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TMI Blog1986 (1) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... nding of the AAC, first narrated the facts in the background and went through his order at length. He submitted that the registration was rightly refused in the instant case because the property which was leased out to Indian Petro-chemicals Corpn. Ltd. (IPCL), a Government company, belonged jointly to four real brothers---Shri Harjaspal Singh, Shri Jagbirpal Singh, Shri Surjitpal Singh and Shri Tarvinderpal Singh---whereas the said lease deed was executed and signed by Harjaspal Singh on behalf of himself and as constituted attorney of his three brothers and whereas Mrs. Harinder Kaur wife of Shri Surjitpal Singh is one of the partners with rest of three gentlemen and as she was not the co-owner of the property, there was no genuine partnership and the registration was rightly refused by the ITO. In support of his contentions, he relied on the cases of Ramniklal Sunderlal v. CIT [1959] 36 ITR 464 (Bom.), Sudarshan Co. v. CIT [1973] 89 ITR 85 (Mys.), New Savan Sugar Gur Refining Co. Ltd. v. CIT [1969] 74 ITR 7 (SC) and last of all Sunil Siddharthbhai v. CIT [1985] 156 ITR 509 (SC). He submitted that when paragraph 3 of the lease deed is gone through in detail and (d), (f) and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Harjaspal Singh, Shri Jagbirpal Singh, Shri Surjitpal Singh and Shri Tarvinderpal Singh had a joint property at G.T. Road, Sherpur. On 7-8-1980, Harjaspal Singh on behalf of himself and as constituted attorney of his three brothers, entered into an agreement for warehousing facilities with a Government company incorporated under the Companies Act, 1956, namely, IPCL. As per the said deed, premises measuring 6,000 sq. feet were leased out on a monthly rent of Rs. 4,500 and as per the said deed, the obligation cast on the lessee, i.e., IPCL, was payment of monthly rent and to arrange at its cost for insurance of the goods stored in the premises; whereas on the lessor there were numerous obligations cast, which are extracted and placed below : "(a) To pay all existing and future taxes, rents, rates, charges, assessments and outgoings of any kind assessed, imposed or payable to the Municipal Corporation, State or Central Government or any other authority, (b) To keep exterior of the premises and all drainage, conduits, electricals, sanitary and other provisions in the premises in good and substantial repair, order and condition and from time to time to do or carry out all structura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (q) To be liable and responsible for the safety of the materials of IPCL stored in the premises. (r) To arrange necessary supply of drinking water and electricity in the said premises at its cost." Besides, there were other conditions mutually agreed upon which were detailed in paragraph 3 of the said agreement, out of which we place below (d), (f) and (g) more specifically, because the learned departmental representative based his case on the same, viz : "(d) IPCL paying the rents hereby reserved and performing and observing the covenants and conditions herein contained shall hold and enjoy the premises without any let, hinderance or interruption by the lessor or any person acting on its behalf. (f) This agreement can be terminated by the IPCL by giving two calendar months' notice to the lessor. (g) IPCL shall retain the original agreement and the lessor shall retain the duplicate thereof." 5. Then after going through the relevant extracts from the agreement for warehousing facilities entered into by lessors, we now come down to the partnership deed which was executed between three of the lessors-co-owners of the said immovable property and Mrs. Harinder Kaur wife of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and simple question of leasing out the property. Then because the said agreement was entered into by three of the four partners and husband of the fourth partner, could not also be damaging to the assessee's claim because we cannot ignore the partnership deed which was subsequently executed in which the business mentioned to be that of the partnership firm, is undoubtedly the business of clearing and forwarding agents at G.T. Road, Sherpur, and it cannot be said that the concern was not doing the business for which the partnership was started because warehousing is one of the very important aspects of business of clearing and forwarding agents. Then, contribution of capital by Mrs. Harinder Kaur is also one of the important aspects and it is not that it was contributed subsequently but it was on the very first date when others had contributed only Rs. 501, she had contributed Rs. 12,000. The learned AAC has very rightly mentioned in paragraph 6 of his order that all the elements of genuine partnership are there as the partnership is evidenced by instrument of partnership, individual shares of the partners are specified in the said instrument, it is genuine partnership because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the lease deed, that the intention of the appellant was to part with the entire machinery of the factory and the premises with the obvious purpose of earning rental income and not to treat the factory and the machinery as a commercial asset during the subsistence of the lease. The intention of the appellant was to go out of the business altogether so far as the factory and machinery was concerned with effect from June 1, 1945. The income from the lease could not be assessed under section 10 but was liable to be assessed under section 12." But looking to the facts of the instant case, the above finding supports the contention that of the assessee. In the instant case, it was not pure and simple question of renting out the property. It was something more than that. By going through the agreement for warehousing facilities, it is abundantly proved that it was an agreement for business and not simply renting out the property. The last and latest case relied upon was Sunil Siddharthbhai. In the said case, the issue involved was whether the contribution of capital of partners is transfer and whether the same could be subjected to capital gains. Undoubtedly, when we go carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X
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