Subramonian Poti, J.:— These are appeals filed by CIT, Kerala-I, Ernakulam, against a common order passed by the Income-tax Appellate Tribunal, Cochin Bench. The appeals before the Tribunal concerned the same matter but were by different parties. Those appeals were against the one and the same order of the IAC of Income-tax, Acquisition Range, Ernakulam. Since the Tribunal purported to dispose of those six appeals by the common order the Commissioner has filed six appeals in this court.
2. The competent authority under the I.T Act passed an order for the acquisition of an immovable property under s. 269F of the I.T Act, 1961. It was the case of the competent authority that the immovable property in respect of which the acquisition proceedings were commenced was transferred for consideration which was less than the fair market value of the property and that the consideration for such transfer as agreed to between the parties had not been duly stated in the instrument of transfer and further that such fair market value of the property exceeded the apparent consideration by more than fifteen per cent, of such apparent consideration. The deed of transfer was executed by the transferors in favour of four transferees. Since the two transferors and the four transferees objected to the order of the IAC each one of them filed an appeal. The transfer was of 16 cents of vacant land in survey No. 592/2 of Ernakulam village. This property had been purchased in 1965 by the transferors jointly for a consideration of Rs. 33,000. To make the property purchased regular in shape, they had purchased a further extent of 0.675 square links in survey No. 592/3 on July 16, 1973, so much so the total extent of the land became 16.675 cents. It was the said extent that was sold by them to the four persons. Though the total extent under the documents taken by the joint transferors was 16.675 cents, on measurement it was found to be only 16.268 cents. Out of this 5.418 cents in A schedule, 3, 6 cents each in B and C schedules and 3.650 cents in D schedule were sold to four persons by the joint transferors under one instrument of transfer, that being document No. 1694/73 executed on August 16, 1973. Though the total extent thus conveyed under the instrument of transfer was 16.268 cents distinct areas described in separate schedules were sold to each one of the four transferees for independent consideration. The four purchasers were brothers. Even before the purchase was effected there was an agreement of sale and it was pursuant to the agreement of sale that the purchase was effected. An advance of Rs. 5,000 had been paid by one of the four purchasers. The competent authority initiated proc??? iings under s. 269 of the I.T Act for acquisition of the property covered??? the transfers. Such proceedings were initiated in respect of the entire ???68 square links of land as one proceeding and not four different pro???dings. In accordance with s. 269D(2) the competent authority shall cat ???a notice to be served on the transferor, the transreree, the person in occ???ition of the property and on every person known to be interested and the ???mpetent authority shall also cause notice to be published in its office and ???the locality in which the property is situate. Under s. 269D(1) such ??? tice is to be published in the Official Gazette too. The immovable proper??? mentioned in such notices and in the Gazette was not described as four??? istinct plots of land covered by A to D schedules in the sale deed but ??? block of land measuring 16.268 cents. Parties objected to the propi ??? for acquisition and aiter hearing the parties the competent authority??? erruled the objection. He was evidently satisfied that the immovable p???perty to which the proceedings related was of a fair market value ex ??? ding twenty-five thousand rupees, that the fair market value exceeded ??? apparent consideration by more than fifteen per cent, and that the cons???ration agreed to was not the consideration shown in the document of ??? ransfer. In this view the competent authority passed an order for acq ??? tion under s. 269F of the Act. The two joint transferors and the four ??? xchasers filed independent appeals under s. 269G of the Act before the 1 ??? inal. The Appellate Tribunal allowed these appeals finding that then ???ere four sale transactions reflected in the deed of transfer. It also founc??? lat the immovable property covered by each particular sale transaction h??? to be taken into account independently for the purpose of proceedings ??? der s. 269 of the Act and the question as to whether the fair market va ??? of the property exceeded Rs. 25,000 had to be determined in respect of??? operty covered by each of the four sales. The competent authority hav ??? estimated the fair market value only for the entire parcel of land as one??? ait there was no investigation and recording of finding as to whether ea??? of the plots in the four schedules exceeded in value Rs. 25,000. In th??? view the Tribunal directed the case to be considered afresh by the compel??? t authority in the light of its findings.
3. Under s. 269H of the Act an appeal lies ??? the High Court on any question of law against the decision of the App??? ite Tribunal under s. 269G. Accordingly these appeals have been filed by t ??? CIT.
