1967 (11) TMI 13

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....oes not arise out of the order of the Tribunal. To appreciate this objection, a few facts may be noted. The assessee is a registered firm with 17 partners ; and the firm has both business income and house property income. The property income for the assessment year 1962-63 came to Rs. 40,515 ; and the assessee claimed that the amount should be assessed, under section 26 of the Indian Income-tax Act of 1961, in the hands of the partners and should not be included in the total income of the firm itself under section 22. On the other hand, the department claimed that the income should be included in the total income of the firm and assessed under section 22 of the Act. The matter ultimately came before the Tribunal ; and the Tribunal confirmed....

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....sessee is the owner of the house property, whereas section 26 applies to a case where the assessee is an association of persons and the members or the persons constituting such association own the house property in definite and ascertainable shares, in other words, as co-owners. To put it differently, section 26 applies to a case where the controversy is whether the income from the house property should be included in the total income of an association of persons or whether the income should be assessed in the hands of the persons who constitute such association. Putting the idea again differently, in a case where the controversy is whether the income of the house property should be included in the total income of a firm, a company or a joi....

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....unsel of the assessee argues that, if the principle applies to joint Hindu families, by parity of reasoning, it must apply to firms as well. In the view we have already expressed regarding the application of section 26 (section 9(3) being the corresponding section in the earlier Act), we feel that section 26 does not apply to cases where joint Hindu families, firms or companies are assessees : it can apply only to cases where associations of persons are assessees. In a Dayabhaga Hindu joint family, the properties are not owned by its members ; the owner is the family itself, but the members have definite and ascertainable shares therein. Therefore, we regret we cannot agree with the view of Deep Narayan Sinha J. in the decision referred to ....