Association of individuals requires proved joint exploitation; separate co-owners after partition are taxable only on their own share.

Separate co-owners do not constitute an association of individuals merely because they live together or one member manages the property. An association arises only where two or more persons combine in a common purpose or common action for the production of income, supported by proof of agreement to exploit the property jointly for their common benefit. After partition by metes and bounds, each sharer becomes the exclusive owner of the allotted parcel, and the income from each share cannot be clubbed as income of one association in the absence of a joint venture or legally recognisable common holding. The assessment of the entire property as income of an association of individuals is therefore not sustainable.

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Issues: (i) Whether, on the facts and circumstances, the assessee, his wife and sons constituted an association of individuals for assessment of the income from the entire property. (ii) Whether, after partition by metes and bounds, the assessee was liable to be assessed only in respect of the income arising from his own share of the property.

Issue (i): Whether, on the facts and circumstances, the assessee, his wife and sons constituted an association of individuals for assessment of the income from the entire property.

Analysis: The charging provision taxed the total agricultural income of every person, and the statutory definition of "person" included an association of individuals. The controlling principle was that an association of persons exists only when two or more persons join together in a common purpose or common action for the production of income. Mere joint residence, joint messing, or management of separately owned lands by one member for convenience does not by itself establish such an association unless there is proof of an agreement among the co-owners to exploit the lands jointly for their common benefit. On the facts, the partition was real, the lands were separately owned, and there was no evidence of any arrangement among the sharers for common exploitation through the assessee.

Conclusion: The assessee, his wife and sons did not constitute an association of individuals.

Issue (ii): Whether, after partition by metes and bounds, the assessee was liable to be assessed only in respect of the income arising from his own share of the property.

Analysis: Once the properties had been divided by metes and bounds, each sharer became the exclusive owner of his or her allotted parcel. Separate ownership after partition negatives the assumption that the income from the entire estate can be assessed in one hand merely because the family continued to live together or because one member managed cultivation. In the absence of a joint venture or a legally recognizable common holding, the income attributable to each separate share could not be clubbed together as the income of an association of individuals.

Conclusion: The assessee was liable to be assessed only in respect of the income arising from his own share of the property.

Final Conclusion: The reference was answered in favour of the assessee on both questions, and the assessment of the entire property as the income of an association of individuals was not sustainable.

Ratio Decidendi: Separate co-owners do not become an association of individuals merely because they remain together or one of them manages the property; there must be a proved agreement for joint exploitation of the property for common benefit.

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