Partnership property transfer without registered conveyance excludes contributed immovable assets from partners' wealth-tax valuation.

Immovable property contributed by partners to the common stock of a genuine partnership firm becomes firm property, and a registered conveyance is not required for that transfer. Where the partnership deed states that the assets vest in the firm and the firm is found to be real and not a sham, the contributed property cannot continue to be treated as the separate wealth of the partners for wealth-tax purposes. On the facts accepted, the properties had ceased to belong to the partners before the valuation dates, so their value was excluded from the assessees' wealth.

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Issues: Whether the immovable properties brought by the partners into the partnership firm became the property of the firm so as to exclude their value from the partners' wealth, and whether absence of a registered conveyance prevented such transfer.

Analysis: The partnership deed expressly stated that the properties would vest in the firm from 1-4-1975 and be treated as firm property. Under section 14 of the Partnership Act, property brought into the stock of the firm becomes the property of the firm. The Court applied the principle that when a partner contributes immovable property to a genuine partnership, a transfer occurs even without a registered conveyance. It further held that the Revenue could disregard the arrangement only if the firm itself was a sham or unreal transaction, but on the material accepted by the Tribunal the firm was a genuine one that came into existence and held assets in its own right. Once the properties were brought into the common stock of the genuine firm, they could not continue to be treated as the separate assets of the partners for wealth-tax purposes.

Conclusion: The properties had validly ceased to belong to the assessees before the valuation dates and their value was not includible in the assessees' wealth. The Commissioner's orders were set aside and the wealth-tax assessments as made by the Wealth-tax Officer were restored.

Ratio Decidendi: Where immovable property is contributed to the common stock of a genuine partnership firm at its inception, the property becomes firm property without a registered conveyance, and it cannot thereafter be assessed as the separate wealth of the contributing partners.

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