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TMI Blog1981 (4) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner. The firm was in existence prior to the sale of this property which was effected by a document No. 612 of 1975 dated 10-6-1975 but registered on 25-6-1975. The two owners who are the assessees under appeal here had sold the property to the firm referred to earlier for a sum of Rs. 1,20,000. For the wealth-tax assessments on the assessees here for the assessment year 1975-76 and also for an earlier assessment year the value admitted for this property was Rs. 2,40,000. When the document was executed and the sale was made the accounts of the two assessees here in the firm were credited with Rs. 40,000 each. The third partner Shri T.V. Narayanan Nambissan also brought in Rs. 40,000 as capital to the firm and this was credited in his a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The assessees here have come in appeal before us. The argument that was taken before the AAC and the GTO that there was no gift at all was not made before us in the course of hearing before us. The only claim that was made was that the gift is exempt from gift-tax under section 5(1)(xiv) as it has been made in the course of the business and for the purpose of the business. It is pointed out that the business of the firm was originally started in 1964, that the capital contributed by all the three partners was of a sum of Rs. 9,000, that the business required further capital and the firm had obtained a loan of Rs. 75,000 before this property was acquired by the firm. Subsequent to the acquisition of this property by the firm the Nedungadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. It is also pointed out that the sale has been made by the two assessees as joint owners of this property to the firm in which they are partners. It is argued that the exemption under section 5 is available to the person making the gift or to the person deemed to have made the gift in the course of carrying on a business, profession or vocation. It is contended that the assessees under appeal here have not been carrying on any business as the owners of this property and in their capacity as the sellers of the property in the transaction considered here under. It is the contention that in order that the benefit of section 5(1)(xiv) may be available to the assessee, the assessee must have been carrying on a business and in the course of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess because there is an integral connection between the transfer of the property and the carrying on of the business of lodging in partnership with a third partner. The other requirement that the transfer is for the purpose of business is also satisfied inasmuch as such transfer was intended to enable the firm to obtain the necessary further funds for the purpose of the business. 7. We have carefully considered these arguments. If the business to be considered for the purpose of section 5(1)(xiv) were the business of the firm Sri Krishna Bhavan, then one would have to agree with the learned counsel for the assessees that the transaction of sale with an element of gift in it can be considered to be in the course of carrying on the business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The business in question was carried on by the firm in which the two assessees were partners with the third partner. The business of a partnership should be considered to belong to the partnership. Of course under the law of partnership a firm has no legal personality but the partners carry on the business of the firm acting for the partners as a whole. Each partner in respect of the partnership business is acting not only for himself but for all the partners. The partner is in fact only acting as an agent in this respect. Even though the partner in his capacity as a partner of the firm may be considered to be carrying on the business of the partnership it cannot be considered to be the same as a business carried on by him individually in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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