4. The question of law this court is called u ??? to decide in these appeals is whether, in the facts and circumstances of ??? case, where a transfer is seen to be effected of different items of propert ??? in favour of four persons under a deed of transfer, is the transfer to be taken to be not in favour of four different persons but in favour of an association of persons or body of individuals and consequently whether s. 269C of the Act would apply. Section 269C of the Act runs thus:
“269C. (1) Where the competent authority has reason to believe that any immovable property of a fair market value exceeding twenty-five thousand rupees has been transferred by a person (hereafter in this Chapter referred to as the transferor) to another person (hereafter in this Chapter referred to as the transferee) for an apparent consideration which is less than the fair market value of the property and that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with the object of—
(a) facilitating the reduction or evasion of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer; or
(b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act or the Wealth-tax Act, 1957 (27 of 1957),
the competent authority may, subject to the provisions of this Chapter, initiate proceedings for the acquisition of such property under this Chapter:
Provided that before initiating such proceedings, the competent authority shall record his reasons for doing so:
Provided further that no such proceedings shall be initiated unless the competent authority has reason to believe that the fair market value of the property exceeds the apparent consideration therefor by more than fifteen per cent, of such apparent consideration.
(2) In any proceedings under this Chapter in respect of any immovable property—
(a) where the fair market value of such property exceeds the apparent consideration therefor by more than twenty-five per cent, of such apparent consideration, it shall be conclusive proof that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer;
(b) where the property has been transferred for an apparent consideration which is less than its fair market value, it shall be presumed, unless the contrary is proved, that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in clause (a) or clause (b) of sub-section (1).”
5. In this case, the property of 16,268 cents covered by the sale deed of August 17, 1973, belonged to the two transferors jointly, They did not sell the whole property to four persons jo; ???ly. If they had sold such properties jointly to the four persons, each o??? of the four would have had right in the entire 16.268 cents, though jo??? ly with the others. Separate portions of the property were sold to the i ???r purchasers and by such sales the entire property was exhausted. Eaci ???ne of the four transferees had absolute right to the property transferr??? to him and in the property transferred to one the other transferees ha??? no right. In other words, the right of each one of the transferees to t??? plot transferred to him was absolute. It was as if four sale deeds had ???een executed for four different portions of a compact plot and four purch ???rs took the respective portions transferred to them with absolute right ove ???uch portions. We may notice here that there is no case that the tra ???ers in favour of the four purchasers or any of them was sham or benan??? tor the others too. The reality of the transfers is not in dispute. Thereto ??? the position was the same as that where four transfer deeds had bee??? executed, one in regard to A schedule, one in regard to B schedule, one??? regard to C schedule and one in regard to D schedule. In the event of ???h independent transfer deeds, the question that has now arisen might per???ips not have arisen at all. But what is contended for, despite this, is that ??? king into account the circumstances and facts and the evidence in the ??? ase the four transferees constitute an association of persons and as such ??? he sale deed must be taken to have been by the transferors in favour of ??? t association of persons. An association of persons is a person for the??? urpose of the Act. What is required to attract s. 269C is only a transf??? by a person referred to as transferor to another person referred to as ??? ansferee. If an association of persons could fall within the definition of a ??? rson under the Act—it so falls within the definition in s. 2(31) of the Act— ???len if it is shown that though four individuals took four transfers the tra??? sfer was to an association of persons it would be one to which s. 269C wi??? be attracted. It is further contended that if for any reason the circums??? mces are not sufficient to read the combination of the four transferees as an “association of persons” their combination would be sufficient to brin??? them within the purview of the term “body of individuals” which aga??? falls within the definition of “person” in s. 2(31) of the I.T Act, 1961, ???ough that was not the case under the Indian I.T Act, 1922.
6. On the meaning of the term “association of persons”, a term which is not defined in the I.T Act, courts have occ??? ion to speak and it may now be taken as well settled that what was said ??? the High Court of Calcutta in B.N Elias, In re, [1935] 3 ITR 408 is the ???roper definition of that term. Chief Justice Sir Harold Derbyshire, speaki??? for the Bench, said in that case thus (p. 415):
“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.”
7. This definition was adopted by the Supreme Court as reflecting the proper meaning of the term. In CIT v. Indira Balkrishna, [1960] 39 ITR 546 the Supreme Court said thus (p. 551):
“It is enough for our purpose to refer to three decisions: In re B.N Elias, [1935] 3 ITR 408 (Cal), Commissioner of Income-tax v. Laxmidas Devidas, [1937] 5 ITR 584 (Bom) and In re Dwarakanath Harischandra Pitale, [1937] 5 ITR 716 (Bom). In In re B.N Elias, [1935] 3 ITR 408 Derbyshire C.J rightly pointed out that the word ‘associate’ means, according to the Oxford Dictionary,‘to join in common purpose, or to join in an action’. Therefore, an association of persons must be one in which two or more persons join in a common purpose or common action; and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains. This was the view expressed by Beaumont C.J in Commissioner of Income-tax v. Lakshmidas Devidas, [1937] 5 ITR 584 (Bom), at page 589, and also in In re Dwarakanath Harischandra Pitale, [1937] 5 ITR 716 (Bom). In In re B.N Elias, [1935] 3 ITR 408 (Cal) Costello J. put the test in more forceful language. He said: ‘It may well be that the intention of the Legislature was to hit combination of individuals who were engaged together in some joint enterprise but did not in law constitute partnerships……… When we find………… that there is a combination of persons formed for the promotion of a joint enterprise…………then I think no difficulty arises whatever in the way of saying that…… these persons did constitute an association…………’
We think that the aforesaid decisions correctly lay down the crucial test for determining what is an association of persons within the meaning of section 3 of the Income-tax Act, and they have been accepted and followed in a number of later decisions of different High Courts to all of which it is unnecessary to call attention. It is, however, necessary to add some words of caution here. There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a conclusion that there is an association of persons within the meaning of section 3; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not.”
