TMI Blog1985 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the transfer of petrol tanker from individual business to partnership firm in which such individual also became partner amounted to transfer in terms of section 2(47) and the difference between the written down value and the amount received by the individual from the firm was profit assessable under section 41(2) of the Income-tax Act ?" The assessee, Shri Vijendra Pal Singh of Ajmer, owned a petrol tanker, which he transferred to a partnership firm in which he also became one of the partners. The value of the tanker was estimated by the assessee at Rs. 40,000 and the said amount was credited in the capital account of the firm in the name of the assessee. The Income-tax Officer was of the view that the transaction amounted to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring for the Revenue made the same submission which was advanced before the Income-tax Appellate Tribunal on behalf of the Department, namely, that the transaction of the assessee bringing the petrol tanker into the assets of the partnership firm amounted to a transfer within the meaning of section 2(47) of the Income-tax Act and as the said asset was sold by the assessee to the partnership firm, the profit received by the assessee was assessable as the income of the assessee under section 41(2) of the Act. On the other hand, Mr. Maloo, appearing for the assessee, has supported the order passed by the Income-tax Appellate Tribunal. Section 2 (47) of the Act defines "transfer" as under " `transfer', in relation to a capital asset, includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no element of sale involved in such transaction, because the partnership firm is not a separate legal entity, but it is merely a compendious name of all the partners including the partner who has placed the asset at the disposal of the partnership firm. Lindely in his treatise on the Low of Partnership (14th edition) has observed that partners are called collectively a firm. Dealing with the legal notion of a firm, the learned author has observed as under (at pp. 29 30) : "The firm is not recognised by English lawyers as distinct from the members composing it. In taking partnership accounts and in administering partnership assets, courts have to some extent adopted the mercantile view, and actions may now, speaking generally, be bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of a share of a partner in the firm, the learned author makes the following statement (at p. 462) : "In the absence of a special agreement to that effect, all the members of an ordinary partnership are interested in the whole of the partnership property on the basis of equality between them, but it is not always clear in relation to any particular item of partnership property whether they are interested therein as tenants in common, or as joint tenants without benefit of survivorship, so far as a beneficial interest is concerned. It follows from this community of interest that no partner has a right to take any portion of the partnership property and to say that it is his exclusively. No partner has any such right, either during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Hind Construction Ltd [1972] 83 ITR 211, their Lordships of the Supreme Court while dealing with the question of transfer of assets by an assessee to the partnership as assessee's share of capital, observed that such transfer did not amount to a sale. Their Lordships held as under in the aforesaid case (at p. 214) : "No one can sell his goods to himself. A sale contemplates a seller and purchaser. If a person revalues his goods and shows a higher value for them in his books, he cannot be considered as having sold these goods and made profits therefrom. Nor can a person by handing over his goods to a partnership of which he is a partner and that as his share of capital be considered as having sold the goods to the partnership. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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