Madras High Court
Gift Tax Officer vs Late R. Sambasiva Rao By Lrs. on 28 February, 1995
Equivalent citations: (1997)57TTJ(MAD)569
ORDER
S. KANNAN, AM. :
This Departmental appeal is directed against the order dt. 29th March, 1988 of the CIT(A)-VII, Madras relating to the asst. yr. 1982-83.
2. The material and undisputed facts of the case are that during his life-time one Sambasiva Rao was running a business under the name and style of M/s Krishnaveni Ink Factory. The said concern was run as the proprietary concern of the said Sambasiva Rao till 31st March, 1977. At that time his two sons, viz., Subba Rao and Sridhar Rao, were his employees.
On 1st April, 1977, it is a matter of record, a partnership firm, consisting of the said Sambasiva Rao and his two sons and his daughter, all having equal shares, was constituted for the purposes of running the said business. Thereupon the firm was brought to tax.
3. Yet another material fact may be noticed. At all relevant points of time the business under the name and style of M/s Krishnaveni Ink Factory was carried in a house property situated at 751, Thiruvottiyur High Road, Madras-21. And in a statement of net wealth as on 31st March, 1981 the said Sambasiva Rao had disclosed inter alia the said property valuing it at Rs. 3,63,000.
4. On 1st April, 1981 the said Sambasiva Rao transferred the property in question to the firm, the transfer having been effected by means of entries in the books of account of the firm. The property was not valued separately for the purposes of the said transfer. But, it is a matter of record that the entries made in the books of account of the assessee had the effect of wiping out the balances aggregating Rs. 1,06,412 standing to the debit of the said Sambasiva Raos (a) current account, (b) CDS account, and (c) loan account. The capital account of Sambasiva Rao, containing a credit balance of Rs. 12,500 was left in tact.
5. Taking note of the aforesaid entries, the AO held that he had before him a case of deemed gift within the meaning of s. 4(1)(a) of the Gift-tax Act, 1958. In this regard he was impelled by the following considerations :
(i) In the return of wealth filed by him in individual capacity Sambasiva Rao had included the said property valuing it at Rs. 3,63,000 as on 31st March, 1981.
(ii) Sambasiva Rao transferred the property to the firm on 1st April, 1981 by means of book entries whose only effect was to wipe out the debit balances aggregating Rs. 1,06,412. It should, therefore, follow that Sambasiva Rao had transferred the property to the firm for a consideration of Rs. 1,06,412 only.
(iii) About 9 months later the firm was dissolved and at that time the property was valued by the partners at Rs. 4,00,000.
Relying on the Madras case of CGT vs. Indo Traders & Agencies (Mad) (P) Ltd. (1981) 131 ITR 313 (Mad), the AO held that the case before him was clearly hit by the provisions of s. 4(1)(a) of the GT Act, 1958. He also relied on the decision of the Supreme Court in the case of Kartikeya V. Sarabhai vs. CIT (1985) 156 ITR 509 (SC), in support of the proposition that there was a transfer in this case.
6. Accordingly, he quantified the deemed gift at Rs. 2,56,588 (Rs. 3,63,000 being the value placed by the assessee himself on the property in question as on 31st March, 1981 less Rs. 1,06,412 being the aggregate of the debit balances wiped out as a result of the transfer by the assessee of his property to the firm).
7. Predictably, the assessee took up the matter in appeal before the first appellate authority, urging the following points in support of the contention that there was no deemed gift at all :
(a) Not only during the period when the business was run by Sambasiva Rao as his proprietary concern but also during the period when the business was carried on by the firm, the property was continuously used by the firm. It is a matter of record that municipal taxes and maintenance expenses relating to the building were borne by the firm and revenue deduction claimed in respect thereof which was allowed by the AO in the income-tax proceedings. Therefore, the transfer of the property by the assessee to the firm on 1st April, 1981 was "only a formalisation of what had really taken place (earlier)".
