9911796707
TMI Blog1972 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years concerned in this reference are 1958-59, 1959-60 and 1960-61 and the corresponding accounting years being the financial years 1957-58, 1958-59 and 1959-60. The assessee is a registered firm consisting of two partners, Sri Chhaganlal Burman and Sri Baijnath Parasrampuria, with equal shares. The firm was constituted under a deed of partnership dated 6th December, 1956, the partnership having been deemed to have come into existence on and from 19th September, 1958. It is provided in the partnership deed that the partners would carry on the business of buying, selling, developing lands, building and/or letting out lands, building and also deal in shares, securities, bullion, jute and jute products, textile and other commodities fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Commissioner on behalf of the assessee that a firm was not a legal entity and as such it could not be the legal owner of the immovable property. If any immovable property was acquired in the name of the firm, the partners of the firm were the legal owners thereof and as the respective shares of the partners in the aforesaid property were definite and ascertainable, the rental income could only be assessed in the hands of the partners in respect of their respective shares under section 9 of the Indian Income-tax Act, 1922. It was further contended that as the assessment of the partners had already been completed earlier and the respective shares of the partners in the rental income of the aforesaid property had been included in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing in the Partnership Act which precluded a firm from acquiring or owning a property. The Commissioner further held that section 9(3) was not applicable as there was nothing to show that the partners were holding an equal share in all the assets and property held by the firm. Thirdly, that the fact that the income from the house property had already been assessed in the hands of the partners, in his opinion, wrongly, would not stand in the way of assessment of the income in the hands of the firm. The assessee appealed to the Income-tax Appellate Tribunal against the aforesaid order of the Commissioner under section 33B. Same contentions were raised before the Tribunal regarding the ownership of this property by the firm. The Tribunal up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implied authority of the partner to act as an agent of the firm and it is provided in sub-clauses (f) and (g) of sub-section (2) of section 19 that a partner does not possess implied authority to acquire immovable property on behalf of the firm or to transfer immovable property belonging to the firm. These sections, in our opinion, clearly establish the position that the firm was an entity known to law under the Indian Partnership Act and by the said Act the firm was such an entity which was capable of acquiring property, and owning property, movable and immovable. Under the Indian Income-tax Act it has been provided that the firm has the same definition as it is provided under the Indian Partnership Act. Counsel for the assessee contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owned by a firm had to be treated as the property of the firm and not of its partners. A firm could, it was held, therefore, be taxed as owner under section 9 in respect of the income from property owned by it. It was further held that sub-section (3) of section 9 would not apply to the case of property owned by a firm. The view we are taking in this case is in consonance with the view taken by the Rajasthan High Court in the case of New Cotton and Wool Pressing Factory v. Commissioner of Income-tax and the view of the Kerala High Court in the case of S. N. Syed Mohammed Saheb & Bros. v. Commissioner of Income-tax and the Allababad High Court in the case of Ram Narain and Brothers v. Commissioner of Income-tax. Counsel for the assessee dr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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