I.T.As. Nos. 3811/LB to 3815/LB of 1997, decided on 23rd June, 2000 VS I.T.As. Nos. 3811/LB to 3815/LB of 1997, decided on 23rd June, 2000, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2335 (2000)

(a) Income-tax---

----Commercial plaza---Association of persons---Alienation of shares of individual members---Status---Alienation of shares of individual members did not change the basic character of the A.O.P. which was that of a collective effort by all members to construct a commercial plaza and dispose of the same on strictly commercial hires.

(b) Income Tax Ordinance (XXXI of 1979)---

--S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Incorrect/improper interpretation appraisal of law and facts, could not debar the Inspecting Additional Commissioner from taking remedial action under S.66-A of the Income Tax Ordinance, 1979 especially when the misconceived decision of Assessing Office ha without (doubt resulted in heavy loss of Revenue.

(c) Income Tax Ordinance (XXXI of 1979)---

----Ss.66-A, 62 & 13(2)(d)---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Income of Commercial plaza---Assessment of share income in the hands of individuals rather than in the hands of Association of Persons (AOP) on the ground that share in the property was definite and ascertainable-- Assessment was cancelled by the Inspecting Additional Commissioner on the ground that direction by the Assessing Officer was detrimental to Revenue as the property had been constructed as a single unit collectively by the individual members of A.O.P. duly approved by L. D.A. ---Construction of plaza being a commercial venture was required to be assessed to income-tax globally on the total income emanating froth sale/rent of shops, offices---Income emanating from A.O.P. assessed m the hands of members of the A.O.P. in their respective shares caused a revenue loss---Validity---Looking at the matter in its totality, Appellate Tribunal came to the conclusion that plaza was indeed an A.O.P. made up of 7 members and that this A.O.P. was collective enterprise set up to commercially exploit the multi-storey building---Order of the Inspecting Additional Commissioner under S.66-A of the Income Tax Ordinance, 1979 was found to be in order as the Assessing Officer had passed an order under S.62 of the Income Tax Ordinance, 1979 directing that income realized from such commercial plaza be assessed in the hands of individual members only and not globally in the hands of the A.O.P., which direction was, prima facie, detrimental to the interests of Revenue and, therefore, also erroneous in terms of the express statutory stipulation contained in S.66-A of the Income Tax Ordinance, 1979.

(1971) 23 Tax 223 (SC Pak.), (1964) 10 Tax 175 (SC. Ind.); 1992 PTD 102; 1992 PTD '104; 1993 PTD Note 197 at p.271; 1992 PTD Note 40 at p.43, 1970 PTD 34; (1997) 223 (SC Pak.); (1993) 200 ITR; (1973) 88 ITR 2930 (SC Ind.); (1994) 209 ITR 888; I.T.A. No. 1198 of 1996-97 and 1978 PTD 54 = 43 ITR 14 = I.T.A. 06 of w 1998 ref.

Shahbaz Butt alongwith Ch. Anwar-ul-Haq for Appellant.

Shafqat Mehmood Chohan, L.A. alongwith Mrs. Talat Altaf, D. R. for Respondent.

Date of hearing: 21st June, 2000.