(b) ".... Once the property in question comes within the purview of transfer within the meaning of s. 2(47) of the IT Act and for a consideration for portion of the right of extinguishment of his right (sic), there cannot be any gift within the meaning of ss. 2(xxiv) and 4(1) of the Gift-tax Act."
(c) The decision of the Supreme Court in the case of K. P. Varghese vs. ITO (1981) 131 ITR 597 (SC), is the authority for the proposition that "there is no deemed gift when the transaction took place for consideration though it comes within the purview of the provisions of IT Act, determining the capital gain".
(d) Again, in the case of Hindustan Steel Industrial Agencies (P) Ltd. (1980) 4 Taxman 204, it has been held that a honest transaction either for settlement or for adjustment of mutual differences or for other conceivable reasons cannot give rise to deemed gift.
(e) Relying on the Gujarat case of CIT vs. Karnoji Lumbaji (1969) 74 ITR 343 (Guj), it was contended that there was no transfer in this case. In any event, the AO has not discharged the burden of proving that in this case there has been a transfer amounting to a gift or that the transfer was for consideration which is inadequate.
(f) Even after the property was transferred to the firm, the assessee continued to hold 25 per cent right in the property by virtue of his holding a 25 per cent share in the profit/loss of the firm. Therefore, this is not a case of complete extinguishment of rights.
(g) The acquisition proceedings initiated by the Department were dropped.
(h) Even assuming that there was a transfer and that too for inadequate consideration, as the firm was using the property for business purposes, it would be extremely difficult for the assessee to recover the property from the firm and sell it in the market. In other words, the market value of the property cannot be determined.
(i) The assessee is also entitled to exemption under s. 5(1)(xiv) of the GT Act, as it stood prior to its omission by the Finance Act, 1986 w.e.f. from 1st April, 1987.
8. On a consideration of the issues involved in the matter, the first appellate authority allowed the assessees appeal for the following reasons :
(i) The AO had not established that the transaction was not a bona fide one.
(ii) It cannot be disputed that the property was being used by the firm for its business purposes.
(iii) Even after the transfer, the appellant as a partner, would be entitled to 1/4th share in the said property. This fact was not taken into consideration by the AO.
(iv) Since the property was all along being used for the purposes of the businesses of the firm, the transfer of the property by the assessee to the firm cannot be regarded as a transfer for inadequate consideration. The transfer was for business consideration. The transfer was for business consideration which adequate consideration. In this regard, he referred to and relied upon the order dt. 29th Oct., 1982 of the ITAT Madras, A-Bench, in the case of A. Hafsa Banu vs. ITO (1983) Taxation 69(6)-70.
9. It is in these circumstances that the Department is now before us.
10. Shri O. P. Sachan, the learned Departmental Representative, vehemently contended that the CIT(A) was not justified in allowing the assessees appeal. He first contended that before invoking the provisions of s. 4(1)(a) of the Act, the AO should show
- that there was a transfer of property within the meaning of s. 2(xiv) of the Act; and
- that the transfer was for inadequate consideration.
In the present case, according to the Departmental Representative, both the aforesaid conditions have been satisfied. Thus, there is first a transfer inasmuch as the Tiruvottiyur High Road property, which admittedly belonged to Sambasiva Rao earlier, was transferred by him to the firm on 1st April, 1981. The decision of the Supreme Court in the case of Kartikeya vs. Sarabhai (supra) is the authority for the proposition that when one transfer ones property to a firm, there is a transfer. The observations made by the Supreme Court in that regard will go to show clearly that the transfer before us is one that squarely falls within the pale of s. 2(xiv)(d) of the Act.
