Registered transfer required for immovable property; book entries and partner agreement did not shift income from the firm.

Title to immovable property held by a firm cannot pass to its partners through a mere agreement and book entries; a duly registered instrument is required for a valid transfer under registration law. Applying that principle, the rental and service income from Kannammai Building remained assessable in the hands of the assessee-firm for the relevant assessment year, because the claimed transfer to the partners was not legally effective. The earlier ruling in Dadha and Company was treated as directly applicable on the facts, and other cited authorities did not alter the result.

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Issues: Whether income from the property known as Kannammai Building was includible in the assessment of the assessee-firm for the assessment year 1973-74, where the firm claimed that the property had been transferred to the partners by agreement and book entries.

Analysis: The decisive question was whether title to immovable property belonging to a firm could pass to the partners without a duly registered instrument. The Court applied the principle that an immovable property transfer requires compliance with the registration law, and that a mere agreement among partners, followed by book entries, does not by itself effect a legal transfer of title. The earlier decision in Dadha and Company was treated as directly applicable, while the reliance placed on other authorities was held not to alter that rule on the facts before the Court.

Conclusion: The property remained assessable in the hands of the assessee-firm, and the answer to the referred question was against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered by holding that the rental and service income from the property was includible in the firm's assessment for the relevant year.

Ratio Decidendi: Transfer of immovable property from a firm to its partners is not legally effected by a mere agreement or book entry and requires a duly registered instrument; absent such registration, the income from the property continues to be assessed in the firm's hands.

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