Partners' Claim of Ownership in Firm Properties Denied

The court held that properties purchased in partners' names but treated as firm assets remained firm properties without individual ownership rights. The partners' attempt to claim ownership based on account book entries was rejected. The court emphasized the properties were acquired with firm funds, treated as firm assets, and income distributed as firm income. Without registered documents, partners couldn't assert ownership. The court ruled partners couldn't claim specific shares in properties for income distribution. The judgment favored the Department, ruling against the assessee with no costs awarded.

---

---

Issues involved: Determination of ownership of properties purchased in the names of partners but treated as firm's properties, and whether entries in account books can change ownership status.

The judgment of the court addressed the issue of ownership of properties purchased in the names of partners but treated as firm's properties. The partnership firm, consisting of five brothers, had purchased three house properties in their names, but these properties were always treated as firm's assets. The firm claimed depreciation on these properties and the income was considered as firm's income. The partners later attempted to claim individual ownership of the properties based on entries in the account books, but the court held that without a registered document, the properties could not be considered as individual properties of the partners. The court emphasized that the properties were acquired with firm's funds, treated as firm's assets from the beginning, and the income was divided among partners as firm's income. Therefore, the court concluded that the properties remained as firm's assets and not individual properties of the partners.

The court also considered whether the properties, even if treated as firm's assets, could be deemed to be owned by the partners with definite shares for tax purposes. The court reiterated that without a registered conveyance, partners cannot claim firm's properties as their own. It was established that the properties were always treated as firm's assets, and partners could not assert individual ownership without proper documentation. The court upheld that as long as the properties were considered firm's assets, partners could not claim specific shares in the properties for income distribution. Consequently, both questions were answered in favor of the Department, against the assessee, with no costs awarded.

---