11. Secondly, the consideration for the property transferred was also inadequate. It is a matter of record that, as the owner of the said property, Sambasiva Rao had disclosed the property in the return of net wealth filed by him and in that connection had valued the property at Rs. 3,63,000 as on 31st March, 1981. He transferred the property the very next day, i.e. 1st April, 1981, and did not receive from the firm Rs. 3,63,000. The net effect of the transfer which was made by recording entries in the books of account of the firm was that Sambasiva Raos liability in an aggregate sum of Rs. 1,06,412 to the said firm stood wiped out. In other words, in terms of money, Sambasiva Rao had received only a sum of Rs. 1,06,412 for the said property, even though on his own showing the property was worth Rs. 3,63,000 on the immediately preceding date, viz., 31st March, 1981.
12. Thirdly, the firm was dissolved 9 months later and at that time, in the context of settling accounts between the partners, they had agreed that the property was worth Rs. 4,00,000.
13. According to Shri Sachan, if regard be had to the totality of the aforesaid circumstances it would be seen that the property in question was transferred by Sambasiva Rao to the firm for a consideration that was much less than adequate. Further, he contended that the assessee cannot call to help the decision of the Supreme Court in case of K. P. Varghese vs. ITO (supra), because that was a case under s. 54(2) of the IT Act.
14. Again, the fact that the assessee had allowed the firm to use the property and the further fact that the firm had met the municipal taxes and maintenance expenses of the property are neither here nor there. The property belonged to Sambasiva Rao who transferred it to the firm and that too for inadequate consideration.
15. In view of the foregoing, therefore, Shri Sachan contended that the Departmental appeal should succeed.
16. Shri K. Sridharan, the learned counsel for the assessee, strongly supported the impugned order of the first appellate authority. His main thesis was that, the fact that the property belonged to Sambasiva Rao notwithstanding, the property was being used by the firm for purposes of its business right from day one, i.e., 1st April, 1977. Further, all along it was the firm which was meeting the municipal taxes and maintenance expenses of the property. For a fact, having defrayed the expenses in question, the firm claimed revenue deduction in respect thereof and the claim was allowed by the IT authorities. According to him the "convention of using" goes to show that the "intention was always to use the property jointly for the purposes of the firm". The property was transferred to the firm on 1st April, 1981 "with a view to avoiding future misunderstandings." That being the case, the fact that the property was actually transferred by Sambasiva Rao on 1st April, 1981 to the firm cannot give rise to any gift-actual or deemed. Secondly, it is wrong to say that there was no adequate consideration for the transfer. The transfer of the property by Sambasiva Rao to the firm was impelled by business considerations. And, as has been rightly held by the CIT(A), business consideration is adequate consideration.
Again the acquisition proceedings initiated by the Department in respect of the property were also dropped.
The learned counsel for the assessee contended that property viewed the decision of the Supreme Court in the case of Kartikeya V. Sarabhai (supra) actually supported the assessees case. This was because even while holding that there was a transfer when a partner makes over his assets to the firm, the Supreme Court went on to observe that the amount actually credited to the partners account in connection with the transfer could not be regarded as the consideration for the transfer. Similarly, in the case before us also it will be wrong to regard that the sum of Rs. 1,06,412 as the consideration for the transfer of the property in question and on that basis to hold that the consideration was inadequate.
17. In view of the foregoing, therefore, Shri Sridharan urged that the impugned order of the CIT(A) does not invite any interference.
18. At the outset we may mention that certain queries from the Bench elicited the following facts :-
(a) The partnership deed dt. 1st April, 1977 does not contain anything to suggest that the property in question was to be treated as the property of the firm.
(b) There was no separate documentation in relation to the transfer by Sambasiva Rao of the property to the firm only necessary entries were made in the books of account of the firm.
(c) The effect of the transfer was that the debit balances aggregating Rs. 1,06,412 in the various accounts of Sambasiva Rao in the books of account of the firm were wiped out. The other partners of the firm did not bring in any property or asset to reduce the amounts standing to the debit of their current accounts.
(d) The amounts standing to the credit of the capital account of each of the partners were not disturbed.