ORDER

MUHAMMAD MUNIR QURESHI (ACCOUNTANT MEMBER).---These appeals by an A.O. P. known as Paisa Akhbar Markaz, 10 Paisa Akhbar Road, Lahore constituted by 7 persons Dr. Jehangir Alam, Lt.-Col. (Retd.) Abid Rashid Minhas, Mr. Amjad Rashid, Mr. Habib Alam, Dr. Aftab Alain, Dr. Azra Qureshi and Mst. Salma War, are directed against the order of I.A.C., Range-I, Lahore dated 5-6-1997 in which the I.A.C. cancelled the assessment made under section 62 of the Income Tax Ordinance, 1979 for the assessment years 1989-90 to 1993-94 for the reason that such assessments made .had been found to be errorneous in so far as these were prejudicial to the interest of Revenue due to the fact that the D.C.I.T. had filed assessment proceedings initiated in the case of the A.O.P. and had directed that the individual members of the A.O.P. be assessed separately with regard to the income earned by them and investment made by each member of A.O.P. also directed to be appraised in their individual hands in view of the fact that their respective shares in the property known as Paisa Akhbar Markaz, 10 Paisa Akhbar Bazar, Lahore, was definite and ascertainable. This direction of the D.C.I.T. was seen by the I. A. C. as detrimental to revenue as the property known as Paisa Akbar Markaz comprising a Commercial Plaza, had been constructed as a single unit, collectively, by the individual members of A.O.P., as per a deliberate plan, duly approved by-L.D.A. Construction of the Plaza being a commercial venture was required as per the I.A.C.'s perception of the law, required to be assessed to income-tax globally on the total income emanating from sale/rent, as the case may be, of shops, offices etc., constructed therein. By arbitrarily directing that the assessment of income emanating from A.O. P. be assessed in the hands of members of the A.O.P. in their respective shares, a revenue loss is statedly manifest and is, therefore, cause for action under section 66-A as such revenue loss renders the order passed under section 62 to be erroneous, by definition.

2. The action of the I.A.C. has been strongly contested by the appellant/A.O.P. on the ground that the action under section 66-A is statedly illegal as shares of individual members being definite and ascertainable, assessment has rightly been directed to be made in the individual hands as per order passed under section 62 for the charge years 1989-90 to 1993-94.

3. It is the A.R.'s contention that the Assessing Officer had examined the matter pertaining to construction of Plaza in its entirety and had come to the conclusion, after conscious deliberation, that the individual members, co-owners of the cited property, were liable to be assessed individually in respect of the income realized from sale of shops/units constructed within the Plaza and investment made by them individually was liable to be appraised in their individual hands.

4. Appellant's A.R.'s basic premise is to the effect that the individual, alleged, co-owners of cited property, inherited the land on which the Plaza has consequently been constructed and at the time of inheritance, their ownership in the said land ' was definite and ascertainable and this ownership continued to be exercised in like manner when the plaza was constructed by them. According to the appellant, specific portions in the Plaza have been assigned to the alleged co owners according to their individual share holding which as cited above is allegedly a continuation of their share holding in the land received by inheritance by each one of them. It is the appellant's contention that investment too has allegedly been contributed by each alleged co-owners in precisely the share that the co-owner had in the said Plaza. Furthermore, it is the appellant's contention that the alleged co-owner have simply constructed the Plaza and as per deposition made by the appellant before the Tribunal, the construction of Plaza is statedly not motivated by an intention of making profit out of the venture. The A.R. emphasized that the purpose of the whole venture was basically to construct a Plaza and the earning of income therefrom was statedly not central to the construction of Plaza. It is the appellant's .contention that where a property (such as the Plaza in question) is alienated since its inception, then in such a situation status of A.O. P. cannot be assigned. The A.R. pointed out that the arrangement between the alleged co-owner statedly been accepted by the Excise and Department for the purpose of property tax levy.

5. According to the A.R., the D.C.I.T. had correctly appraised the factual position and had come to a conscious decision to file proceedings in the case of A.O. P. and direct that assessment be made of individual co-owners separately. It is contended that there is no illegality in such a decision consciously made by the D.C.I.T. and as there is no error in such decision made, therefore, it was not open to the I.A.C. to take action under section 66-A.

6. As per grounds of appeal, it is also the appellant's contention that the action under section 66-A has also been, statedly, rendered void for the reason that the I.A.C. who had initiated the action under section 66-A and cancelled the assessment made .by D.C.I.T. under section 62 had also, statedly, in the same case, accorded permission for addition to be made under section 13(2)(d) earlier on 28-5-1992 for an amount of Rs.59,28,600 (assessment year 1991-92).

