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TMI Blog1975 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firm took over the lorries. In the accounts of both the assessee and the partnership firm, the value of the lorries was shown at the original book value. At the time of assessment, however, the assessee filed an affidavit stating that due to mistake and ignorance, the value standing in the account of the lorries in his individual books was transferred as purchase price to the books of the firm and in doing so the actual market value of the lorries was not taken into account resulting in presenting a wrong picture of the assets. Treating that transaction as a sale by the assessee to the partnership firm, the Income-tax Officer considered that neither the cost price nor the written down value could be taken into account for determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal permitted the assessee to raise these two additional grounds. The Tribunal, therefore, directed the Appellate Assistant Commissioner to receive evidence on the question whether the lorries belonged to the assessee or to the joint family of himself and his sons and submit a finding. The Appellate Assistant Commissioner in his report gave a finding that the lorries belonged to the joint family of the assessee and his sons. The Tribunal was of the view that when the partnership was formed and the lorries were taken over by the partnership the lorries which were once the of the joint family became the assets of the partnership and since the ownership accordingly was transferred from the joint family to the different entity which is the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs constituting the joint family were also members of the partnership with a third party, the lorries still continued to be owned by the joint family as such though the partnership also could be considered as an owner and that, therefore, section 41(2) is not attracted. The learned counsel for the revenue, on the other hand, contended that a Hindu undivided family as such could not be a partner in a partnership concern. Therefore, even though all the members constituting the Hindu undivided family are the members of the partnership, the Hindu undivided family as such could not be treated as a partner in a partnership. The lorries which were once the properties of the Hindu undivided family had become the asset of the partnership in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the contract of partnership and the principles of law governing such relationship. When, therefore, A makes over his property to a firm consisting of A and B, it will be a nice question whether the transaction involves a transfer of the property. By such a transfer A clearly does not divest himself completely of his rights or interest in the property, though it is true B, by reason of the transaction, becomes entitled to certain rights which are regulated by the terms of the agreement of partnership, as well is the provisions of the Indian Partnership Act. " The Supreme Court also in Commissioner of Income-tax v. Dewas Cine Corporation , with reference to a partnership formed for the first time and one of the members of the partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case, the Hindu undivided family consisted of the father and two sons and all the three were partners in the new partnership along with a third party. Therefore what was originally held by them as a Hindu undivided family is now held by them as partners in a partnership firm. In this respect there is no difference between an individual and a Hindu undivided family. As in the case of an individual, when he converts his in dividual property to that of a partnership, a Hindu undivided family also when the property of the Hindu undivided family becomes the property of the partnership ceases to hold the property. In the first case, the individual ceases to hold the property as his individual property and in the other case, the Hindu undi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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