Meaning of “Body of individuals v. Association of persons”

The meaning of body of individuals v. association of persons under section 2(31) of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble High Court tried to explain the meaning of body of individuals v. association of persons.

Meaning of body of individuals v. Association of persons defined by court

The phrase ‘body of individuals v. association of persons‘ used in section 2(31) of the Income Tax Act came up before various high courts as detailed under :

1. Hon’ble Bombay High Court explained the meaning of ‘body of individuals v. association of persons’ while delivering judgment in CIT vs. Modu Timblo [1994] 206 ITR 647 (Bom.) as under :

Meaning : The expression ‘person’ has now been defined in section 2(31) which includes ‘an aop or a boi, whether incorporated or not’. The legislature had definitely some purpose in mind while specifically including a boi in the category of persons along with ‘aop’. It will not be proper to say that ‘boi’ must be given the same meaning as attributed to ‘aop’ by the supreme court in cit v. Indira balkrishna [1960] 39 itr 546.

Doing so will render the entire exercise of defining the expression and incorporating specifically ‘boi’ within the ambit of a particular category of persons redundant. The expression ‘boi’ must be given a definite meaning of its own. ‘Aop’ and ‘boi’ convey two different combinations of persons and it will not be proper to try to apply the principle of ejusdem generis to give the same restricted meaning to the newly introduced expression ‘boi’ as had been given by the supreme court to aop on interpretation of the word ‘association’. The fact is that the expression ‘boi’ must receive a wider interpretation than ‘aop’.

2. Hon’ble Andhra Pradesh High Court explained the meaning of ‘body of individuals v. association of persons‘ while delivering judgment in Deccan Wine & General Stores vs. CIT [1977] 106 ITR 111 (AP) as under :

Meaning : The absence of a common design is what principally distinguishes a body of individuals from an association of persons. Another distinguishing feature is that the one refers to persons and the other to individuals.

Section 2(31) of Income tax act

2(31). “person” includes—

(i) an individual,

(ii) a Hindu undivided family,

(iii) a company,

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) a local authority, and

(vii) every artificial juridical person, not falling within any of the preceding sub-clauses.

Explanation.—For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains;

In this article, you can get guidance from high courts on the meaning of body of individuals v. association of persons under section 2(31) of the Income Tax Act.

Updated up to Finance Act 2021