TMI Blog1991 (8) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... There are three partners in the assessee firm one of whom is Smt. Preeti Rameshchandra Patel. She was earlier a partner in the firm of M/s. Shree Satyanarayan Estate. She retired from the said firm on 7-11-1980. The said firm of Shree Satyanarayan Estate was carrying on business of letting godowns to several parties and earning rent therefrom. After retirement of Smt. Preetiben the said firm continued the same business and had been granted registration. When Smt. Preetiben retired from the said firm, she received certain godowns on taking account of the said firm. The said godowns Were introduced by Smt, Preetiben in the assessee firm as her capital contribution. The business of the assessee-firm as stated in the partnership deed was to pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ought to have been granted. It was further submitted that the income was liable to be assessed as business income. Both these submissions were accepted by the AAC. The department is now in appeal and both the findings have been challenged in the grounds of appeal. 4. As regards the grant of registration it is admitted fact that for assessment year 1982-83 Smt Preetiben, one of the partners of the assessee firm, has been assessed to income-tax by order dated 16-3-1984. In this assessment the share of profits of Smt. Preetiben amounting to Rs. 12,927 had been included. The assessment of the firm had taken place on 8-3-1985. Thus the partner of the see firm has been assessed prior to the assessment of the assessee firm in respect of her s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the income in a particular year is assessable under the head other than the head of profits and gains of business would be irrelevant. The head under which the income is assessable under the IT Act is not material. What is material is the nature of activity of the firm. Under section 2(23) of the IT Act the words "firm", "partner" and "partnership" have the meanings respectively assigned to them in the Indian Partnership Act, 1932. Section 4 of the said Act defines expression "partnership" as a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The definition in the Partnership Act indicates that what all that was necessary was that the business should be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Ltd. it was held after an exhaustive review of the authorities, that under the scheme of the Income-tax Act, 1922, the heads of income, profits and gains enumerated in the different clauses of section 6 are mutually exclusive, each specific head covering items of income arising from a particular source and that even though the securities were part of the trading assets of the company doing business, the income therefrom had to be assessed under section 8 of the Act. In the case of East India Housing Land Development Trust Ltd. a company which was incorporated with the objects of buying and developing landed properties and promoting and developing markets, purchased certain land in the town of Calcutta and set up a market therein and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary under sub-section (2) of section 24 of the 1922 Act was that there was a business income in the commercial sense in the subsequent year although the said income would be assessable under a head other than the profits and gains of business, and that the loss of the earlier year could be set off against such income. This decision does not lay down that the income by way of interest from securities would be computed in accordance with the provisions for computation of income by way of profits and gains of business. What all this decision lays down is that the loss of earlier year would be liable to be set off against the income by way of interest from securities. This decision is therefore of no assistance. The same comment would apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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