TMI Blog1971 (12) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted a return claiming the status of an " association of persons ". However, by a subsequent letter dated March 27, 1967, it was claimed that each of the three individuals, i.e., the mother and the two minor children (the children continued to be minors), should be separately assessed in their " individual " status on their respective one-third share of the income from the businesses. It was pointed out in the letter that in the course of the year of account there was a partition of the businesses in the sense that the capital of the businesses was divided in equal shares between the three individuals. The Income-tax Officer did not accept the plea that the three persons should be separately assessed as individuals. The Income-tax Officer held that the three persons constituted a " body of individuals " and should be assessed as such and not as an " association of persons " either. The order of assessment made by the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. At the instance of the assessee the Tribunal has referred to us the following question : " Whether, on the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us a passage from 'The Law and Practice of Income Tax' by Kanga and Palkhivala (sixth edition), where the learned authors have said : " The words 'body of individuals', placed in the same clause in juxtaposition with 'association of persons ', were not in the 1922 Act. Since 'association of persons' contemplates persons joining in common action with the object of producing income, presumably the words 'body of individuals' were introduced as being more appropriate to describe the status of persons like executors who merely receive jointly income such as dividends and who may be assessable jointly as representing the estate, or co-trustees who may likewise merely receive income jointly and be assessable in the like manner and to the same extent as the beneficiaries individually. In such cases, the new and more accurate label or status of 'body of individuals' would not enhance or in any way affect the tax liability. Co-executors or co-trustees may be assessed as a body of individuals because their title and interest is indivisible. " We do not agree with the learned authors that the expression " body of individuals " was introduced to more appropriately describe the status of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " is not defined in the 1961 Act. It was not defined under the 1922 Act. But it was interpreted by judges. In the case of B. N. Elias, In re [1935] 3 ITR 408 (Cal), Derbyshire C.J. referred to the Oxford Dictionary, where the meaning of the word " associate " is given as " to join in common purpose, or to join in an action " and proceeded to pose the question, " Did these individuals join in a common purpose, or common action, thereby becoming an association of individuals ? " In Commissioner of Income-tax v. Lakshmidas Devidas [1937] 5 ITR 584 (Bom), Beaumont C J. accepted this view and applied it to a case where one of the members of the association was a minor who was represented by his father as natural guardian. In Dwarkanath Harischandra Pitale, In re [1937] 5 ITR 716 (Bom), Beaumont C.J. extended the principle to a case where though the original association was not a voluntary act on the part of the members, they elected to retain the property and manage it as a joint venture producing income. The Supreme Court in Indira Balkrishna's case [1960] 39 ITR 546, 551, 552 (SC) approved these three decisions and said : " Therefore, an association of persons must be one in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of persons. It is only when they associate themselves in an income-producing activity that they become an association of persons. They must combine to engage in such an activity ; the engagement must be pursuant to the combined will of the persons constituting the association ; there must be a meeting of the minds, so to speak. In a nutshell, there must be a common design to produce income. If there is no common design, there is no association. Common interest is not enough. Production of income is not enough. This interpretation of the expression " association of persons " flows from the meaning of the word " association ". When the word " association " is replaced by the word " body ", it must follow that the feature of common design or combined will so peculiar or distinctive to an association of persons is not a characteristic of a body of individuals. The absence of a common design is what principally distinguishes a body of individuals from an association of persons. Another distinguishing feature is that the one refers to persons and the other to individuals. A person, by definition, includes an individual. But an individual, apparently, does not include a person. Under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift as an association or a body of individuals. We do not think that the case is of any assistance. It is commonplace in the interpretation of statutes that the same word or expression occurring in different statutes or in different parts of the same statute need not mean the same thing. The word or expression must take its colour from the context. More so in the labyrinth of taxing statutes. We are not concerned with a body of individuals in the abstract. We are concerned with " a body of individuals " in the context of the Income-tax Act which is different from " a body of individuals " in the context of the Gift-tax Act. The considerations which determine whether a gift is made by a body of individuals are obviously different from the considerations which determine whether income has accrued or is deemed to accrue to a body of individuals. Further, in the case before the Supreme Court the subject-matter of the gift was property, i.e., buildings and not businesses. If the subject-matter of the gift was a running business carried on by the two ladies, perhaps the position might have been different. For example, if the ladies were carrying on cinema business and had gifted both t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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