Decided on December 28,1971



CHINNAPPA REDDY, J. - (1.) LATE Pannalal, apart from owning immovable properties with which we are not concerned, ran certain businesses known as "Deccan Wine and General Stores", "Moti Wine and General Stores" and "Tinu's Bar and Hotel". Pannalal died in 1959 and his heirs, his widow and two minor children succeeded to the three businesses. For the asst. yrs. 1959 60 and 1960 61, assessments in respect of the income from the three businesses were made as if the assessee's collective status was that of an "individual". For the asst. yrs. 1961 62, 1962 63 and 1963 64, assessments were made as if the assessee's status was an "HUF". For the asst. yrs. 1964 65 and 1965 66 assessee claimed the status of an "AOP" and assessments were made on that basis. For the asst. year 1966 67 also the assessee submitted a return claiming the status of an "AOP". However, by a subsequent letter dt. 27th March, 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 ITO did not accept the plea that the three persons should be separately assessed as individuals. The ITO held that the three persons constituted a "BOI" and should be assessed as such and not as an "AOP" either. The order of assessment made by the ITO was confirmed by the AAC and the 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 the case, the assessment for the asst. year 1966 67 has been validly made in the status of a 'BOI' ?"
(2.) BEFORE us, it was common ground that the mother and the two minor children would not constitute an "AOP" since it could not in law be said that these three individuals had joined together in a common purpose or a common action with a view to produce income, profits or gains. Sri T. Ramachandrarao, learned counsel for the assessee, submitted that on the same principle these three individuals would not constitute a BOI, which expression, according to him, should be construed ejusdem generis with the expression "AOP". In fact, according to Sri Ramachandrarao, the category of "BOI" was added to the other categories of persons assessable to income tax by the 1961 Act, with a view to more accurately describe co executors, co trustees and the like who, while they possessed unity of title and interest, could not be said, without strain on the language, to have joined together with a common design to produce income. Sec. 3 of the Indian IT Act of 1922 listed the units chargeable to income tax. It mentioned an "AOP" but not a "BOI". In the IT Act of 1961, income tax is levied on a person and "person" is defined in S. 2(31) by an inclusive definition which includes, among other categories, the category of "an AOP or a BOI, whether incorporated or not". Thus a "BOI" is brought in and placed alongside "an AOP". The juxtaposition of the two expressions does suggest that the expression "BOI" should be interpreted ejusdem generis with the expression "AOP". But, naturally, the interpretation should not be so as to destroy the separate identity of the expression "BOI". The expression must have a distinct meaning of its own; otherwise Parliament would not have introduced it. It may have some characteristics common with "an AOP" but it cannot be the same thing as an AOP, or, as contended by the learned counsel, a mere species of "AOP" which is better described as "a BOI".
(3.) THE learned counsel read to 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 'BOI', placed in the same clause in juxtaposition with 'AOP', were not in the 1922 Act. Since 'AOP' contemplates persons joining in common action with the object of producing income, presumably the words 'BOI' 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 'BOI' would not enhance or in anyway affect the tax liability. Co executors or co trustees may be assessed as a BOI because their title and interest is indivisible." ;

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