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TMI Blog1992 (7) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... f the partnership reads as under : " 7. The capital of the partnership shall consist of as under :-- (a) The Parties of the First Part have agreed title and interest in the said property described in the Schedule hereunder written by way of capital contribution and for the purpose of taking accounts it has been agreed by and between the parties hereto that the party of the First Part shall be credited with an amount of Rs. 9,00,000 in the Books of Accounts of the said Partnership as and by way of their capital contribution. The aforesaid amount of Rs. 9,00,000 has been ascertained on the basis of the said property being valued at or for the price of Rs. 9,00,000 as per architect's valuation report. (b) Parties of the second and third parts shall contribute, provide and procure whatever capital is required for the purpose of carrying on partnership business and the party of the First Part shall not be bound to contribute any further amount by way of capital, loan or otherwise. " 4.1 The share of the assessee-company in the partnership business was to the extent of 80 per cent and the balance 20 per cent was held by the two other partners. 5. On 4-8-1978, the assessee-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ground floor and the compound of the said building as compensation for vacating the premises. 8. The Assessing Officer made the assessment on that basis that the assessee-company's contribution to the capital of the new partnership firm styled as Marshall Real Estate and Investment Corporation amounted to " transfer " of property giving rise to capital gains. For the purpose of computing capital gains, he substituted the fair market value of the property at Rs. 11 lakhs, for Rs. 9 lakhs valued by the assessee-company. In adopting the value of the property at Rs. 11 lakhs, the ITO was influenced by the fact that the assessee agreed to sell the property for a consideration of Rs. 11 lakhs while agreement for sale dated 4-8-1978 to Kamal Construction Co. Pvt. Ltd. within three days of the inception of the partnership firm with effect from 1-8-1978. According to the CIT(Appeals) the ostensible purpose of forming the partnership firm was to develop the property. He took into consideration the indenture of partnership and also noted that within three days from the date of the formation of partnership the sale agreement of the property was entered into. This demonstrates the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way so as to tax the subject twice over the same income. Our attention was invited on the ratio laid down by the Apex Court in the case of CIT v. Murlidhar Jhawar Puma Ginning Pressing Factory [1966] 60 ITR 95 and by the jurisdictional High Court in the case of CIT v. V. H. Sheth [1984] 148 ITR 169 (Bom.). 12. Coming on merits, Shri Dastur stated that the estate was converted into stock-in-trade and its cost must be taken at Rs. 9 lakhs. Alternatively, it was stated that if the capital gains are taken into consideration in the case of the assessee-company, the claim of Rs. 1,49,000 made by it ought to be allowed. Our attention was invited on the correspondence with unauthorised tenants in this connection. 13. Shri Keshav Prasad, ld. Departmental Representative appeared before us and vehemently supported the order of the ld. CIT(Appeals). It was stated that the facts of the present case are completely different from that of the Murlidhar Jhawar Purna Ginning Pressing Factory and V. H. Sheth. The ratio as laid down in these two cases cannot be applied in the facts of the present case. Shri Keshav Prasad relied on the decision rendered in the case of S. P. Jaiswal v. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imply, the fact that the income which was earned by 'X', has offered for taxation by 'Y', and as per 'Y's statement, the same being taxed in the hands of 'Y', does not exonerate 'X', from his liability to make the payment of tax. Once it is found that the income is earned by 'X', the income is to be assessed only in his hands. Canons contained in the tax jurisprudence apropos the jeopardy of double taxation owe its origin from a well known common law dictum " Nemo debut his vexari pro uno delicto ". It means that no one should be vexed twice for the same fault. Under the provisions made to this effect in the tax laws nobody can be taxed twice on the same income. 17. The facts of the present case dwell on different footings. The law propounded in the dictum referred to hereinbefore is not germane to the matter. It is evident that the property was actually sold by the assessee-company. The conveyance was executed in its name and not on behalf of the partnership firm. Certificate as required under section 230-A of the IT Act, 1961 was also obtained by the company. In these circumstances, it is difficult to accept that real income accrued to the partnership firm and not to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bona fide, tenants. It transpires from the perusal of clauses 2 and 3 of the agreement for sale that the property is agreed to be sold on " as is where is basis ", i.e., subject to all existing tenancies. It is palpable from the agreement that the entire property was in the occupation of the tenants. The names of the tenants are reflected in Annexure 'A'. As per this agreement the assessee-company was not bound to give vacant possession. We have also noted that the assessee-company purchased the property from a private trust. There is no material on record to prove that the assessee-company created any encumbrances in respect of the property since then, making it liable, to pay the said amount of Rs. 1,49,000. Neither the alleged unauthorised parties were produced before the Assessing Officer nor any cogent material was placed before us to demonstrate the exigency for making the payment of Rs. 1,49,000. We do not find any mention in the agreement in regard to the unauthorised occupants. We are, therefore, inclined to accept the finding given by the ld. CIT(Appeals) in regard to the same. We, accordingly, uphold his order on this count also. In the result, appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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