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TMI Blog1976 (6) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. The capital standing in the name of Shankaraiah in the firm which belonged to the joint family was divided into four equal shares and necessary entries were also made in the books of the firm as on 26th Oct., 1963. Respective accounts were opened in the books of the firm crediting the amounts divided. It was further agreed that Shakaraiah should continue to remain as a partner vis-a-vis the partnership firm and the profit derived by him will be divided between himself (12 per cent) and the there sons at 6 per cent each. As can be seen from the memorandum of past partition some movable assets were not divided and there were immovable properties which were also not divided. Since, however, the main controversy in with regard to the share in the partnership firm we need not dilate on the other assets which were either divided or remaining undivided. On 26th Oct., 1963 there was also another agreement which was brought about. This argument having recognised the partial partition between Shankaraiah and his sons further mentioned that Shankaraiah will continue as a partner but he will receive share of profit not only for himself but for his sons who have acquired their rights at 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "We are of the view that the expression BOI should receive a wide interpretation perhaps not wide enough to include a combination of individuals who merely receive income jointly without anything further as in the case of co-heirs inheriting shares of securities, but certainly wide enough to include a combination of individuals who have a unity of interest but who are not actuated by a common design, and, one or more of whose members produce or help to produce income for the benefit of all." In the appeal filed by the assessee against the judgment of the learned single Judge there was no reference to this aspect as evidently the only question argued was with regard to the legality of notice under s. 148. 3. After the proceedings in the High Court terminated the ITO passed the assessment orders for these six years on identical grounds. The seasonal order appears in the assessment order for the asst. yr. 1970-71. He felt that the share income held in the name of any one of the undivided family members is to be assessed in the hands of BOI . Thus he brought into tax 24 per cent share of profit from the firm of T.L. Jaganadham son in the hands of BOI . He has not taken into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther after the partition the members of the family would constitute "an" AOP is also dealt with in a few cases. The Orissa High Court in the case of Shri Ladukishore Das vs. State of Orissa 87 ITR 555 (Ori) held that there was no "AOP" after the partition of HUF. Earlier the Supreme Court dealt with the question arising under the Gift-tax in the case of CGT, Kerala vs. Ra. Valasala Amma 82 ITR 828 (SC) and held that where the parties have divided the properties they should be held as tenants-in-common and there would be no "AOP". 6. From the above discussion it is clear that after the partition that has taken place in the present case Shankaraiah and his two divided minor sons cannot be said to be constituting an "AOP". That is also not the case of the Revenue. The question, however, is whether these persons would constitute a "BOI". We are trying to answer this question as in our opinion answer to this question is most relevant. It is true, as argued by Mr. Anjaneyulu, that by virtue of the agreement entered into between the parties there was an over-riding obligation on Shankaraiah and a superior title in favour of the two minors in respect of their share of profit. But as Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature. If the first of the three meanings set out therein were to be accepted there would be no difference between an "AOP" and "a BOI" and acceptance of that meaning would mean that the Legislature has used the words "BOI" in vain to describe one and the same group of individuals. On the other hand, if we are to accept the third meaning, then, we would be losing sight of the principle of nosciture a sociis and also the fat that this phrase "BOI" occurs in the context of IT Act and it is only that body of individuals which is earning income with which the IT Act is concerned. Though the principle of ejusdem generis cannot be applied to the definition of the word "person" occurring in s. 2(31), since there is no specific genus to which an individual, a HUF, a company, a firm or an AOP can be said to belong, the principle of nosciture a sociis can certainly apply in the facts of this case. The BOI with which the IT Act is concerned, must be carrying on an activity with a view to earn income become it is only with such a BOI that the Income-tax is concerned and again the words "BOI derive colour from the context in which they occur namely an AOP and, therefore, in our opinion the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject matter of the partial partition. Each of the divided members are only tenants in common in respect of the share income from the partnership firm. 7. The principles laid down by their Lordships of the Gujarat High Court which have been referred to by us are not contrary to what has been stated by the Lordships of the Andhra Pradesh High Court in Deccan Wines and General Stores case (1973 (1) ITJ 220). The following passage may be referred to in this connection : "We are of the view that the expression "BOI" should receive a wide interpretation, perhaps not wide enough to include a combination of individuals who merely receive income jointly without anything further as in the case of co-heirs inheriting shares or securities, but certainly wide enough to include a combination of individuals who have a unity of interest but who are not actuated by a common design, and, one or more or whose members produce or help to produce income for the benefit of all". From a careful perusal of the observation noted above it is clear that their Lordships also contemplated that a sort of activity to produce or help to produce income is necessary. Their Lordships were not laying down a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apart, even without the specific agreement entered into by the parties Shankaraiah would be under an obligation to pass on the share income to the divided members as per the partial partition. The agreement was evidently executed with a view to see that the persons retained their share of the capital which was allotted to them after the partial partition and shown as credit in the books of the firms. In this connection we may usefully refer to some of the observations in the case of Additional CIT vs. Chandulal C. Shah, (Guj), Sec. III (1976 Taxation Vol. 42, S. III, page 47 : 1971 CTR (Guj) 299. That is again the decision of the Gujarat High Court. In identical circumstances as present in the instant case the Revenue there wanted to assessee the divided members as a sub-partnership. The Court repelled that contention. There was also more or less a similar agreement between the parties when the partition took place. The kartha continued as a partner in the firm and the profits derived therefrom where distributed among the divided members as stipulated in the deed of partition. Their Lordships observed at page 52 as : "A further and the most important fact which should be borne in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." In our opinion the observations of their Lordships of the Gujarat High Court afford complete answer to the various objections raised by Mr. Joshi. Mr. Joshi s reference to the decision of the Supreme Court in the case of Murlidhar Himatsingka Anr. vs. CIT 62 ITR 323 (SC) does not throw any light on the point. There may be cases of sub-partnership so as to divide the profit of a firm but we are not able to understand how that will be relevant so far as the present controversy is concerned. 9. We therefore feel that on the facts of this case there is no BOI to be assessed as a unit of assessment. 10. Mr. Anjaneyulu raised another contention that the agreement entered into by Shankaraiah with his two minor sons itself is contrary to ss. 6 and 8 of Hindu Minority and Guardianship Act. In the view we have taken that there is no BOI and we need not dilate on the further contention raised by Mr. Anjaneyulu. It is also therefore unnecessary to decide that appeal only on the basis of the first contention raised by Mr. Anjaneyulu viz., that there is superior title or overriding obligation, in as much as we have found that the unit of assessment as a BOI does not exist in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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