Tenancy rights compensation taxed in partners' hands where rights remained with individuals, not the firm.

Compensation received on surrender of tenancy rights was held taxable in the hands of the individual partners, not the firm, because the tenancy traced to the original individual tenants and their heirs. The conveyance documents and later correspondence showed the rights remained with the individuals, while the partnership deeds did not treat the tenancy rights as firm capital. Payment of rent by the firm was not sufficient to establish that the firm was the tenant. Relevant tenancy law provisions were read as supporting continued individual ownership of the tenancy rights, and authorities cited by the Revenue were distinguished as not addressing this question directly.

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Issues: Whether the compensation received on surrender of tenancy rights belonged to the firm or to the individual partners in their personal capacity.

Analysis: The tenancy traced back to the original individual tenants and, on the evidence of the conveyance and subsequent letters, the rights were treated as having been held by the individuals and their legal heirs. The partnership deeds also indicated that the tenancy rights were not introduced as firm capital. The fact that rent was paid by the firm did not, by itself, establish that the firm was the tenant. The relevant tenancy law provisions supported the conclusion that the tenancy continued in the hands of the individual holders rather than vesting in the firm. The authorities relied upon by the Revenue were distinguishable because they did not concern this specific question of who held the tenancy rights.

Conclusion: The compensation for surrender of tenancy rights was taxable in the hands of the partners individually and not in the hands of the firm; the Revenue's appeal failed.

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