TaxTMI 
TaxTMI 
1994 (11) TMI 122
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....d qualify for the exemption provided in section 22 of the Income-tax Act, 1961 ? (ii) On the facts and in the circumstances of the case, whether the Tribunal was justified in allowing deduction under section 23(2) of the Income-tax Act ? " The assessee, an individual, is also a partner of a partnership firm. The said assessee had allowed some rooms in his building where the partnership business was being carried on. No rent was being charged from the said partnership firm. During the assessment year 1983-84, the assessee contended that the rooms wherein the business was being carried on by the partnership-firm of which the assessee himself is a partner should be excluded while computing the income from house property under section 22 ....
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....peal of the assessee thus having been allowed, the Department moved the Tribunal under section 256(1) of the Income-tax Act, 1961, and the Tribunal on being satisfied had referred the two questions as already stated for the opinion of this court. So far as the first question is concerned, learned standing counsel for the Department submitted that the answer to the aforesaid question would depend upon an interpretation of section 22 of the Income-tax Act. Section 22 of the Act is extracted hereinbelow in extenso : " 22. The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or pr....
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.... of the partner. The learned judges of the Karnataka High Court have relied upon the decision of the Delhi High Court in the case of Bhai Sunder Dass and Sons v. CIT [1972] 85 ITR 28 (Delhi) as well as the decision of the Calcutta High Court in the case of Sarvamangala Properties Ltd. v. CIT [1973] 90 ITR 267 (Cal). The two decisions of the Delhi and Calcutta High Courts though are not directly on the point, but the principles therein were applied by the learned judges of the Karnataka High Court. But a Bench of the Gujarat High Court in the case of CIT v. Rasiklal Balabhai [1979] 119 ITR 303, answered a similar question against the Revenue. Interpreting section 22 of the Income-tax Act, their Lordships of the Gujarat High Court have com....
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.... partnership in the Partnership Act has been incorporated in the Indian Income-tax Act, in section 2(6B).... " A partnership as defined in section 4 of the Indian Partnership Act is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Therefore, when a firm carries on business, it is business carried on by the partners of that firm. One partner is the agent of the other in carrying out that business. Consequently, when a partnership carries on a business, each partner thereof must be said to be carrying on that business. In the aforesaid premises, in our considered opinion, the learned judges of the Karnataka High Court were not justified in interpreting section ....