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Interpretation of partnership deed for property transfer, requirement of registration under the Registration Act for property transfer, legality of partial dissolution deed, applicability of Partnership Act provisions on property ownership, relevance of apex court judgments on partnership property distribution. Analysis: The case involved a partnership firm with 17 partners who decided to transfer nine godowns from the firm's assets to individual partners through a partial dissolution deed. The main issue was whether this transfer required registration under section 17(1)(b) of the Registration Act. The Income-tax Appellate Tribunal referred the question of law regarding the transfer to the High Court. The Tribunal considered sections 14 and 15 of the Partnership Act, defining firm property and rights, and the decision in CIT v. Amber Corporation [1981] 127 ITR 29, stating that property contributed by partners becomes partnership property without registration. However, the High Court analyzed the apex court's judgment in S. V. Chandra Pandian v. S. V. Sivalinga Nadar [1995] 212 ITR 592, emphasizing that partners have no individual claim on specific firm property during the partnership's existence. The High Court concluded that the partial dissolution deed did not dissolve the firm entirely, making the transfer subject to registration if the firm continued. The court held that the partners could not hold firm property as co-owners without complying with section 17(1)(b) of the Registration Act. The Tribunal's decision in favor of the partners was overturned, ruling in favor of the Revenue. In summary, the judgment clarified that property transferred to partners upon firm dissolution does not require registration under the Registration Act. However, in cases of partial dissolution where the firm continues, registration is necessary for property transfers. The court emphasized the importance of partnership agreements and the applicability of Partnership Act provisions in determining property ownership within a firm.
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