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1977 (4) TMI 35 - HC - Wealth-tax

Issues:
1. Whether the business asset, the Grand Hotel building, could be transferred to the partnership without a registered deed?
2. Whether the entire value of the building should be included in the individual assessee's net wealth?

Analysis:

The case involved the transfer of a hotel building from an individual assessee to a partnership with his son. The Wealth-tax Officer included the full value of the building in the assessee's net wealth. The Appellate Assistant Commissioner upheld the claim that only the assessee's 75% share should be included. However, the Tribunal ruled that there was no effective transfer, and the entire value should be in the individual's net wealth.

The main question was whether the building was brought into the partnership's stock or capital. The Transfer of Property Act requires a registered instrument for a valid transfer. However, case law, including Prem Raj Brahmin v. Bhani Ram Brahmin and other High Court decisions, established that no written document is necessary for an individual to contribute immovable property to a partnership.

The standing counsel cited a decision where a Division Bench held that immovable property belonging to a firm cannot be converted into personal property without a written instrument. However, this case did not address the issue of bringing individual property into a partnership without a registered instrument.

The High Court held that the Tribunal was not justified in requiring a registered deed for the transfer of the building to the partnership. They ruled in favor of the assessee, stating that the entire value of the building should not be included in the individual's net wealth. The assessee was awarded costs, and the advocate's fee was assessed at Rs. 200.

 

 

 

 

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