COLLISTER, J. - The Commissioner of Income Tax has on his motion under Section 66 (1) of the Income Tax Act referred the following two questions to this Court for decision :-
'(1) Whether on the facts of the case stated below (i.e., in his statement of the case) the various co-shares owning the Mandi known as the Khalifa Mandi at Allahabad constitute an association of individuals within the meaning of Section 3 of the Income Tax Act
(2) If the answer to the above question be in the affirmative, whether in view of the fact that Mufti Mohammad Aslam has, subsequently to the issue and service of the notice under Section 2 (12) of the Income Tax Act, 1922, transferred his proprietary interest to his wife, the Income Tax Officer is debarred from treating him as the principal officer of the association within the meaning of the section quoted above ?'
The Khalifa Mandi consists in some shops, houses and a piece of open ground on which a market is held. It originally belonged to one Mufti Karim Quli who died in 1860. It appears that from 1925 onwards twenty-six persons have by right of association or transfer been the owners of this Mandi. Up to 1925 the owners used to lease the Mandi thekadars, but in that year they appointed a man named Kanhaiya Lal to collect rents and maintain accounts. These accounts were kept in Hindi; but subsequently, for the convenience of some of the co-sharers, another man, named Abdul Shakoor, was also appointed, who wrote in Urdu. It appears that Kanhaiya Lal has now resigned, but we do not know the date of his resignation and we do not know whether Abdul Shakoor is still in the employment of the owners.
As regards question No. (1) the learned counsel for the department contends that an association of individuals within the meaning of Section 3 of the Income Tax Act will cover any case where a number of persons have a specified but undivided share in property which produces income; but he has not been able to show us any authority for this definition. Taken by itself, it cannot be denied that the expression is capable of a very wide interpretation, but having in view its context and the Act as a whole, we do not think it was the intention of the Legislature that the words should have so comprehensive a meaning. Originally the words used in the Act were 'individuals, company firm and Hindu undivided family', but under an Amending Act of 1924 (II of 1924) the words 'individual, Hindu undivided family, company, firm and other association of individuals' were substituted. There is no comma after the word 'firm' and from this as well as from the fact that the words 'Hindu undivided family' have been transposed to a higher position in the sentence it must be inferred that it was the intention of the Legislature that the expression 'other association of individuals' should be ejusdem generis with the word immediately preceding, i.e., the word 'firm'. Thus, before there can be an association of individuals within the meaning of the section, it must first be shown that the association has at least some of the attributes of a firm or partnership, though not in the strictly legal sense of the term. Learned counsel for the department has referred us to the following cases : Commissioner of Income Tax, Madras v. Mohideen Sahib of Bellary; Hotz Trust of Simla v. Commissioner of Income Tax; Commissioner of Income Tax, Madras v. Mrs. J. V. Saldhana; Trustees of the Tribune Press v. Commissioner of Income Tax; In the matter of Messrs. B. N. Elias and Mian Channu Factories Union v. Commissioner of Income Tax, Punjab. None of the above cases, with the possible exception of B. N. Elias, In re, is of much assistance to us in deciding the questions which are laid before us. In the last mentioned case it was held that persons who have joined themselves together in the purchase of a property and have remained joined as owners and for holding and using it in order to make gain thereby are an association of individuals within the meaning of Section 3 of the Income Tax Act. The following observations of the learned Chief Justice in that case may with advantage be quoted :
'Those words association of individuals have to be construed in their plain, ordinary meaning. There is no difficulty about the word individuals. Associate means, according to the Oxford Dictionary, to join in common purpose, or to join in an action. Did these individuals join in a common purpose, or common action, thereby becoming an association of individuals In my view, they did. In the first place, they joined together in the purchase of this property on January 9, 1920. In the second place, they have remained joined as owners of this property from the date of the purchase down to the present time. Thirdly, they have joined together, as the powers-of-attorney show, for the purpose of holding this property and of using it for the purpose of earning income to the best advantage of them all'.
We now have to see what are the facts in the present case. The Commissioner of Income Tax at one place states that in 1925
'the owners as a body employed one Kanhaiya Lal, an accountant and a servant of the former lessees, to collect rents and maintain the account thereof.
He then mentions that subsequently a second man was employed and he then goes on to state :
'The collections were made generally by the staff; but sometimes the co-shares made them themselves and reported them to the accountant for the purpose of writing up and adjusting the accounts'.
It thus appears that the rents were sometimes collected by one or other of the accountants and sometimes by individual co-shares. Thus, although the learned Commissioner has stated at the beginning that these accountants were appointed by the owners as a body, it seems at least doubtful whether all the co-shares had consented or were satisfied with their appointment. It also appears that there is no large measure of agreement among the co-shares. It does not appear from the Commissioners statement of the case that the accountants had authority to do anything more than collect rents and maintain accounts. On page 4 of our printed book we read that
'suits have been filed by some of the co-sharers for the recovery of rent in respect of their shares only'.
Even if the accountants were acting under the authority of all the co-shares, we do not think the mere appointment by a body of co-owners of a common collecting agent will convert such body of co-owners into an 'association of individuals' within the meaning of Section 3 of the Act. We express no opinion as to what the position would be if the co-owners of an income producing property appointed one or more persons, whether from among themselves or from outside, to perform all the functions of a common scheme of management. For the reasons given we are unable to agree with the Income Tax Commissioner that the owners of the Khalifa Mandi are an 'association of individuals' within the meaning of Section 3 of the Income Tax Act. This is our reply to question No. (1) of the reference.
In this view of the first question, the second question does not fall to be decided.
The assessee will be entitled to his costs from the department. Mr. Kamla Kant Verma on behalf of the department should file his certificate within two months. The hearing of this case occupied a whole day.
Reference answered accordingly.