TMI Blog2003 (7) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural operations. As the assessee failed to produce satisfactory evidence to support the claim, the Assessing Officer treated the entire income as income from other sources. On appeal the same was confirmed by the CIT(A) against which the assessee is in appeal before us. 3. It is argued by the ld. counsel that papers regarding possession of agricultural land the sale bill of agricultural produce were found during the course of search at the premises of the assessee. These documents themselves will go to prove that the assessee was carrying on agricultural activities. It was admitted that no evidence was found during the course of search indicating the cultivation, tilling of land, sowing of seeds, planting and other operations. But the fact remained that enough evidences were found during the course of search suggesting the agricultural income earned by the assessee. It was also stated that even in the assessment year 1992-93 the agricultural income declared by the assessee was accepted by the Assessing Officer. Neither the Assessing Officer nor the CIT(A) have found any discrepancy in the claim of the assessee vis-a-vis the documents seized during the course of search the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odown. When the assessee filed the return of income no income by way of income from house property was returned. The Assessing Officer therefore asked the assessee as to why no income under the head income from house property was disclosed by the assessee. In reply the assessee stated that as the premises were being used by the assessee for its business purposes, the question of disclosing the annual letting value of the premises did not arise. The Assessing Officer considered the submissions of the assessee. He observed that the assessee as an individual was the owner of the premises. But he was not the partner of the firm in his individual capacity. It was his HUF which was partner and the assessee was only representative of the HUF. Thus it was a case where the premises were not used by the assessee in its business. The Assessing Officer observed that the assessee would have got a benefit of section 22 had he been the partner in the firm in his individual capacity. The Assessing Officer therefore did not accept the claim of the assessee and proceeded to work out the annual letting value of the premises. He noted that the property was sold on 22-4-1994 for a consideration of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bagyalakshmi Co. [1965] 55 ITR 660 (SC) and V. Ramaswamy Iyengar v. CIT [1960] 40 ITR 377 (Mad.). The ld. counsel also stated that it is well settled law that a partner representing his HUF has two capacities: one as an individual qua his other partners and the other as a trustee qua other members of the HUF. In other words, the relationship between Karta and other partners is that of any individual or individual with another individual; or individuals. It is only for the purpose of deciding the question of assessability of income from the firm as to whether it should be taxed in the hands of Karta or individual one has to examine whether the partner has joined the firm as individual or whether he represents his HUF. While in the former case the income will be assessed in his individual hands and in the latter case in the hands of HUF. Whether the assessment of income is made in the hands of individual or in the hands of HUF does not alter the relationship of the partners inter se. The ld. counsel therefore pleaded that the property owned by the individual and used for the purposes of business of the firm would satisfy the condition laid down under section 22 even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case reported in CWT v. Rama Shanker Gupta [1988] 174 ITR 134 and by Madras High Court in the cases reported in CWT v. C.G. Radhakrishnan [1994] 210 ITR 1016 and D.M. Srinivas case ( supra ). This legal decision has been admitted by the Assessing Officer and he had no objection in allowing the claim of the assessee provided the assessee was partner in the firm in his individual capacity. But the lower authorities have held that the assessee was individual who owned the property but it was not the individual who was a partner of the firm. The partner was the HUF and the assessee was only representing the HUF. Thus it was not a case where premises were owned by a person who could be said to be a partner of the firm. 9. We have therefore examined this issue in greater detail. We find that similar provisions are made under section 40( b ) of the Act. The amended provisions of section 40( b ) of the Act has provided that in computing the income of the firm the deduction of any salary, bonus, commission etc. payable to a working partner was allowable deduction. Prior to amendment section 40( b ) has prescribed that no deduction from the income of the firm will be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enting a Hindu undivided family or any other body of persons then the position in law will not be any different. The Hindu undivided family is not and cannot be a partner in a partnership firm. The remuneration or the commission that is paid to the partner cannot be claimed to be a remuneration or commission paid to the Hindu undivided family. The partner may be accountable to the family for the monies received by him from the partnership. But in the assessment of the firm, the partner cannot be heard to say that he has not received the commission as a partner of the firm but in a different capacity." 11. The ratio laid down by Hon ble Supreme Court clearly stipulates that there was no difference between an individual who is partner or the karta of the HUF, representing the HUF. When the ratio of the Hon ble Supreme Court is applied to the instant case it is clear that whether a person is owner of the premises in the individual capacity and he was partner of the firm in the representative capacity and the firm was occupying the premises of the individual for the business purposes, such individual will be deemed to have occupied the premises as partner. The issue is therefore sq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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