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TMI Blog1986 (9) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... income from the property has to be assessed in the hands of the partner ? " We may first state the facts relevant to the above questions. The partnership firm called Messrs. Jethalal Nanji and Brothers; New Bhoiguda, Secunderabad, consisted of seven partners. Their shares in the partnership were not in equal proportions. The partnership firm owned a plot No. 4 in Bhoiguda, Secunderabad. The partnership firm obtained permission for constructing a building comprising of seven flats in the said plot. The permission for construction was obtained in the name of the firm. For the purpose of the construction, a separate account called " construction account " was opened in the account books of the firm. At the end of the construction, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him, the building comprising of the seven flats was always the property of the partners themselves and hence there is no question of any transfer. He observed thus: " The flats were never treated by the partners as the property of the firm, Instead of withdrawing monies from time to time for the construction, they maintained a common construction account and finally transferred the expenditure to their individual accounts ......... It is immaterial that the municipal sanction was obtained in the name of the firm ...... This is not a case where the property of the firm has been transferred to the partners by debit to their accounts in their profit sharing ratios." This reasoning of the Appellate Assistant Commissioner has been affir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which amounts were no doubt drawn from the partnership firm. It is argued that since the partnership firm consisted of these seven partners, the monies spent for construction are their own monies which fact is evident from the entries made in the account books at the end of the construction. The question is whether the view canvassed by the assessees and which has been accepted by the two appellate authorities cannot be said to be justified and warranted in the circumstances of the case? We think it is. Mr. Suryanarayana Murthy is right in law when he says that if the property concerned herein can be said to have become the property of the partnership firm at any point of time, it cannot be transferred to the partners by merely making entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that the inference drawn by the two appellate authorities from the above facts cannot be said to be unjustified or unwarranted. It cannot be said that such inference cannot flow from the above facts. Mr. Suryanarayana Murthy placed strong reliance upon the decision of this court in Abdul Kareemia Bros. v. CIT [1984] 145 ITR 442. We are, however, of the opinion that the facts of that case are totally distinct. What happened there was that the assessee-firm which was formed in 1963, treated the said property right from 1963 as the property of the firm. The income from the building was treated as the income of the partnership firm. Depreciation was also claimed by the firm and this went on till 1969 when entries were made in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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