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TMI Blog1984 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10 per share. The assessee, therefore, claimed a short term capital loss of Rs. 50,000. The ITO disallowed this claim of the assessee on the ground so unity of identity of a firm and its partners and the impossibility of dealing between the firm and its partners. 4. The assessee appealed to the CIT(A) who confirmed the action of the ITO by relying on a number of decision mentioned in his order and observing as under: "In this case, in any case, the loss is purely notional. The shares were allotted to the firm on the conversion of the partnership business. The shares have been purported to be transferred to the partners by the firm at a national rate, the so-called sale price having been merely debited to the accounts of the partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th brother. The company in which the shares are held is their own company. The reason for not transferring all the shares has also not been mentioned. The firm and its partners are in apposition to pass any entry they like. The entries are supposed to have been passed on last day of the relevant accounting year. Thus, here there is not real loss apart from the legal position that a partner cannot made profit out of his transaction with the firm, A firm cannot make profit out of its transactions with the partners, a partner cannot incur loss out of the transactions with the firm and vice versa which rests on the will recognised principle that one cannot make a profit or loss out of himself. The cases mentioned above also comprise the situati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hna Setty Sons vs. Addl. CIT 1975 CTR (Kar) 54 : (1975) 100 ITR 587 (Kar) and that of the Gujarat High Court in the case of CIT vs. Kartikey vs. Sarabhai (1981) 24 CTR (Guj) 184 : (1981) 131 ITR 42 (Guj) wherein the assets transferred by the firm to its partners where held to be a genuine transfer. The ld. counsel for the assessee, therefore submitted that the lower authorities should have allowed the assessee's claim for short-term capital loss of Rs. 50,400. The ld. departmental Representative, on the other hand, highlighted the elaborate reason given by the CIT(A) for coming to the conclusion that there was no valid transfer of the shares by the assessee firm to its partners. He relied of the decision of the Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Mills Ltd. out of its own funds and the shares were held by the assessee firm as its own assets, although these shares were held in the names of different partners. The law is fairly settled that during the subsistence of a partnership no partner can claim any of the properties belonging to the firm in which he is a partner as his own property. The Transfer of Property Act contemplates a transfer from a person to himself or to himself and one or more other living person. In the instant case, the firm claimed to have transferred the shares belonging to it to its partners. This fact was not controverted by the Revenue. In the case of R. B. Lachman Das Mohanlal Sons vs. CIT (1964) 54 ITR 315 (All) the partners of the firm constituted a lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee did not find place in the assessee's P L A/c. In regard to leakage of gas from the cylinders there was no evidence not could any figures be given by the assessee in support thereof. He, therefore, confirmed the trading addition of Rs. 16,324 made by the ITO. 9. In this further appeal before us the ld. counsel for the assessee reiterated the same contentions as were advanced before the CIT(A). He, however, could not improve his case before us by production of any further evidence in support of his contention that the assessee had to incur any expenditure for earning the gross profit of Rs. 36,052 or there had been any shortage of gas due to leakage etc. We, therefore, find no reason to interfere with the order of the CIT(A) on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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