In his reply, the learned Departmental Representative reiterated the points that he had earlier made. And, in particular, contended that the use of the property by the firm was neither here nor there.
19. We have looked into the facts of the case. We have considered the rival submissions.
20. It is common ground that the Tiruvottiyur property belonged to Sambasiva Rao who was using it for business purposes when he was running M/s Krishnaveni Ink Factory as a proprietary concern. With effect from 1st April, 1977 the proprietary concern was converted into a partnership concern consisting of the assessee, his two sons, and a daughter as partners. At the time of the constitution of the firm, Sambasiva Rao, admittedly, did not make over the property in question to the firm as his contribution to the capital of the firm. His capital contribution at that time was Rs. 12,500 only. On the contrary, right up to 31st March, 1981 he was treating the property as his own. This is clear from the fact that in the return of net wealth filed by him he had disclosed the property as his own and had valued it at Rs. 3,63,000 as on 31st March, 1981.
21. It was only on 1st April, 1981 that he transferred the said property to the firm. What happened in that context is significant and, indeed, holds the key to the problem before us. What happened was :
(a) The transfer was evidenced merely by the entries passed in the books of account of the firm.
(b) No documentation whatsoever was made in relation to the transfer of the property.
(c) The said entries had the effect of wiping out the debit balances in question.
(d) The capital account of Sambasiva Rao was left in tact. That is to say his capital contribution remained unchanged at Rs. 12,500. In other words, the transfer of the property to the firm did not go to augment the capital contributed by Sambasiva Rao.
(e) At the time when Sambasiva Rao transferred his property to the firm, the other partners did not admittedly bring in any property or asset belonging to them, even though their current accounts also showed debit balances.
The aforesaid factors, as we see it, lead to the one and only conclusion that the property was transferred in full satisfaction of the debt of Rs. 1,06,142 owed by Sambasiva Rao to the firm; and that, by the same token, the case before us is not one of additional capital contribution by a partner of the firm. [CIT vs. Janab N. Hyath Batcha Sahib (1969) 72 ITR 528 (Mad)].
22. Before considering the legal consequences of the transaction in question, we may clear the decks as it were by examining the basic contentions of both the assessee and the Department. The Departments case is that, as has been laid down by the Supreme Court in the case of Kartikeya V. Sarabhai (supra), when a partner of a firm makes over his personal assets to the firm, there is transfer of property. This proposition is not seriously disputed by the assessees counsel but his contention is that in the very case of Kartikeya V. Sarabhai (supra), the Supreme Court has held that in cases of the type under consideration before it, the amount credited to the capital account of the partner concerned cannot be regarded as the consideration for the transfer of the personal assets of the partner. The consideration for the transfer of the personal assets is the right which arises or accrues to the partner during the subsistence of the firm to get the share of the profits from time to time and after dissolution of the partnership or on his retirement from the partnership to realise his interest in the net partnership assets and to receive its value. According to the Supreme Court, it is not possible to predict beforehand what will be the position, in terms of monetary value, of the partners right to realise the interest in the net assets of the firm and to receive its value. In other words, the consideration is not capable of being quantified at the time when a partner makes over his personal assets to the firm as his contribution to the capital of the firm. It should, therefore, follow that the sum of Rs. 1,06,412 being the debt owed by the assessee to the firm cannot be regarded as the true consideration for the transfer of the property in question.
23. As we see it, the aforesaid arguments, both of the assessee and of the Department, based on the Supreme Court decision in the case of Kartikeya V. Sarabhai (supra), are clearly out of place on the facts and in the circumstances of the case. The case before the Supreme Court was one where partners have made over to the firm their personal assets as their contribution to the capital of the firm. In the case before us, however, Sambasiva Rao transferred the property in question to the firm not as his initial contribution to the capital of the firm; nor even as his additional contribution to the capital of the firm. He transferred the property in question to the firm in satisfaction of the debts owed by him to the firm. We, therefore, dismiss the arguments as being in apposite.
