TaxTMI 
TaxTMI 
1977 (11) TMI 5
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 1974: " Whether, on the facts and in the circumstances of the case, it has been rightly held that the assessee was entitled to rebate on the share of dividend received from the firm, M/s. Tarapore & Co., when the relief by way of rebate had already been granted to the firm under section 85 ? " T.C. No. 385 of 1974: " Whether, on the facts and in the circumstances of the case, it had been rightly held that the assessee was entitled to rebate on the share of dividend received from the firm, M/s. Tarapore & Co., when the relief by way of rebate had already been granted to the firm under section 85 ? " The firm, of which the said Loganatha Mudaliar and Tarapore were partners, held certain shares in Kalinga Tubes Ltd. It is admitted t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....68. The firm of Tarapore & Co. got the benefit of s. 85, and the dividend income received from Kalinga Tubes Ltd. was exempted in computing the taxable income of the firm, Tarapore & Co. When the two partners, Loganatha Mudaliar and Tarapore, claimed exemption of the share of the dividend received by them from Kalinga Tubes Ltd. on the basis that their share of income from the firm contained the income received by the firm by way of dividend from Kalinga Tubes Ltd. it was contended by the revenue that the benefit that was available to the firm would not be available to the partners of the firm. This contention was negatived by the Tribunal on the basis that the income received by the distribution of the income of the firm by division of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ases. But certainly the decision gives an indication of the principle to be applied. Counsel on behalf of the revenue mainly emphasised the distinction that has been introduced by the amendment to s. 85. It was contended before us that the firm was the owner of the shares in Kalinga Tubes Ltd. and that the partners cannot be said to be the owners of the shares and, therefore, it was urged that the partners cannot get the benefit of s. 85. " The property of the firm " is statutorily defined in s. 14 of the Partnership Act ; the property that has been brought in by the partners and the property that is acquired by a firm will be the property of the firm. According to s. 14 of the Partnership Act, when one talks of the property of the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... said that each partner holds all the shares in Kalinga Tubes Ltd. But this does not matter. The partners are the owners of the shares and the general principle of law cannot be abrogated and we cannot conceive of a hypothetical ownership of these shares and deny the partners, who, in law, own the property and in whom the property is vested, the benefit of s. 85. We have, therefore, to proceed on the basis that the partners are the owners of the shares in Kalinga Tubes Ltd. The two partners of the particular firm with which we are concerned, Tarapore & Co., between them held all the shares. From it the dividend income was received. No point was made that the share of profits and gains of the firm received by the partners from the firm did n....