TMI Blog2003 (2) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... minor was admitted to the benefit of the Partnership. According to Clause-III of the Partnership Deed, the business of the firm shall be to take on lease or hire, to purchase or acquire immovable properties and demolish, improve or reconstruct the said properties for the purpose of hiring or selling out them to the best advantage of the firm and in particular to develop immediately the property at 70 70/1, M.G. Road, Bangalore-560 001. On 21-3-1980 one of the partner Smt. Asha Nanjaraj took the premises bearing No. 70/70/1, M.G. Road, Bangalore on lease for and on behalf of assessee firm by means of registered lease deed from Shri A.K. Anand Narain and Shri Prem Narain. The lease deed was for a period of 40 years. As per the terms of lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of D.R. Puttana Sons (P.) Ltd. v. CIT [1986] 162 ITR 468 (Kar.) and also the judgment of the Supreme Court in the case of S.C. Mercantile Corpn (P.) Ltd. v. CIT [1972] 83 ITR 700. Apart from this, the assessee himself claimed the income as income from house property all along. The CIT(A) further observed that the term business has been defined in the Income-tax Act, however, the same was not defined in the Indian Partnership Act. Upon this observation, the CIT(A) came to the conclusion that the activities of the assessee is in the nature of the organised one with an intention to generate income and the same is within the wide meaning of the term business as understood in the commercial parlance by the public. According to C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 dated 19-1-2001 and 29-11-2001, the assessee firm has to be treated as registered firm, even though the assessee has income only from house property. 6. We have heard the rival submission on both sides and we have also perused the material available on record. It is admitted case of both parties that the rental income received by the assessee has to be treated as income from house property. In fact, the assessee has filed the return claiming the income as income from house property. The lower authorities also concluded that the income is only from house property. Section 2(b) of Indian Partnership Act, 1932 defines business. It is an inclusive definition as in the case of Indian Income-tax Act. Section 2(b) of the Indian Partnership Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 'partners' and collectively 'a firm' and the name under which their business is carried on is called the firm name." According to the above definition, three essential conditions are required to be fulfilled for a valid Partnership Firm. i. There must be an agreement entered into by all the partners concerned. ii. The agreement must be to share the profits of the business. iii. Business must be carried on by all or anyone of the partners acting for all. 8. While examining the provisions of Indian Partnership Act in order to find out whether there can be a valid Partnership Firm or not we have to first find out whether there is an agreement between the partners to share the profit of a business. The agreement wherein Partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be an assessment in the status of a firm. The revenue took up the matter on reference before the High Court. Hon'ble Karnataka High Court by its order dated 19-6-1992 in ITRC No. 26 to 29/1991 approved the decision of this Tribunal. The jurisdictional High Court held that when there is no firm, the question of considering as to whether there is a registered firm or not does not arise. The income from property will be taxed in hands of partners as co-owners in view of section 260f the Act. However, the said decision has no application in present set of facts, as the genuineness of firm is not questioned, but status is changed to Association of Persons instead of a registered firm. 10. Under the Income-tax Act, income is chargeable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Motel [1982] 133 ITR 895, wherein the court held as under: "The classification of various heads of income under the Income-tax Act is only for the purpose of convenience of administration of the Act and the concept of "business" as envisaged under the Income-tax Act cannot be imported into the determination of the question as to whether a group of individuals, by agreement carryon business as a firm. While as a result of section 2(23) of the Income-tax Act, the concept of the Partnership Act has been imported into the Income-tax Act, there is no provision in the Partnership Act which imports into it the concept of the Income-tax law. Accordingly, because of the classification of income under several heads under the Income-tax Act, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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