Body of Individuals (BOI) :
Main distinction between BOI and AOP is that AOP can be of artificial persons (like company, society, firm), while BOI should be of natural persons (individuals) only.
In CGT v. Valsala Amma (1971) 82 ITR 828 (SC), mother bequeathed a property to her two daughters. They gifted the property to their brother. Each had a distinct share in the undivided property. It was held that the two daughters did not constitute AOP or BOI – quoted in Smt. Pannabai v. CIT (1985) 23 517 = 153 ITR 608 (AP HC FB – 3 member bench).
In CIT v. HarivadanTribhovandas (1977) 106 ITR 494 (Guj HC DB), BOI means a conglomeration of individuals who happened to have come together but who carry on some activity with a view to earn income or profit or gains – quoted with approval in CIT v. V S Desale (1982) 10 115 = 137 ITR 117 (Bom HC DB).
In Deccan Wire General Stores v. CIT (1977) 106 ITR 111 (AP HC), it was observed, ‘We are of the view that the expression ‘BOI’ should receive a wide interpretation, perhaps not wide enough to include a combination of individuals who merely receive income jointly without anything further as in the case of co-heirs inheriting shares or securities but certainly wide enough to include a combination of individuals who have a unity of interest but who are not actuated by a common design, and, one or more of whose members produce or help to produce income for the benefit of all – quoted with approval in CIT v. HarivadanTribhovandas (1977) 106 ITR 494 (Guj HC DB).
In CIT v. Deghamwala (1980) 3 470 = 121 ITR 684 (Mad HC DB), it was observed, ‘The meaning of the word “body” would require an association for some common purpose or for a common cause or there must be unity under some common tie or occupation. A mere collection of individuals without a common tie or a common aim cannot be taken to be a BOI. The two entities (BOI and AOP) cannot be identical in conception, but it is not possible to state precisely what combination would constitute an AOP and what a BOI. There may be some overlapping and the incorporation of this category into the definition can be attributed to an anxiety not to leave out any category from assessment. The rule of construction of noscitur a
sociis would have to be applied in respect of the two categories, viz., AOP and BOI. Further, the words “whether incorporated or not” would show that the category is such as can be incorporated or is susceptible of incorporation, if the members so chose. The BOI whether incorporated or not must be capable of holding properties as an entity and of distributing them at the time when it dissolves. Thus, a common purpose or a common tie, actual or potential capacity to hold properties or disposable income would be the minimum requirement of such a BOI. The purpose or the aim should, in the context of the IT Act, be to produce income or hold income-producing assets. In this view, though a BOI is not identical with an AOP, they have some
similarities. An AOP may consist of non-individuals too. But a BOI has to consist only of individuals or human beings’.- – In this case, it was held that in the absence of material to show that the two co-owners acted in concert in selling the property with a view to earn capital gains, mere execution of a joint sale deed would not lead to constitute a BOI
Thus, co-heirs of inherited property cannot be held as BOI. However, if such co-heirs carry on come business, they will fall within the definition of ‘BOI’.