TMI Blog2011 (7) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... dual co-owner merely because he happens to be a partner of a firm in occupation of a part of the property - Decided against the assessee - I.T.A. No.742 of 2004 - - - Dated:- 15-7-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. R.N. Dutt, Mr. Aniket Mitra, Mr. R.N. Mitra. For the Respondent: Mr. R. N. Bandopadhaya, Mrs. Soma Chatterjee. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax ( Act ), 1961 is at the instance of an assessee and is directed against an order dated 22nd June, 2004, passed by the Income-tax Appellate Tribunal, A Bench, Kolkata, in Income-tax Appeal being ITA No.1724 (Kol) of 2002 for the Assessment Years 1998-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the assessee as one of the co-owners is a partner, such co-owner is entitled to the benefit of exclusion provided in Section 22. As indicated earlier, the Tribunal has turned down such contention. Being dissatisfied, the assessee has come up with the present appeal. A Division Bench of this Court formulated the following substantial question of law for decision: Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in law by not holding that the income from the property occupied by the firm of which the assessee owner was a partner for carrying on the business of the firm was not liable to be included in its total income under Section 22 of the Income Tax Act, 1961? Mr. Dutt, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax, W.B., reported in (1973) 90 ITR Page 267. By relying upon the aforesaid two decisions, Mr. Banerjee contends that in order to get the benefit of exemption provided in Section 22 of the Act, the property should have been owned by the partnership firm itself which was in possession of the property and in such a situation, the partnership firm as the owner of the property could get the benefit of exemption. According to Mr. Banerjee, the mere fact that the assessee is one of the partners of the partnership firm which is in possession of the property is immaterial for the purpose of availing oneself of the benefit of Section 22. According to Mr. Banerjee, in order to get the benefit of Section 22 of the Act the owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the occupier of the portion of the same must be the same person and the profits of such owner from the business or profession must be chargeable to income tax in order to be excluded from the operation of Section 22 of the Act. In the case before us, the assessee is no doubt a co-owner of the property but the portion is not occupied by such co-owner for his business or profession which is chargeable to income tax; it is a partnership firm which is in the occupation of the portion and the profit from such business is chargeable to income tax and such partnership business is chargeable to income tax for which the firm is liable to tax. Therefore, the assessee cannot pray for exclusion of income of the portion in occupation of a partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Properties Ltd. vs. C.I.T., West Bengal, reported in (1973) 90 I.T.R 267, under the Indian Partnership Act, a firm is an entity known to law and is capable of acquiring and owning property, both moveable and immoveable, and under the law of income tax in India, a firm owning a property would be liable to taxation. It was further pointed out that under the Indian Income Tax Act, 1922, a firm is a person liable to tax as the owner of the property and under Section 9 thereof, in case of property owned by firm, the same is to be treated as the property of the firm and not of its partners. The same principles have been maintained in the Income Tax Act, 1961. Thus, after taking into consideration the overall position of a partnership firm in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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