7. It is the appellant's contention that the I.A.C. acted without lawful authority and there was allegedly no basis in law for his direction that the assessment of income arising from cited Plaza be assessed in the hands of A:O. P. globally besides assessment made in the hands of alleged co-owners in their respective shares in the cited Plaza. It is also the A.R.'s contention that the D.C.I.T.'s order dated 30-6-1994 under section 62 in the case of A.O.P. is neither erroneous nor prejudicial to the interests of Revenue.

8. The A.R. has cited cases-law in support of his contention that in the case of property alienated since inception, status of A.O.P. cannot be assigned (1971) 23 Tax 223 (SC Pak.), (1964) 10 Tax 175. (SC Ind.). The A.R. has also referred to cases-law in support of his contention that in the case of an A. O. P., a key purpose in forming the A. O. P. is to earn income 1992 PTD 101 and 1992 PTD 104. The A.R. has also cited case law in support of contention made that I.A.C: having exercised option to direct that assessment of income from Plaza be made in the individual hands of alleged co-owners, such option exercised was legally in order and not open to question subsequently (1993 PTD Note 197 at p.271, 1992 PTD Note 40 at p.43 and 1970 PTD 34.

9. The A.R. has also referred to an alleged `Agreement', dated 12-10-19$6 in which the legal heirs of 4ate Mr. Abdul Majeed and late Mr. Abdul Rasheed owners of Property No.S-III-13-S-10/1 and Property No.S-III-13-S-10, respectively, have agreed to construct a multi-story building after obtaining permission .from L.M.C., as per "their own at arrangements in a manner that each individual owner being directly responsible to construct and defray the cost of construction to the extent of his/her ownership in the said property". It is emphasized that the cited individuals have allegedly sub-divided their respective properties viz. S-III-13-S-10/I and S-IIl-13-S-10 in Paisa Akhbar Street in accordance with their individual shares (as inheritance of each) and such Sub Division indicated by way of colour coded site plan---except those portions of the property that are for common use viz. open space, excalators, passage and corridor etc. have not been so colour coded and have been left blank. It is further stated in the cited agreement that through such agreement general power of attorney has been assigned to Lt.-Col. (Retd.) Abid Rashid Minhas by Mr. Aftab Alam and Mst. Salama Zafar son of arid d/o Late Abdul Majeed for the reason that they were residing in Karachi and, therefore, unable to execute this agreement in person.

10. The D.R. has contested the appellant's stance as utterly misconceived and artificially contrived on the basis of a, so-called, "agreement" that finds no specific mention whatsoever in the order of D.C.I.T., dated 30-6-1994 under section 62 for the charge years 1989-90 to 1993-94 passed in the case of A.O.P. Furthermore, the said agreement again finds no mention whatsoever. in any of the assessment orders passed by D. C. I. T. in the case of individual members of the A. O. P.

11. The D.R. who was assisted by Legal Advisor has first of all taken issue with appellant's A.R. for repeatedly referring to the so-called `agreement' between members of the A. O. P. dated 12-10-1986, when the said agreement was never before the D.C.I.T. as pointed out above when he was making appraisal of the A.O.P.'s affairs. The so-called agreement is not registered and as it :s central to appellant's case against the I.A.C.'s action under section 66-A, the fact that it has not been mentioned in any of the orders passed by D.C.I.T. in the case of individual members or the order passed by the same D.C. I.T. it the case of A.O.P. itself has been highlighted as a matter of considerable significance. It is argued that the so-called agreement, never placed before the D.C.I.T. at the relevant time cannot be used to provide legal cover for the contention regarding individual specification of shares of the members of the A.O.P. in the cited property as per colour coding of Site Plan attached with the said agreement. It is the D.R.'s contention, fully supported by L.A. that the so-called agreement having never been considered by the DCIT at the relevant time could not be relied upon belatedly at appeal stage to substantiate appellant's contention.

