. By a resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade an assessable entity under the W.T. Act. The petitioner has relied upon the provisions of s. 4(1)(b) which provides for inclusion of the proportionate share of a member of an association of persons where that particular association of persons holds any assets, but the determination of the share of that association of persons had to be done in the prescribed manner. Under r. 2 of the W.T. Rules, the manner of including the interest of a member of an association of persons has been prescribed and the residue of the net wealth of the association has to be allocated among the members in accordance with the agreement of association for the distribution of assets in the event of dissolution of the association and, in the absence of such agreement, in the proportion in which the members are entitled to share profits. This is the prescribed manner, according to the petitioner-club, so far as an association of persons is concerned. It is further the case of the petitioner that there is no question of a representative-assessee so far as an association of persons is concerned looking to the language of s. 21 of the W.T. Act. No affidavit-in-reply has been filed on behalf of the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a unit and is a group of persons is covered or included in the word " individual " occurring in s. 3 of the W. T. Act. It must also be pointed out that S. K. Das J. who delivered the minority decision in Sodra Devi's case [1957] 32 ITR 615 (SC) observed at page 634 of the report : " It is not disputed before us that the word 'individual' occurring in sections 3, 4A, 48 and 55 means either a male or a female ; nor has it been disputed before us that, according to the ordinary accepted meaning of the word, it means a single human being as opposed to I society , ' family ', etc., and that a single human being may be of either sex. Learned counsel appearing for the assessees in the two appeals have pointed out, however, that the word 'individual' has not the same width of meaning in subsection (3) of section 16 as it has in the other provisions; for example in section 3, the word 'individual' has been held to include a corporation created by a statute, e. g., a university or a bar council or the trustees of a baronetcy trust incorporated by a Baronetcy Act. " The question before us is not whether the word " individual " which occurs in singular in s. 3 of the W. T. Act does not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mappilla family which was not a family of Hindus. The Supreme Court pointed that under the charging section of the Expenditure-tax Act, tax was imposed on individual an HUF and undivided family which consists of Hindus alone may be treated as unit or an association and members of an undivided family whose members were not Hindus will be assessed and taxed as individuals. In the concluding paragraph of the judgment of the Supreme Court which dealt with purely the question of discrimination between HUF and Mappilla family, at page 57, Shah J., as he then was, speaking for the Supreme Court, observed : " Parliament in the present case having made the Expenditure-tax Act applicable to Hindus governed by the law of the joint family, but not including Mappilla families who are governed by the Mappilla Marumakkattayam Act has not made any discrimination and the charging section is not liable to be struck down on the ground that the Mappilla family may have to pay tax at a lower rate, whereas a Hindu undivided family ; by reason of the amalgamation of, the expenditure of all the members of the family, may have to pay tax at a higher rate. Members of Mappilla family would, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was restricted to human beings alone. Following the earlier decision of the Supreme Court in Andhra Pradesh State Road Transport Corporation v. ITO [l964] 52 ITR 524, the Full Bench hold that the word "individual" in s. 3 of the W.T. Act was not restricted to human beings and included a corporation similar to the Kerala Financial Corporation constituted under a Central, Provincial or State Act. It may be pointed out that these decisions, one of the Supreme Court in Andhra Pradesh State Road Transport Corporation's case [1964] 52 ITR 524 and the other in Kerala Financial Corporation's case[1971] 82 ITR 477 (Ker)[EB) are in line with the observations in Sodra Devi's case [1951] 32 ITR 615 (SC) and the word " individual " therefore can be interpreted to mean a juridical person as well. After the decision of the Supreme Court in Andhra Pradesh State Road Transport Corporation's case, Parliament has amended the definition of the word " company " in s. 2(h) of the W.T. Act. A new definition was substituted for the earlier definition by the Finance Act, 1975, with effect from April 1, 1975. By virtue of this definition substituted in 1975, a company means a company formed and registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an association of persons is to be valued and under sub-r. (1) of r. 2, the value of the interest of a person in an association of persons in which he is a member shall be determined in the manner provided in sub-r. (1). Net wealth of an association on the valuation date shall first be determined. That portion of the net wealth of the iation as is equal to the amount of its capital shall be allocated among the members in the proportion in which capital has been contributed by them. The residue of the net wealth of, the association shall be allocated among the members in accordance with the agreement of association for the distribution of assets in the event of dissolution of the association or, in the absence of any such agreement, in proportion in which members are entitled to share profits. It is, therefore, clear that under r. 2(1) of the W.T. Rules, 1957, read with s. 4(1)(b), the Legislature has given clear indication that an association of persons is not an assessable entity covered by the word " individual ", in s. 3 of the W.T. Act. just as ss. 5 and 21 give a positive indication that the word " individual " covers trustees of a trust, similarly, s. 2(h)(iii) and s. 4(1)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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