24. It was also the case of the assessees counsel that the "intention of use" of the property by the firm goes to show that the "intention was always to use the property jointly for the purposes of the firm" and that the said arrangement was formalised on 1st April, 1981 "with a view to avoiding future misunderstandings".
This argument too lacks force. Admittedly, at the time when the firm was constituted, Sambasiva Rao did not make over the property in question to the firm as his contribution to the capital of the firm. Even on 1st April, 1981 when, through the medium of book entries, the property was transferred by Sambasiva Rao to the firm, there was no documentation whatsoever. It is well-settled that property belonging to the partners or to any one of them does not become partnership property merely because it is used for the purposes of business. A personal asset of a partner will become partnership property only if it is shown either with reference to the partnership agreement or with reference to subsequent agreement that the intention was that the property should form part of the joint estate.
Again, as has been pointed out by the Madras High Court in the case of CIT vs. Dadha & Co. (1983) 142 ITR 792 (Mad), "the book entries do no make a conversion of any kind known to law.... they cannot by their own force effect, any conveyance, release, partition, or other transfer of immovable properties".
True, it was the firm which defrayed the expenses on municipal taxes and on maintenance of the property in question and claimed deduction in respect thereof which was allowed in its IT assessment. The said factors do not amount to anything more than a case of "licence for a fee".
25. In view of the foregoing, therefore, we reject the related contentions of the learned counsel for the assessee.
26. Now to the main question : "Was there a valid transfer in this case"? . As pointed out earlier, Sambasiva Rao made over the property in question to the firm not as his contribution towards capital of the firm; nor even as his additional contribution to the capital of the firm. He transferred the property to the firm in full satisfaction of the aggregate amount of Rs. 1,06,412 owed by him to the firm.
27. Now it is well settled that vis-a-vis the firm, the partner can have a dual capacity. In a given case or a situation even while remaining a partner he can be creditor or, as the case may be, a debtor of the firm. This legal position is well-settled not only by the specific provisions contained in s. 13 of the Partnership Act, but also by reported cases.
28. Sec. 13 of the Partnership Act defines the mutual rights and liabilities of partners. Sub-s. (c) and (d) of that section, providing as they do a study in contrast, are relevant here.
29. Sec. 13(c) stipulates that where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits. The significance of the words "only out of profits" lies in the fact that, the firm being "a mere shorthand name for a collection of persons, commercially convenient but not legally recognised", a stipulation as to payment of interest on the capital contributed by a partner is in reality a mode of division of the firms profits. It is this principle which is incorporated in s. 13(c) of the Partnership Act and emphasised by the use of the words "only out of profits".
30. Sec. 13(d), in contrast, does not contain the words "only out of profits". That the said words have been omitted from the sub-section not through oversight, will be clear when we see that the said sub-section deals with payment of interest by the firm on any payment or advance made by a partner beyond the amount of capital he has agreed to subscribe for the purposes of the business of the firm.
31. Thus, s. 13 itself makes a distinction between the capital contributed by the partner, on the one hand, and on the other, the sums advanced by him to the firm for the purposes of its business. As elucidated by Pollock and Mulla in their commentary on the Indian Partnership Act, the principle of sub-s. (c) of s. 13 is that a partner, as regards the capital brought by him into the business, is not a creditor of the firm but an adventurer and, therefore, any agreed interest on such capital is, unless the contrary is clearly expressed, is a payment in lieu of or on account of profits and accordingly chargeable to profits only. An advance by a partner to a firm, on the contrary, is not treated as an increase of capital. As respects the sums advanced by him to the firm, a creditor-debtor relationship is brought into being between the partner and the firm. This is proprietary reason why there is no stipulation in s. 13(c) to the effect that the interest on such advances must be paid only out of profits. When a partner advances money to it over and above the capital, he has agreed to subscribe, and when the advance is made for the purposes of its business, then, so far as the firm is concerned, the interest payable by it on the sums advanced by the partner is a regular revenue expenditure which must necessarily be taken into reckoning for the purposes of deducing its true profits.
