1939 (3) TMI 6

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....tant Commissioner of Income-tax, Northern Division, Ahmedabad, under Section 31 of the Act, in respect of the assessment of the Association for the financial year 1937-38, ended 31st March 1938. 2. Facts of the Case:-The Association has its office at Ahmedabad and as laid down in Rule 4 of its "Rules and Regulations" (copy annexed hereto, marked Exhibit A) "Any individual, partnership or Company owning a cotton, wollen or silk mill or a factory to which the Factory Act for the time-being in force has been applied and which is actuated by motive power of any description will be eligible for membership." The objects of the Association are stated to be as under, under its Rule 3:- "(a) The protection of interests of millowners and users of ....

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....to be charged with income-tax as, under the charging Section 3 of the Act, the only persons liable were an "individual, Hindu undivided family, Company or other association of individuals" and that it was neither of these, being an association of limited companies. The Income-tax Officer, however, was of opinion that it fell within the description of "other association of individuals", and was liable to be taxed under the above section. He therefore levied an assessment under his assessment order dated 5th November 1937, a copy of which is annexed hereto, marked Exhibit C. 4. The Association keeps its accounts in accordance with the calendar year and for the purposes of its assessment for the year 1937-38, its "previous year" within the me....

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.... the members mentioned in paragraph 4 hereof has been correctly treated by the Assistant Commissioner as chargeable to income-tax under Section 3 of the Act as being an 'association of individuals'." 8. Opinion of the Commissioner.-As Section 66(2) of the Act requires me to give my opinion while submitting this reference to the Honourable Court, I beg to state that under Rule 4 of the Rules framed by the Association, an individual, a company or a firm can be its member. As far as individuals are concerned, there is nothing to be said. As regards firms, the decisions of the Lahore High Court in the case of Sri Gopalji&Co. v. Commissioner of Income-tax, Punjab,[*] and the Mian Channu Factories Union v. Commissioner of Income-tax, Pun....

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....hat a company which is a separate legal entity can be said to be an "individual" being "an indivisible entity" and "a totality which cannot be separated into parts without altering the character and significance of those parts." Moreover, the contention of the Association that it is an association of limited companies only is not correct as individuals and firms can become its members and, as a matter of fact, an individual is one of its members. The answer to the question should therefore be in the affirmative in my humble opinion. 10. A copy of your Lordships' decision may kindly be certified to me for further action as required by Section 66(5) of the Act. JUDGMENT BEAUMONT, C.J. This is a reference by the Commissioner of Income-....