8. The Supreme Court, again considering the term “association of persons”, in the decision in G. Murugesan & Brothers v. CIT, [1973] 88 ITR 432 at p. 436 said thus:
“The expression ‘association o???ersons’ is not a term of art. That expression has come up for coriside???tion before this court in more than one case. In Commissioner of Income ???x v. Indira Balkrishna, [1960] 39 ITR 546, 551 (SC) this court, after referri??? to the various judgments, observed thus:
‘It is enough for our purpos???to refer to three decisions: In re B.N Elias, [1935] 3 ITR 408 (Gal), Comissioner of Income-tax v. Laxmidas Devidas, [1937] 5 ITR 584 (Bom) and ???re Dwarakanath Harischandra Pitale, [1937] 5 ITR 716 (Bom). In In re???. N. Elias, [1935] 3 ITR 408 (Cal) Derbyshire C.J rightly pointed ??? that the word “associate” means, according to the Oxford Dictionary, “??? join in common purpose, or to join in an action”. Therefore, an associ???on of persons must be one in which two or more persons join in a commi???purpose or common action, and as the words occur in a section, which ii ???oses a tax on income, the association must be one the object of which is ??? produce income, profits or gains. This was the view expressed by Bea???nont C.J in Commissioner of Income-tax v. Laxmidas Devidas, [1937] 5 ITR 584 (Bom), at page 589, and also in In re Dwarakanath Harischandra Pita???, [1937] 5 ITR 716 (Bom). In In re B.N Elias, [1935] 3 ITR 408 (Cal) Co???llo J. put the test in more forceful language. He said: “It may well???that the intention of the legislature was to hit combination of individua???who were engaged together in some joint enterprise but did not in law ??? nstitute partnerships ……………. When we find …………… that there is a combination ??? persons formed for the promotion of a joint enterprise………. then Ithir??? no difficulty arises whatever in the way of saying that these persons did ??? nstitute an association…………’.”
9. We think that the aforesaid dec??? ons correctly lay down the crucial test for determining what is an ‘assc??? ition of persons’ within the mean ing of section 3 of the Income-tax A???and they have been accepted and followed in a number of later decis???ts of different High Courts to all of which it is unnecessary to call attenti??? It is, however, necessary to add some words of caution here. There ???10 formula of universal application as to what facts, how many of then???nd of what nature, are necessary to come to a conclusion that there is??? association of persons within the meaning of section 3; it must depend ??? the particular facts and circum stances of each case as to whether the??? nclusion can be drawn or not.
10. In the course of that judgment, ???s court also observed [CIT v. Indira Balkrishna, [1960] 39 ITR 546, 550 (S???::
“With regard to the shares, divi???nds and interest on deposits there was no finding of any act of joint n???lagement. Indeed, the main item consists of the dividends and it is ???fficult to understand what act of management the widows performed ??? espect thereof which produced or helped to produce income.
For forming an ‘association of persons’, the members of the association must join together for the purpose of producing an ‘income’. An ‘association of persons’ can be formed only when two or more individuals voluntarily combine together for a certain purpose. Hence volition on the part of the members of the association is an essential ingredient. It is true that even a minor can join an ‘association of persons’ if his lawful guardian gives his consent. In the case of receiving dividends from shares, where there is no question of any management, it is difficult to draw an inference that two or more shareholders function as an ‘association of persons’ from the mere fact that they jointly own one or more shares, and jointly receive the dividends declared. Those circumstances do not by themselves go to show that they acted as an ‘association of persons’.”
11. It is evident from the discussion in that case that joining together by the members of the association for the purpose of producing income is requisite for formation of an association of persons. Such coming together or combining is a consensual act and depends upon the volition of the parties. Merely because certain persons are constituted joint owners, such as by inheriting the property of a person on his death, they do not become an association of persons, for, in that event, the jointness is the result of operation of law and not of volition of parties.
