Law:

Section:

Section 9 of the Indian Income-tax Act, 1922 - [Corresponding to Section 26 of the Income-tax Act, 1961] - Income from house property - Property owned by Co-owners - Assessment year 1957-58 - ITO assessed rental income derived from residential building and godowns within premises of assessee firm's factory in hands of assessee, firm - Assessee claimed that rental income should have been assessed in hands of individual partners in their respective profits sharing ratio - Tribunal disallowed claim of assessee holding that while co-owner can alienate or sell his share in property, a partner of firms has no such right of alienation of share either in profits or assets of firm and partner's share in assets of firm is not in same ratio in which he shares profits or losses and, hence, provision of section 9(3) of 1922 Act would apply only to co-owners and not to partners of firm - Whether order of Tribunal could not be interfered - Held, yes FACTS The assessee was an unregistered partnership firm consisting of thirteen partners with specified capital contributed and share in the profit and loss. It was running a wool and cotton pressing factory. Among other assets of the firm, there were residential buildings and godowns within the premises of the factory and they were yielding rental income. For the relevant assessment year, the ITO assessed income of the firm which included rental income derived from the immovable properties the rest being the income from the business of pressing of bales carried on by the firm during the said year. It was contended by the assessee before the ITO that the rental income from the immovable properties should not have been assessed as the income of the firm under section 9(1) of the Act 1922, but that it should have been assessed as income in the hands of the partners of the firm in proportion to their profit-sharing ratio under section 9(3) of the Act 1922. This contention was repelled by the ITO in his order. The assessee's appeal against this order was dismissed by both the AAC and the Tribunal. On reference : HELD It might be observed that section 19 of the Indian partnership Act 1932 deals with implied authority of the partner as…

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