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Issues: Whether the house property at 4/23-B, Asaf Ali Road, New Delhi, was owned by the assessee-firm for the purposes of section 9 of the Income-tax Act, 1922, so that its annual value was assessable in the hands of the firm.
Analysis: The governing test was whether the property was acquired by or for the firm or for the purposes and in the course of the firm's business. A partnership firm may own property, and for income-tax purposes it can be treated as a separate assessable unit. The mere fact that partners are the persons behind the firm does not require property standing in the firm's name to be taxed in the hands of the partners individually. The lease deed stood in the firm's name, the property was shown in the municipal records in the firm's name, the earlier treatment of the property also supported ownership in the firm, and the record did not establish that the property belonged to the partners individually rather than to the firm.
Conclusion: The property was held to be owned by the assessee-firm and the income from it was rightly assessable in the hands of the firm.
Ratio Decidendi: For income-tax purposes, a partnership firm can be an assessable unit capable of owning property, and where the property is acquired or held in the firm's name on the material on record, its annual value is taxable in the firm's hands under section 9 of the Income-tax Act, 1922.
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