R. S. PATHAK J. - This is a reference made under section 24(2) of the U. P. Agricultural Income-tax Act for the opinion of this court on the following question :
'(1) Is the society a person within the meaning of clause (11) of section 2 of the U.P. Agricultural Income-tax Act ?
(2) If it is a person, is is chargeable with agricultural income-tax directly on the total income or only as a common manager under section 11 of the Act ?'
In 1948 a number of plots of land were purchased jointly by 23 persons, whose shares were specified in the land. The following year they formed a co-operative society which was registered under the Co-operative Societies Act under the name of Naya Basera Bhatia Farms, Juguru Nagar, Sahkari Samiti. It is admitted that the society cultivated the land belonging to its members and marketed the produce. The profits were then distributed by the society among its members.
For the assessment year 1360 Fasli the society was assessed to agricultural income-tax on the income from the produce obtained by cultivation. There was an appeal by the society before the Commissioner who dismissed it.
A revision application was then filed by the society and two contentions were raised before the Revision Board. It was contended that the assessee was not an association of individuals and, therefore, not a 'person' within the meaning of section 2(11) of the Act. It was also contended that the provisions of section 11 were applicable inasmuch as the assessee acted as a common manager on behalf of its members in cultivating the land. Both these contentions were rejected.
Learned counsel for the assessee has submitted before us that the assessee is a registered co-operative society and is not an association of individuals and, therefore, does not fall within the definition of 'person'. He urges that having become a corporate body by virtue of registration under the Co-operative Societies Act it can no longer be considered as an association of individuals. It is well settled that a body of individuals, whether corporate or incorporate, constitutes an association of individuals. That expression has been used in the widest sense in section 2(11). That is also clear if reference be had to section 4 of the Act where provision is made for determining the minimum limit above which agricultural income becomes taxable, and it has been declared that 'agricultural income of the previous year exceeds Rs. 4,200, ... or, in the case of any society, trust or other association of individuals, such higher figure as may be prescribed.' The society has, therefore, been treated as an association of individuals. In Halsburys Laws of England, the law relating to companies contains the following statement.
'The word company imports an association of a number of individuals formed for some common purpose. Such an association may be incorporated (that is, a body corporate with perpetual succession and a common seal) or it may be unincorporated...'
A company, in India, is incorporated by registration under the Companies Act upon the fulfilment of the formalities required by law, a religious or charitable society is incorporated by registration under the Societies Registration Act, 1865, and a co-operation society is incorporated by registration under the Co-operative Societies Act, 1912. All these are associations of individuals in the generic sense.
Learned counsel also contends that the society was not a person because it did not either own the land nor held it. While it does appear from the facts before us that the society did not own the land, we find it difficult to accept the contention that it did not hold it. It cultivated the land, and, therefore, necessarily was in possession of it. There is nothing to show that its possession was restricted by limitation. Learned counsel urges that before the society can be said to hold the land, it must enjoy an interest in the land. In our opinion, the enjoyment of such interest is wholly unnecessary. The definition of 'person' contemplates that the land can be held by a manager, among others. A manager is merely an agent and has no interest in the land.
Our answer to question No. 1 is therefore, in the affirmative.
The Revision Board, when considering the application of section 4 of the Act for the purpose of determining whether the assessee was liable to tax as a common manager on behalf of its members, held that there was no distinction between the society and its members and, therefore, when the society cultivated the land the position was the same as if the members of the society were cultivating. We are unable to accept this reasoning of the Revision Board. The society having been registered under the Co-operative Societies Act became a body corporate and, therefore, distinct from the members constituting it. One of the cardinal features of incorporation is that the body incorporated can no longer be identified with its members. It is holds any property that property belongs to the corporate body and the members cannot be said to have any interest in that property. The position in law is well settled and it is not possible to agree that there is no distinction between a corporate body and the members constituting it. It is also apparent from the facts contained in the statement of the case that the members of the assessee-society were jointly interested in the that land. The provisions of section 11 of the Act would, therefore, have applied if it could also be established that the assessee was appointed as a common manager under some law or under an agreement. No finding has been given by the Revision Board that there was any such agreement, and the learned counsel for the assessee has not pointed to any law under which the society was appointed manager. In the absence of a finding that the assessee was appointed as a common manager under an agreement or under some law, it is not possible to hold that it is liable to be charged as a common manager under section 11 of the Act if it was appointed as such under some law for the time being in force or under an agreement.
We direct that a copy of this judgment be sent to the Revision Board under the seal of the court and the signature of the Registrar. In view of the answers returned to the questions, the parties shall bear their own costs. Counsels fee is assessed at Rs. 100.