1972 (6) TMI 2

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....e assessment year 1960-61 in respect of the assets used in the partnership business ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee-firm was not entitled to claim depreciation under section 10(2)(vi) of the Income-tax Act, 1922, for the assessment years 1960-63 to 1961-64 on the assets used in the partnership business ?" The circumstances under which the reference has been made are these: Smt. Rajeswari Vedachalam who became the absolute owner of the capital, deposits, outstandings and other properties in three Burmah Shell agencies run at Chingleput, Tindivanam and Pondicherry, took in six working partners and constituted a partnership for conti....

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....n. According to the Tribunal, before depreciation could be claimed under section 10(2)(vi) of the old Act or section 32(1) of the new Act, two conditions ought to be satisfied: (1) The machinery and the assets in respect of which depreciation is claimed should be the property of the partnership; and (2) that such assets and machinery should have been used by the partnership for the purpose of its business. The Tribunal has taken the view that though the second condition was satisfied, the first condition had not been satisfied in this case and, therefore, the partnership was not entitled to the benefits of the depreciation under section 10(2)(vi) of the old Act or section 32(1) of the new Act. The Tribunal, after holding that the partnershi....

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.... deed and has come to the conclusion that Smt. Rajeswari Vedachalam continued to be the absolute owner of the assets and the machinery and that the partnership has only used the said machinery and the assets. But, we are unable to agree with the Tribunal in its interpretation of the terms of the partnership deed so far as the ownership of the assets is concerned. Clause (3) of the partnership deed makes it clear that the intention of the partners is to carry on the existing business in partnership. It is true that the business was owned by Smt. Rajeswari Vedachalam. But, when she took in the other persons as working partners to continue the existing business in partnership, she has naturally brought in all the assets of the business into th....