Co-owners acting together for a profit-making property venture can be treated as an association of individuals for tax assessment.

Co-owners who jointly purchased, held and managed property through powers of attorney for the common purpose of earning income were treated as an association of individuals under the Income Tax Act, 1922. The court also held that, for assessment purposes, the association could be regarded as the owner of the property under the head of income from property, and the existence of defined individual shares did not prevent that treatment while the arrangement subsisted. In light of those findings, no separate determination was required on assessment under the residuary head.

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Issues: (i) Whether the co-owners of the property constituted an association of individuals within the meaning of the Income Tax Act, 1922. (ii) Whether such association could be treated as the owner of the property under the head of income from property. (iii) Whether, if not owners, the income could be assessed under the residuary head.

Issue (i): Whether the co-owners of the property constituted an association of individuals within the meaning of the Income Tax Act, 1922.

Analysis: The expression was construed in its ordinary sense. The members had jointly purchased and continued to hold the property, and had arranged for its management through powers of attorney for the common purpose of earning income from it. The combination was therefore not a mere accidental co-ownership but a concerted union for a joint enterprise and profit-making purpose.

Conclusion: The co-owners constituted an association of individuals within the meaning of section 3 and section 55 of the Income Tax Act, 1922, in favour of Revenue.

Issue (ii): Whether such association could be treated as the owner of the property under the head of income from property.

Analysis: Once the association was found to be the organized holder and manager of the property for the common enterprise, the property could be regarded as belonging to that association for assessment purposes. The existence of specified shares among the individuals did not prevent the association from being treated as owner so long as the arrangement continued.

Conclusion: The association was the owner of the property within section 9(1) of the Income Tax Act, 1922, in favour of Revenue.

Issue (iii): Whether, if not owners, the income could be assessed under the residuary head.

Analysis: In view of the affirmative answers on the first two issues, the residuary question did not require separate adjudication.

Conclusion: No separate determination was necessary on the residuary head.

Final Conclusion: The reference was answered by holding that the assessees formed an association of individuals and that the property income was assessable on that basis.

Ratio Decidendi: A combination of co-owners who unite and continue together for the common purpose of holding and managing property to earn income can constitute an association of individuals for income-tax assessment, and the property may be treated as owned by that association for the relevant charging provisions.

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