Law:

Section:

Section 22, read with section 5, of the Income-tax Act, 1961 [Corresponding to section 9, read with section 4, of the Indian Income-tax Act, 1922] - Income from house property - Chargeable as - Assessment years 1958-59 to 1960-61 - Whether term 'person' occurring in section 4 of 1922 Act includes firm - Held, yes - Land on which house was constructed, was purchased in name of firm - There was no evidence to support claim that construction was by done one of partners - Property stood in name of firm in municipal records - Further firm had claimed and availed exemption of income from house property for two years - Whether on facts it could be said that property belonged to firm and as such was assessable in its hands - Held, yes Words and phrases: Word 'Person' as occurred in section 4 of the Indian - Income-tax Act, 1922 FACTS The assessee firm constructed a house on the land purchased in its name. It claimed that the income was not taxable in its hands, but should be taxed directly in the hands of the partners constituting the firm. The Income-tax Officer rejected the assessee's contention and treated the house property as being owned by the assessee. Before the Tribunal, it was contended that a firm had no existence apart from its partners and consequently, it could only be the partners who were the owners of the property even though in the records of rights the property stood in the name of the firm. The Tribunal rejected the contention. On reference: HELD A partnership can own property and the circumstances that the partners have agreed to share the profits of a business is neither here nor there. The main object of the Partnership Act a partner is the agent of the firm for the purposes of the business of the firm but the ownership of property by the firm is by no means excluded by reason of the fact that the object of the firm is to share the profits of a business. Since taxability of the property owned by a firm is under the provisions of section 9 of the 1922 Act in an appropriate case, the income from that property may be treated under that section apart from the business of the firm which taxable under section 10 of the Act. That circumstance by no…

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