TaxTMI 
TaxTMI 
1985 (3) TMI 99
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....tion of the assessee cannot be accepted as the firm in which the assessee was a partner, was a separate entity and it cannot be said that the assessee HUF occupied the property for the purpose of its business. He pointed out that the property was used for the purpose for the purpose of business carried on by the firm and not by the assessee itself, and, therefore the annual value of the property was assessable in the hands of the assessee under s. 23 (1) (a). He considered the transfer of similar properties in the town and the rent paid for similar properties and computed the annual value of the said property at Rs. 30,000, i.e., at the rate of Rs. 2,500 per month. The building used as hotel by the firm had twenty rooms in addition to the guest room, restaurant halls etc. He also pointed out that the municipal tax was paid by the firm and, the therefore, no deduction was to be allowed in the hands of the assessee. He computed the annual value of the property after allowing 1/6th for repair which worked out to Rs. 25,000 for the whole year. The assessee's share of profit as per allocation stood at Rs. 40,524. 3. the assessee took up the matter before the AAC raising similar conte....
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....income of the firm owned by the firm. It is submitted that in the present case, the assessee partner is the absolute owner of the property and, therefore, income from that property was assessable in the hands of the assessee partner it self and that it is not correct for the AAC to conclude that the business carried on by the firm constituted as business carried on by the assessee partner. It is urged that the partnership deed by which the property was allowed be sued by the firm clearly shown that the ownership remains and continues to be so with the assessee partner. That apart, it is urged that the assessee has shown the said property as him own property in the balance sheet. It is also pointed out that running expenses only like municipal taxes etc., were borne by the firm as the property was utilised by the said firm, which fact would not alter the position that the ownership was all along with the assessee partner. He also refers to the provisions of s. 24 (1) (vii). It is submitted, therefore, that the order of the AAC on the facts of the case may be reversed and that of the ITO may be restored. 5. The assessee's ld. counsel supports the order of the AAC while stressing t....
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....its that in taxation, there is no estoppel and that paying of the municipal tax by the firm would not convert the property owned by the assessee as property of the firm. It is also urged that in the case of premchand Jute Mills. the facts and context of the matter were different and, therefore, the ratio of that decision cannot be applied to the facts of the present case. 7. We have heard both the sides and have perused the orders of the authorities below for our consideration. We have also gone through the orders as relied on by both the sides. We have also perused the copy of the agreement dt. 11th Oct., 1977, by which the assessee as a first party expressed him desire to make addition and extension to his building used as Hotel Saluja-cum-Bar, Siliguri and that he was not capable to invest the capital in the partnership firm and he cannot afford any finance. At the same time, he would be busy in supervising the construction work and would not be able to give his personal skill to manage the business. The second partner Shri Gurmit Singh would provide the finance on which no interest would be paid and no salary was also to be paid to him for the skill and labour given in the m....
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....rty' used in s. 6 and s. 9 of the old IT Act refer to the income of the legal owner of the property who is the only person assessable on the basis of the bona fide annual value thereof. 8. As indicated earlier, the assessee relied on the decision in the case of Ramniklal Kothari. In our opinion, the facts of the present case are distinguishable. In fact, the text and the back-ground in the decided case above, were completely different and that the question before the Hon'ble Supreme Court was materially different. In that case, the business was carried on by the firm and the profits were considered to have been earned by all the partners in carrying on the business and the share of the partner is business income for the purpose of s. 10 of the old Act and being business income, the expenditure necessary for earning that income would be liable. In our opinion, the ratio of the decision in the case of Ramniklal Kothari was wrongly applied by the AAC to the facts of the present case. 9. The Hon'ble Supreme Court of India in the case of R. B. Jodha Mal Kuthiala vs. CIT (1971) 82 ITR 571 (SC) on the facts of that case held that for the purpose of s. 9 of the old Income-tax the own....