Law: Wealth Tax Act, 1957

Section: 27

[Indian Wealth Tax Act, 1957]........Partnership-Transfer by partner of his immovable property to firm-Whether registered instrument necessary Held no-Whether property can be assessed in the hands of the partner as individual-Held no-Partnership Act, 1932, S. 14. A partner can bring his immovable property to the stock or capital of the firm as his contribution thereto without a registered instrument. As soon as a partner intends that his separate properties should become partnership properties and they are treated as such, then by virtue of the provisions of the Contract Act and the Partnership Act, the properties become the properties of the firm. The assessee who was running a hotel as its sole properties entered into a partnership with his son in 1966. In the wealth tax assessment for the year 1967-68, he claimed that he had transferred his entire business assets including the hotel building which belonged to him individually to the newly formed partnership. The Tribunal held that in the absence of a registration deed there was no effective transfer of the building from the assessee to the firm and the entire value of the building should be included in his net wealth. On a reference: Held, that the Tribunal was not justified in holding that the business assets consisting of the building could be transferred to the partnership only by a registered deed and that in the absence of such a deed the building remained the individual property of the assessee. The entire value of the building was not, there- fore, assessable in the hands of the assessee as an individual. Cases referred to: Chief Controlling Revenue Authority v. Chidambaram [1970] AIR 1970 Mad 5; CITV. Hind Construction Ltd. [1972] 83 ITR 211 (SC) ; CIT v. Janab Hyath Batcha Sahib (N.) [1969] 72 [TR 528 (Mad); Firm Ram Sahay Mall Rameswar Dayal v. Bishwanth Prasad [1963] AIR 1963 Pat. 221; Prem Raj Brahmin v. Bhani Ram Brahmin [1946] ILR 1946 1 Cal 191; Ramanathan Chettiar (R. M.) v. Contr. of ED [1975] 99 ITR 410 (Mad) and Ram Narain & Brothers v. CIT [1969] 73 ITR 423 (All). JUDGMENT [The judgment of the court was delivered by CHANDRASHEKHAR J.] At the instance of the assessee, the Income Tax…

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