12. It is the D. R.'s contention that the entire construction of Plaza and subsequent sale of its constituent units and income realized therefrom is a pure and simple business venture in which all members of the A.O.P. have participated `collectively', of their own volition and with express purpose of realizing income therefrom contention that the cited purpose as per so-called agreement between the members of A.O.P. dated 12-10-1986 was simply to construct a multi- storey building is rebutted as utterly implausible and making no sense whatsoever. It was argued strongly that the ultimate purpose of construction of cited Plaza was to realize income therefrom.

13. The Legal Advisor specifically pointed out to the Tribunal that the fact that shares of individual members of A.O. P. were ascertainable still did not absolve the A.O.P. from assessment of its global income arising as a result of sale/rental constituent units of the Plaza. In any case the L.A. emphasized that each member of the A.O.P. had a vested interest in each and very inch of the property considered as a unit. The building i.e. Commercial Plaza, was one unit jointly owned by the members of A.O. P. and the purpose of construction of the Plaza was only to earn income therefrom. In this context reference was made to the printed Brochure available in the market and prepared by the promoters of the Plaza i.e. all the members forming the A.O.P. The promoters of Paisa Akhbar Markaz are clearly cited on the cover of the Brochure as Paisa Akhbar Markaz Associates. Similarly, the site plan submitted to L.D.A. made no reference to the members of the A.O.P. as individual clients of the Architect who made out the site plan and submitted it to L. D. A.

14. The D.R. explained that the essential ingredients of an A.O.P. included unity of purpose, volition and object of realizing income profits and gains. In the present case each and every members of the A.O.P. had independently decided to become member of the A.O.P. and each one of them were agreed that they would get together to construct a Plaza in a location of premier commercial significance. As is evident from the brochure, the object of the A.O.P. was to sell the constituent unit i.e. shops, offices etc. located within the Plaza at commercial rates. It was thus statedly established beyond doubt that the Plaza had been constructed for commercial gain i.e. earning of income by the members of the A.O.P. over and above the cost that had been incurred in constructing the Plaza. The D.R. assailed the appellant's contention that, the earning of profits/gains from the Plaza was not the main objective of its construction as a blatant and brazen misstatement before the Tribunal simply to show that the construction of Plaza was not a business venture and hence its income not liable to be assessed on global basis in the hands of the A. O. P.

15. The D. R. further pointed out that none of the individual members of A.O.P. had executed sale-deeds independently in respect of the portions within the Plaza to which they claimed specific ownership as per colour coded Annexure with the so-called agreement of 12-10-1986. Rather it was pointed out that all the sale-deeds without exception had been executed by Lt.-Col. (Retd.) Abid Rashid Minhas, attorney holder for all the members of the A.O.P. This, according to the D.R. further established that the contention made regarding specific individual, ownership of specific portions within the Plaza was an artificial arrangement that had no basis in reality and had been contrived only to confuse and confound the Income-tax Authorities so that the A.O.P, as a global unit escaped proper levy of income-tax to the benefit of its individual members. It was pointed out that had this not been so, then the individual members of the A.O.P. must have executed sale-deeds individually in respect of their individually marked portions within the Plaza. As this is not so, it is, therefore, established that the Plaza as a unit is jointly owned and there was no question of ownership being strictly restricted to individual members in .respect of specific portions of the Plaza.

16. The D.R. further pointed out that in the sale-deeds it is the attorney holder who has negotiated the sale and the attorney holder has not stated that he was acting on behalf of a specific member of the A.O.P. in respect to the particular sale being made.

17. The D. R. submitted that the order acted upon by the I.A.C. passed under section. 62 by the D. C.I.T. in the case of A. O. P. dated 30-6-1994 was without doubt prejudicial to the interests of revenue as the income from sale of constituent units of Plaza when considered globally in the hands of A.O.P. would, without any doubt, suffer much greater taxation than when considered in the individual hands of members of A.O.P. Loss of revenue is thus patent and, by definition (66-A) an assessment order resulting in loss of Revenue was also erroneous.

18. The D.R./L.A. have referred to case-law which shows that the construction of Plaza involves a collective effort for a common purpose and the earning of income from such commercial venture was on essential feature (1997) 223 (SC Pak.), (1993) 200 ITR, (1973) 88 ITR 2930 (SC Ind.) and (1994) 209 ITR 888.

