Association of individuals means human beings, not companies, for income-tax chargeability under contextual statutory interpretation.

The phrase "association of individuals" in the charging provisions of the Income-tax Act, 1922 was construed contextually to mean an association of human beings, not an association of companies. Because the statute distinguished an individual from a Hindu undivided family, company and firm, the word "individual" was read as a human being in that setting. Limited companies, being separate legal entities, did not enlarge the statutory phrase. The assessee association, consisting predominantly of companies with one individual member, was therefore not chargeable as an association of individuals, and the reference was answered in favour of the assessee.

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Issues: Whether an association whose members consisted predominantly of limited companies, together with one individual member, was chargeable to income-tax as an "association of individuals" within Section 3 of the Income-tax Act, 1922.

Analysis: The charging provision grouped together "individual, Hindu undivided family, company, firm or other association of individuals". The term "individual" had to be read in context, and not merely by dictionary meaning. Since the expression distinguished an individual from a Hindu undivided family, company and firm, the word in that setting was taken to mean a human being. The phrase "association of individuals" therefore referred to an association of human beings, and not to an association of companies. The fact that limited companies are separate legal entities did not expand the statutory phrase beyond its contextual meaning.

Conclusion: The association was not correctly treated as an "association of individuals" chargeable under Section 3, and the answer to the reference was in the negative, in favour of the assessee.

Final Conclusion: The assessment could not be sustained on the footing that the assessee was an association of individuals, and the reference was answered against the Revenue.

Ratio Decidendi: In the charging provisions of the Income-tax Act, 1922, the expression "association of individuals" means an association of human beings and cannot be construed to include an association of companies.

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