JUDGMENT
1. The following three questions have been referred having been called by the High Court under Section 256(2) of the Income Tax Act, 1961 (in short the "Act"):
1. Whether the Tribunal was correct in the facts and in law in concurring with the order of the First Appellate Authority holding that M/s Laxmi Pd. & Sons was an A.O.P. created in pursuance of the will left by late Laxmi Pd., when there was no specific direction in the will for the creation of any trust.
2. Whether the Tribunal was correct on the fact and in law in concurring with the interpretation of the contentions when on plain reading of the will the interference drawn is found to be incorrect.
3. Whether the Tribunal was correct in law in concurring with the First Appellate Authority and holding that part of the unexplained assets round during the course of search belonged to the AOP styled as M/s Laxmi Pd. & Sons and ignoring the fact that had these assets belonged to AOP why the returns of wealth were not filed before its detection in search.
2. A copy of the will in question has been enclosed and we find that the relevant part of the will merely says that during the life time of the testator he will remain the owner of all movable and immovable properties and after his death, Sri Subhash Chandra and Sri Tagore Kumar will become owners of all movable and immovable properties. The will further annexes certain obligations to that ownership namely, making provision for the upbringing the family of Vijay Kumar, one of the sons of testator. However, the will says that such arrangement of upbringing his family would be discretionary as the two legatees may deem fit and this obligation will not be enforceable. There is another obligation imposed upon the legatees namely, that they will marry the two daughters of the testator in good families and the normal ceremonies will be performed in a respectable manner. These obligations though vague but yet these are obligations annexed to the ownership which has been passed on by the will. We have to consider whether by this will Subhash Chandra and Tagore Kumar have been constituted into an association of persons (in short "AOP").
3. We may make it clear at this point that the case of the assessee is that they were constituted into an AOP by virtue of the will. The assessee does not claim that the AOP got constituted in any other manner.
4. AOP is not defined in the Act. Section 2(7) of the Act says that an "assessee" is a "person".
5. Section 2(31)(v) of the Act says that "person" includes "an association of persons".
6. The explanation to Section 2(31) of the Act reads as under:
2(31) "persons" 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.
7. Thus it is apparent that an AOP is a voluntary association of two or more persons who joined together for a particular purpose which may not necessarily be with the object of deriving of income profits or gains. It is also obvious that although the initial object may not have been deriving of income etc. but subsequently income must have arisen, because otherwise the AOP will not be concerned with the Act. Whatever the object of associating, the association has to be voluntary on the part of the persons forming association. Forced association of persons because of inheriting joint property by a will or such other circumstances not being voluntary would not constitute such joint legatees as AOP.
8. In view of the above principles, we are of the opinion that the assessee cannot be said to be an AOP because of the terms of the will under which the two legatees have inherited the assets of the testator jointly, shares of each legatees not being specified.
9. We answer the first and second question accordingly.
10. So far as the third question is concerned in view of the our findings that the AOP was never constituted by the will, no further answer is called for.
11. This reference is disposed of accordingly.