Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 405 - AT - Income TaxAddition u/s 56(2)(vii) - real owners - partners v/s firm - property purchased by assessee-partner less than guideline value of the property - addition made to the extent of assessee’s share therein i.e., one-fourth - Assessee argued that entire amount to purchase the property was spent by the firm and the property actually belonged to the firm - as per AO the sale deed does not mention that the property was purchased in the capacity of the partners of the firm and the property was being acquired by the firm and loan was sanctioned in the name of the partners only and property was purchased in individual names only - HELD THAT:- As the impugned property has been purchased in joint ownership of 4 persons all of whom happens to be partner in a firm - From the financial statements as placed on record, it emerges that the said property has been introduced by the partners in the firm and the said property is in business use of the firm. The same is also evidenced by the fact that the depreciation has also been allowed to the firm. The firm is repaying the loan installment and for all practical purposes, it is the firm only which is exclusively using the property for its business use. We also find that the provisions of Section 14 of Indian Partnership Act provide that unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm. Therefore, applying purposive construction to the facts of the present case, the property is deemed to have been acquired by the firm only and not by individual partners. Provisions of Sec.56(2)(vii)(b)(ii) could not be pressed into service since these provisions do not apply to partnership firm at the relevant point of time. Therefore, addition is not sustainable. Assessee appeal allowed.
|