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TMI Blog2013 (12) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... had purchased a piece of land. The property was purchased at a cost of Rs.1,71,030. The purchase deed was registered in the name of Mr. Irudayaraj in his personal name. Mr. Irudayaraj had also withdrawn money from the assessee-firm to finance the purchase of the above stated property. In the books of account of the assessee-firm the purchase of the land was shown as an asset. As per the accounts of the assessee-firm, it is seen that the property was purchased by the firm. Accordingly, this landed property was reflected in the balance-sheet of the assessee-firm. Mr. Irudayaraj sold this property on June 17, 2005 to a third person. The sale document was executed by Mr. Irudayaraj in his personal capacity. Mr. Irudayaraj also purchased anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the assessee-firm. This matter was taken in the first appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer on this point. The assessee is aggrieved and, therefore, the second appeal before us. The only issue raised in the present appeal is whether the assessee is liable for long-term capital gains taxation on sale of land on June 17, 2005, which was purchased on June 17, 1999. We heard Shri V. D. Gopal, learned counsel appearing for the assessee. Learned counsel relied on the decision of the hon'ble Madras High Court rendered in the case of CIT v. S. Rajamani and Thangarajan Industries [2000] 241 ITR 668 (Mad). He explained that the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the hands of the assessee-firm may be deleted. Shri T. N. Betgeri, the learned Commissioner of Income-tax appearing for the Revenue, on the other hand, contended that the facts of the present case clearly established that the property was purchased by using the funds of the assessee-firm and the sale proceeds of the property was again brought back to the assessee-firm and the property was always shown as one of the assets of the assessee-firm and, therefore, in such circumstances the facts speak for themselves and there is no basis for Mr. Irudayaraj in claiming the property as his individual property. The learned Commissioner of Income-tax explained that the decisions cited by learned counsel for the assessee are delivered on diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the assessee-firm was a registered firm carrying on business in pharmaceuticals, chemicals, drugs and money-lending. For the assessment year 1971-72, corresponding to the previous year ended on October 30, 1970, the firm filed a return showing an income of Rs. 1,22,180. While going through the accounts of the assessee, the Assessing Officer found that the capital account of the partners showed a credit of one-third share of sale proceeds of the house property Nos. 161 and 162, Nyniappa Naicken Street, Madras. Those properties were purchased on June 14, 1948 and February 1, 1950 by the firm and the income from the properties were being assessed in the hands of the firm until the assessment year 1964-65. During the accounting year ended N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty by means of book entries. Section 17(b) of the Indian Registration Act, 1908 provides that any non-testamentary instrument, which purport or operate to create, declare, assign, limit or extinguish any right, title or interest in the immovable property of the value of Rs. 100 and upwards shall be registered. Even if the transaction by which the common property becomes the separate property of each of the partners in severalty, it clearly amounts to a release and counter release of their respective interest in the common property. Even on that basis the transfer should be by a release deed. The court held that the book entries made showing the common properties of the partners as the separate properties of each of the partners cannot hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined entries regarding the purchase and sale of the property and the balance-sheet of the assessee-firm showed for some time the property as its own asset, such things cannot change the legal character of the transactions. The accounting entries reflected in the books of account of the assessee-firm cannot undo the rule of law or the law of land. In order to bring the property into the ownership of the assessee-firm, it was necessary to have a conveyance deed registered in the name of the assessee-firm. As no such document is available, no such conveyance can be presumed and as such it is not possible to hold that the property was ever owned by the assessee-firm. The consequence is that the firm cannot be implicated in the sale of the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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