19. We have heard the arguments made by the A. R. and the Revenue. After due consideration of the matter, we find:---

(i)Commonality of purpose of all members of A.O.P. with regard to construction of a commercial multi-storey building known by the name of Paisa Akhbar Markaz, is also too evident. The members of the A.O.P. are without doubt united in a common objective viz. to construct a Commercial Plaza. Construction of a Commercial Plaza is itself indicative of its real purpose i.e. to earn income therefrom by realizing profits gains over and above the construction cost incurred. We are, therefore, convinced that construction of the Plaza is essentially a commercial venture and income realized therefrom is business income assessable under section 22 of the Income Tax Ordinance, 1979.

(ii)The so-called "agreement", dated 12-10-1986 between the members of the A.O.P. indeed finds no mention whatsoever either in the order passed in the case of the A.O.P. under section 62 for the charge years 1989-90 to 1993-94 dated 30-6-1994 or any of the orders passed in the case of the individual members of the A.O.P. It is pertinent that the same D.C.I.T. has assessed both the A.O.P. as well as the individual members and has nowhere made any mention of the agreement dated 12-10-1986. It is also pertinent that this so-called agreement is not a registered document.

20. The appellant has not been able to cite a single case involving a commercial Plaza in which the primary objective of constructing the Plaza was not the earning of income and making of profits/gains over and above the construction cost.

21. The appellant has gone to great lengths to establish individual ownership of specified portions of the Plaza. However, the sale-deeds executed by the attorney holder do not lend support to sale of specific portions of the Plaza by their specified owners. Rather the sale-deeds indicate that sale of constituent units of Plaza had been made on a global basis and sale proceeds therefrom were not shown to have been routed to specified individual members of the A.O.P. but rather to form the collective income/profits of the A.O.P. as a unit to be shared subsequently by the individual member$ in their respective shares.

22. The so-called contribution made by individual members of A.O.P. for the construction of cited Plaza has not been specifically quantified anywhere in any document before us nor does such, so-called, individual contribution, find specific mention in any assessment order. The 'ambient circumstances clearly suggest that the members of the A.O.P. have pooled their resources to realize their collective objective of construction of a commercial Plaza. There is nothing on record to suggest that the contribution made by individual members was strictly consistent with their specified shares in the A.O.P.

23. The so-called alienation of shares of individual members referred to by appellant does not change the basic character of the A A.O.P. which is that of a collective effort by all members to construct a Commercial Plaza and exploited the same on strictly commercial lines. The Brochure printed by the promoters of the Plaza, who are the members of the A.O.P., makes it abundantly clear that the constituent units of the Plaza are up for sale in the market at commercial rates and it is the A.O. P. as a global unit that is making the sale and not the individual members in their personal capacity. Thus the repeated reference to so-called alienation of property is contrived to evade proper incidence of taxation only and in no way prevents the A.O.P. from acting collectively to realize maximum profits from sale of constituent unit of the Plaza.

24. The status of A.O.P. has been assigned by the D.C.I.T. in his order dated 30-6-1994 passed under section 62 for the charged years 1989-90 to 1993-94. The IAC has not changed this status in any .way. However, the I.A.C. has rightly acted to neutralize the D.C.I.T.'s direction to make assessment of income realized from Plaza exclusively in the individual hands of the members of A.O.P. in their respective shares and not to make any assessment of income in the hands of A.O.P.

