S. Ranganathan, J.
1. These two references can be disposed of by a common judgment. They relate to the assessments for the assessment year 1963-64 of two persons, Kailash Lamba and Madan Lal Lamba. The question referred in both the cases is identical and reads as follows :
'Whether, on the facts and in the circumstances of the case, the Tribunal has rightly upheld direct assessment of the assessed's share from an association of persons without the association itself having been assessed to tax ?'
2. The facts out of which the question arises are the same in both the cases and can be briefly stated. The assessed was a member of an association of persons consisting of four persons, namely, Madan Lal Lamba, Kailash Lamba, Harish Lamba and Jagdish Lamba. They ran a guest house at 9, Kitchenar Road, New Delhi, during the period November 15, 1961, to April 30, 1962, for the delegates to the World Council of Churches at New Delhi. It is common ground that the four persons formed an association and that they had equal shares in the profit earned by the association in the above activities. The share of profit of each of the two assesseds has been determined at Rs. 5,265 and included in his personal assessment. It is, however, also common ground that there has been no direct assessment on the association itself. The short point taken by each of the assesseds is that, without there being a direct assessment on the association itself, the share income of a member of the association cannot be included in his total income. This contention was accepted by the Appellate Assistant Commissioner but not by the Appellate Tribunal. The aggrieved assesseds have sought a reference to this court.
3. We have heard the learned counsel for the assesseds. We are, however, of the opinion that the decision of the Tribunal is correct. Section 4 of the Income-tax Act, 1961, brings to charge the total income of the previous year of every person at the rate or rates prescribed by the Finance Act.'Person' is defined in section 2(31) as including, inter alia, 'an association of persons or a body of individuals, whether incorporated or not'. It is, thereforee, clear that the income of an association of persons is charged to income-tax under the Income-tax Act. However, an association of persons is not a legal person like, say, a company, and the income earned by the association is equally the income of the members of the association to the extent to which they have agreed to share the same. It is, thereforee, clear that though the association of persons is a taxable entity and the association can be said to earn the income on which it is chargeable to tax, each member of the association also derives income in respect of which, being a person, he is also chargeable. There is nothing in the present Income-tax Act which precludes the taxation of both the association of persons and the individual, the former in respect of its income and the latter in respect of his share of the income from the association. Of course, the same income is not intended to be subjected to tax twice and this double taxation is avoided by the provision contained in section 86(v). This clause provides that where the assessed is a member of an association of persons, income-tax is not payable by him in respect of any portion of the amount which he is entitled to receive from the association on which tax has already been paid by the association. So far as the present case is concerned, no such double taxation is involved. We fail to see how the mere fact that the association itself has not been assessed to tax can stand in the way of every member of the association being assessed in respect of his share of the income.
4. The assessed's counsel pointed out that there is a substantial distinction between the provisions of section 3 of the Indian Income-tax Act, 1922, and those of section 4 of the Income-tax Act, 1961. The former conferred an option on the Income-tax Officer to assess either the association (or an unregistered firm) or the individual member (or partner) thereof but not both. The scope of such option has been considered and dealt with by the Supreme Court in the case of CIT v. Kanpur Coal Syndicate : 53ITR225(SC) and CIT v. Murlidhar Jhawar & Purna Ginning & Pressing Factory : 60ITR95(SC) and other cases. However, this difference has no relevance to the present case. Indeed, even in the decisions under the old Act, it was not held that a member of an association or firm could not be assessed directly on his share of income from the association. On the other hand, these decisions only arose because the Officer had assessed the individual members before assessing the association or firm and they held that where the Income-tax Officer had exercised an option and made an assessment directly on the member of an association or partner of a firm in respect of his share of income there from, the Income-tax Officer would not be entitled to make a direct assessment also on the association or firm. That was because the old Act authorised the Income-tax Officer to proceed either against one or the other but not both. The absence of such an option in section 4 clearly indicates that there is no obstacle in the way of the Income-tax Officer directly assessing a member of an association or a firm without making an assessment on the association or firm itself.
5. Learned counsel for the assessed also submitted that in this case the association of persons had earned income from November 15, 1961, to April 30, 1962, and that this income should have been assessed, if at all, only in the assessment year 1962-63. It is not, however, open to the assessed to raise this point which has not been raised at any earlier stage, either before the authorities or before the Tribunal.
6. For the above reasons, we are of the opinion that the question referred to us in each of these references has to be answered in the affirmative and in favor of the Department. We dispose of the reference accordingly. The Commissioner will be entitled to his costs but only one set of Rs. 500 in both the references to be paid equally by the two assesseds.