Meaning

Association is Persons (AOP) means a group of people who comes together to achieve a common objective with same mind sets. Members in the AOP can be natural (Human beings) or artificial (Artificial Persons-e.g. company, LLP, etc.)

Body of Individuals (BOI) means a group of INDIVIDUALS (Human Beings) who come together to achieve a common objective.

Features

Only difference between the AOP and BOI is that its members composition. AOP/BOI can be formed by simply entering into a deed which contains objectives, names of members, share of members in profits, date of formation, its rules, byelaws, frequency of meetings of members or managing persons, powers of the management, the amount of capital introduced by the members if any etc., The deed can be registered with the registrar of society by paying the applicable fees.

There is no separate governing body for the both the AOP and BOI, they are self-driven with natural law of justice, customs and cultures that a person usually follows in the society.

Since there is no governing body, Income tax Act 1961 included AOP or BOI under Person definition in section 2(31) for the purpose of taxing such AOP/BOI.

Procedure

Since AOP/BOI is recognized as person under section 2(31) of the Income Tax Act 1961 it has to be assessed to tax separately hence there need of Permanent Account Number (PAN) to be applied first for the AOP/BOI. Also, the PAN is required for operating a bank account.

To get PAN the Management of AOP/BOI shall fill Application for PAN i.e. in Form 49A and shall pay the prescribed fee along with application and shall submit such application along with only a Notarized Deed.

Now the management will carry on the business of AOP/BOI or work towards the common objective for which it was formed. AOP/BOI may or may not earn profit/loss as a result of the operations. In case the AOP / BOI is formed with an objective of carrying business and earning profits let us evaluate the taxation of such profit or loss.

For any kind of assistance, contact Mr.Manohar B V, FCA, MCom @ manohar@mbvca.in / 9916870055