25. The D.C.I.T. has wrongly accepted the appellant's contentions to the effect that "there is no assessee with the name of "Paisa Akhbar Markaz". (Page 2 of assessment order, gated 30-6-1994 in the case of A.O.P.). Rather, Paisa Akhbar Markaz is the A.O.P. that is made up of 7 members. As is evident from the detailed discussion above it is clear that Paisa Akhbar Markaz is a fully functioning A.O.P. with the avowed objective of realizing income profits and gains from the cited commercial Plaza. That being so, the option exercised .by D.C.I.T, to which reference has been made by the appellant in his appeals before us, to assessee the individual members separately with respect to their respective shares in the income of the, Plaza, is misguided and misconceived and hence a nullity in the eye of law. Such option having been illegally exercised as a result of incorrect/improper interpretation appraisal of law and facts, cannot debar the I.A.C. from taking remedial action under section 66-A, especially when the misconceived decision of DCIT has without doubt resulted in heavy loss of revenue as a necessary consequence of splitting up, per force, the total income realized by AOP.

26. The reference by the appellant in the ground of appeal (No.2) to allege earlier notice under section 13(2)(d) dated 28-5-1992 has not been explained/elaborated by the appellant during the present appeal proceedings as a bar to the action currently taken under section 66-A for the charge years 1989-90 to 1993-94. Nothing whatsoever has been placed on record by the appellant during the course of appeal proceedings to show that the IAC taking action under section 66-A has contradicted any earlier "finding" recorded by him on the matter. It has also not been shown that any other IAC had ever recorded a contrary finding on the matter at an earlier date.

27. The decision of IAC to proceed under section 66-A is not a mere `change of opinion' as alleged by appellant vis-a-vis decision of D.C.I.T. in his order, dated 30-6-1994 in the case of A.O.P. (assessment years 1989-90 to 1993-94). The JAC has simply taken cognizance of the all too evident fact that Paisa Akhbar Maikaz is a commercial Plaza collectively built by 7 members that constitute an A.O.P. and that such Plaza being a purely commercial enterprise was liable to be assessed directly with respect to the total income realized globally by the A. O. P.

28. The so-called agreement of 12-10-1986 referred to by appellant before the Tribunal (and which was not proved to have been produced before D.C.I.T. when he passed order under section 62 in the case of A.O.P. on 30-6-1994 or when he made assessments in the, case of individual members of the A.O.P. on 28-11-1994) does not in any way debar the individual member from exploiting the Plaza for commercial purposes Rather, the sale having been made in each and every case by the attorney holder, Lt. Col. (Retd.) Abid Rashid, Minhas acting directly in his individual capacity without any reference whatsoever to any individual member of the A.O.P. clearly shows that the attorney holder has not been encumbered in any manner in negotiating the sale of constituent units of the Plaza viz. shops, offices, apartments etc.

29. In the case of an AOP it is to be noted that it is "a creature of contract". (ITA No. 1198 of 1996-97 decided on 13-12-1977; 1978 PTD 54 = 43 Tax 14 -- I.T.A. 6 of 1998). In the present case appellant has referred to agreement dated 12-10-1986 as the contract terms by which the A.O. P. is governed. According to the appellant, the so-called agreement of 12-10-1986 establishes the individual ownership of members of the A.O.P. of specified portions of the cited commercial Plaza constructed by them. By doing so, the appellant clearly seeks to 1 escape global assessment of A.O.P.'s total income. However, as pointed out in above paragraph, appellant's contention of strict individual roles played by members of the A.O.P. and strict individual contributions allegedly made for specified portions of cited commercial Plaza is belied by the facts on record as well as the ambient circumstances. Thus it is not possible at all to establish from the material on record, the precise amount contributed by each member towards construction of the cited Plaza. The appellant was specifically asked during the appeal proceedings whether it can be established from bank accounts of each member that specified sums of money equal to the members shares in the, A.O. P. had been contributed. The AR of the appellant avoided a direct answer to the question and instead made a general response to the effect that members of the A.O.P. have contributed towards construction of cited Plaza in the amounts that they held shares in the AOP. -It is reiterated that specific documents in the shape of bank statements in `respect of each individual member of A.O.P. have not been produced, at any stage by appellant to establish its contention on the matter. Furthermore, the agreement dated 12-10-1986 does not make specific reference to precise share of each individual member of A.O.P. and ever the annexure appended with the agreement comprising colour coded Site Plan of cited Plaza, does not specifically cite the precise square feel involved in respect of each individual member. The appellant's A.R. was questioned on the matter but again made a general response that the precise sq. ft. of covered area owned by each individual member can be worked out from the colour coded drawings appended with .the agreement. It is further to be noted that the individual members in no case have negotiated sale of their so-called individual portions in the cited Plaza with the purchase. Rather the entire sale agreements have been negotiated by the attorney holder of all members of AOP Lt.-Col. (Recd.) Abid Rashed Minhas. This fact is of crucial significance as the sale-deeds executed do not cite the names of any individual member o1 AOP and the attorney holder only is cited. Also; the appellant has not been able to establish by reference to the sale deeds, the so-called "individual stake" of each member of AOP- in the cited Plaza. All this goes to show that sale of constituent units of the Plaza has been made on the global basis, collectively, by the A.O.P. as such; and not- by individual members of the A.O.P. Furthermore, it is established from the ambient circumstances surrounding the sale transactions that the terms of agreement dated 12-10-1986 have not been implemented -strictly which shows that the members of A.O.P. had agreed to dispose of constituent unit of cited Plaza on a purely commercial basis, collectively, through their attorney holder. Thus in reality it is the A.O.P. 'collectively' that has finalized sale of constituent units of cited Commercial Plaza and not the. individual members of AOP as is the contention of the appellant before us. It is thus obvious that appellant's contention during appeals has been made simply to rebut I.A.C.'s action under section 66-A and is not based on facts, as discussed above.

