Valid transfer of immovable property requires registered instrument; rental income from firm asset remained taxable in firm's hands.

Immovable property valued at more than Rs. 100 could not be validly transferred from a continuing firm to its individual partners without a registered deed or another recognised legal mode. Because no valid transfer had been effected, the property remained the firm's asset for tax purposes, and the rental income from Kannammai Building was assessable in the hands of the assessee-firm for the relevant assessment years.

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Issues: Whether the rental income from the property known as 'Kannammai Building' was includible in the assessment of the assessee-firm for the assessment years 1976-77 to 1978-79 in view of the alleged transfer of the property to the individual partners without a registered instrument.

Analysis: The property was immovable property valued at more than Rs. 100, and the firm was a continuing firm. A valid transfer of such property to the partners could not be effected without a registered deed or some other recognised legal mode. In the absence of a valid transfer, the property continued to belong to the assessee-firm for tax purposes, and the rental income arising from it remained assessable in its hands.

Conclusion: The income from 'Kannammai Building' was includible in the assessment of the assessee-firm. The question referred was answered in the negative and in favour of the Revenue.

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