Law: Income Tax Act, 1961

Section: 256

Income tax---Property of firm Assessee, a firm property Property acquired with funds of the firm and cost debited in books of firm also claiming depreciation on property Property is to be treated as firm property Property transferred in favour of individual partners by snaking entries in books of firm Does not become property of partners. A partner cannot at any given point of time claim any of the firm properties to be his notwithstanding the fact that at one time they belonged to him and that he had put the properties into the assets of the firm. Where certain properties were acquired with the funds of the firm and the cost of these properties was debited in the books of the firm and right from the inception of the firm, these properties were treated as the firm properties and the firm claimed depreciation on these properties also any that the income from these properties was treated as the firm's income and accordingly divided between the partners, the properties must be treated as the properties of the firm. In such a case, by merely makin entries in the account books of the firm, the firm's properties could no become and could not be treated to have become the separate properties e the partners. Similarly, so long as they are the firm's properties no partners ca; predicate that he owns a particular property or that he owns a specifies share in the particular property or properties, as the case may be. A A I R 1966 3 C 1300 rel. (1969) 73 I.T.R. 423 and 1969 1 I.TJ 719 (All) ref. JUDGMENT JEEVAN REMY, J. The assessee is a partnership firm, Messrs Abdc Kareemia and Brothers. The partnership consists of five partners, who are brothers. Originally the partnership was formed in 1963 under partnership deed, dated 27th March, 1963. At that time the fifth brother was a minor and was admitted to the benefits of the partnership. After the fifth brother became a major he opted to continue as partner an accordingly a partnership deed, dated 6th November, 1964 was executed b all the five partners brothers. 2. Three house properties were purchased in the names of these brothers. The first sale deed is dated 12th August, 1960 while the second and third sale deeds are…

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