30. In the matter of assigning the status of A. O. P., it is be noted that the Income Tax Ordinance, 1979 does riot specifically define `A.O.P.' as such. Rather, the term A.O.P. is included in the definition of "person" (subsection (32) of section 2). The dictionary meaning of Association of Persons is "an organized body of people who have an interest, an activity, or a purpose in common; a society". (The American Heritage Dictionary of the English Language, 3rd Edition, 1992). It is obvious that such definition' applies well in the situation before us as the 7 individual members in the present case clearly have agreed to construct a Plaza (objective) on purely commercial lines. The 7 members, therefore, have a common interest. Case law on the subject further clarifies that "volition" is also a necessary ingredient of an AOP and it is evident that element of volition is clearly present in the present case as is evident from the fact that each- individual member has participated in. the joint enterprise of his own free-well and has not been subjected to any coercion or pressure of any sort. Available case-law on the subject of A.O.P. also indicates that the earning of income is also an ingredient of an A.O.P. This is quite understandable in a business context as the term 'business' as understood in the ordinary parlance, indicates transactions made with a view to earning profit. As the cited Plaza is without any doubt whatsoever a commercial building if follows, therefore, that this is a business enterprise and the earning of income has to be a key feature of the construction of the Plaza. The A.R. of appellant vehemently dented during the appeal proceedings that the earning of income was the central purpose of construction of cited Plaza. However, his denial has no merit whatsoever as it is completely belied by the factual position obtaining on the ground and the ambient circumstances which establish beyond any shadow of doubt that the members of the A.O.P. constructed the Plaza to earn income.

31. Looking at the matter in its totality, we have come to the conclusion that Paisa Akhbar Markaz is indeed at A.O.P. made up of 7 members and that this A.O.P. is a collective enterprise set up to commercially exploit the multi-storey building at 10 Paisa Akhbar Bazar, Lahore. That being so, the order of the IAC under section 66-A for the charge years 1989-90 to 1993-94 dated 5-6-1997 is found to be in order as the D.C.I.T. had passed an order, under section 62 on 30-6-1994 directing that income realized from such Commercial Plaza be assessed in the hands of individual members only and not also be assessed globally in the hands of the A.O.P., which direction is, prima facie, detrimental to the interests of revenue and therefore also erroneous in terms of the express statutory stipulation contained in section 66-A of the Income Tax Ordinance, 1979.

32. Resultantly, the appeals filed by the appellant, fail.

C.M.A./M.A.K./354/Tax/(Trib.)Appeals failed