12. In the case before the Supreme Court in Commissioner Of Gift Tax, Kerala v. Smt R. Valsala Amma, [1971] 82 ITR 828 two ladies who obtained properties jointly under a will and had not divided some of those properties executed a gift of those to their brother under one deed of gift. It was contended that the ladies may be held to constitute as an association of persons or a body of individuals. The GTO assessed them as an association. The AAC upheld the assessment as an assessment on a body of individuals. The Tribunal came to the conclusion that the assessment in question was a valid assessment and it was an assessment on an association. The High Court took the view that the two ladies could be assessed only as individuals. Section 3 of the G.T Act which is the charging section charges to tax gifts made by a person during the previous year and it was contended that the person who made the gift in the case was an association of persons constituted by two ladies or a body of individuals constituted by two ladies. Considering this question the Supreme Court said thus (p. 830):
“Now the question is in what capacity the gift was made by the assessees. Did they do it as an association or as a body of individuals or as individuals. The property received by the assessees under the will of their mother was admittedly received by them as co-tenants. Each one of them had half share in that property. The question whether they divided that property or not is not a material question. In law each one of them had half the right in the property that ??? gifted to their brother. They were holding that property as tenants???-common and not as joint tenants. Hence they made the gifts as tenanl???in-common and not as joint tenants. Each one must be held to have r???ie a gift of her share of the property though the gift is made through one???ngle document. It is surprising that the Income-tax Officer or the Aj???llate Assistant Commissioner or the Tribunal should have ever thought ???it the gift in question was by an association or by a body of individu???. The Gift-tax Act did not change the general law relating to the right ???o property. It merely sought to tax a gift of the property owned by a p???on. As mentioned earlier the property with which we are concerned???this case is a property owned by two persons as tenants-in-common, each???ie having a definite share.
In our opinion, the High Court ???is absolutely right in answering the question referred to it in favour d???he assessees. Civil Appeal No. 1436 (NT)/71 accordingly fails and the sa???is dismissed with costs.”
13. The joint ownership and joint a???ssment by heirs of a deceased will not make them an association of per???as was the view expressed in Commr. of Agrl. I.T v. Raja Ratan Gopal, [1966] 59 ITR 728 (SC). Where four persons succeeded to the estate as cc???harers and each one of them was entitled to ¼th share of income fro???the estate they did not form a unit for the promotion of any joint enter;???se to earn income, profits or gains and the collection of the entire incomi???rom the estate by one of the sharers or even by a common employee will???t make that income an income from a joint venture. This is what has b???n noticed by the Supreme Court in Commr. of Agrl. I.T v. Raja Ratan Gopal, [1966] 59 ITR 728. Each one of the sharers in that case was found t???ave obtained his income as an individual and not as an association of???ndividuals. This court in an earlier decision in Choodamani v. CIT, [1959] 5 ITR 676 had also expressed the same view as to the scope of the ter??? “association of persons”. According to the revenue the fa??? which are relevant for determining whether the four transferees constiti???an association of persons or at least a body of individuals are that, (???the four transferees are brothers, (2) though the transfer was of distin???plots to the iour transferees there was only one agreement preceding t???transfer, (3) one of the brothers alone paid the advance, (4) only one deed ???sale was executed, (5) after the purchase the entire property was lev???ed up and pile driving commenced before the purchase was completed ??? (6) such pile driving was only for construction of one building.
14. We are not at the question here ??? hether the property purchased by the four brothers were put to commc ??? use in a joint venture for deriving income as an association of person ??? Possibly if the income out of the venture they embarked upon later is sought to be assessed as that of an association of persons the question may become relevant. We are at the question whether the purchase is by an association of persons and not whether an association of persons came into existence after the purchase to run a joint venture. We have already indicated the elements required to find a combination styled “association of persons”. Some element of volition is necessary even for “a body of individuals”. What exactly would be the distinction between “a body of individuals” and “an association of persons” is a matter on which we need not speak further, for, that may not be relevant for the purpose of this case. A body of individuals is different from individuals and if they are treated as a person because they are a “body” there must be jointness by volition. When four persons take sale deeds for different plots of land from the same vendor and when each one of the transferees get absolute title to the property transferred to him there is no jointness in the purchase of the transferees. The fact that they may make or put to common use the property purchased by them is a factor which will have no bearing on the purchase itself. We are concerned here with the purchase only and that purchase is conceded to be in favour of four persons of four different properties for different considerations. In “A” schedule the first of the transferees alone has right and the three others have no right. So is the case with the other three schedules. If so, there is no conveyance of the property to all the four persons. Had the sales been effected by four different instruments it is agreed that the case now urged by the revenue may not have arisen. It would make no difference merely because the four sales are covered by one instrument. This is what has been said by the Tribunal in its order. The section, as we have already pointed out, speaks of a transfer by a person to another person. If the transfer in this case is not by the two joint transferors in favour of the four purchasers of the entire property so that each one of them got rights to that property under the transfer, s. 269C will have no application. This is what the Tribunal has said. We are in agreement with the Tribunal. In this view the appeals are to be dismissed. We do so. No costs.