32. A combined reading of ss. 13(c) and 13(d) would make it clear that a partner can have a dual capacity vis-a-vis the firm. As regards the capital contributed by him he is a partner, and as regards the money advanced by him to the firm (of course, over and above the amount of capital he has agreed to subscribe), he is a creditor of the firm. In the latter case, conceptually speaking, the sums advanced by the partner to the firm is not different from the sums advanced by third parties to the firm.
33. The aforesaid dual capacity is also reflected in and recognised by s. 48, which deals with the mode of settlement of accounts between partners, and which goes by the name of "accounting clause". This section gives a special treatment to the sums advanced by a partner to the firm over and above the amount of capital he has agreed to subscribe. It lays down, in a sequential order, the manner in which, on the dissolution of the firm, the assets of the firm shall be applied. The assets shall be applied -
first, in paying the debts owed by the firm to third parties;
secondly, in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital;
thirdly, in paying to each partner rateably what is due to him on account of capital; and finally, the residue, if any, will be divided amongst the partners in the proportions in which they were entitled to share the profits.
The said sequential order, it is evident, gives the creditor-partner a preferential right to be paid the advance and ranks the right only next in order to the debts of the firm to third parties.
34. The scheme of the Partnership Act thus clearly recognises the fact that, vis-a-vis the firm, the partners may have two capacities - one that of a partner as such, and the other that of a creditor of the firm.
35. If any authority for the aforesaid proposition is needed, it is to be found in the decision of the Madras High Court in the case of C. T. Narayanan Chettiar vs. CIT (1966) 60 ITR 690 (Mad).
36. The same ruling was also given by the Andhra Pradesh High Court in the case of Kasamsetty Radhakrishnaiah vs. CIT (1967) 64 ITR 522 (AP). There, in the context of the assessees claim for revenue deduction in respect of certain bad debt which, according to him, had arisen in the course of the moneylending business carried on by him, one of the questions that arose for consideration was whether or not the advances made by a person to a firm of which he is a partner constituted money-lending business. That question arose this way. The assessees case was that he was taking interest-bearing loans and was using the sums so borrowed for making interest-bearing advances -
to two firms in which he was a partner;
initially to one Kotrika family and, on its partition, to the three divided brothers; and to the Lingam Venkata Subbiah;
and that the said activities constituted moneylending business. The sums advanced to the three divided brothers of the Kotrika family became bad and consequently the debt in question was revenue deductible.
The assessee was unsuccessful before the ITO, the AAC, and also before the Tribunal. On the question whether the sums advanced by the assessee to the two firms in which he was a partner amounted to moneylending business, the Tribunal observed :
"... As far as financing of the firm was concerned, it could not be treated as part of the moneylending business, as it was in the assessees interest as a partner to find working capital for the firms and whatever interest he received from the firms was only part of his share income."
Disagreeing with the Tribunal the Court observed :
"But we cannot accept this view. It is not only a matter of business practice, but also perhaps in the interest of a partner to advance moneys to the firm of which he is a partner, because as a person having control over the affairs of the firm, can expect a prompt repayment of the money. Sec. 13 of the Partnership Act lays down thus :
"13. Subject to contract between the partners :........
(d) a partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of six per cent per annum.
Thus, the Act recognises a partner advancing moneys to the firm and being entitled to interest at 6 per cent per annum. We do not consider it necessary to elaborate the point any further. It is sufficient to state that we cannot accept the view of the Tribunal that in no event can a partner who advances moneys to a firm of which he is a partner occupy the position of a creditor or be said to carry on the business of money lending".
37. Thus, the Andhra Pradesh High Court also recognised the fact that a partner, besides being a partner, can be a creditor of the firm. Interestingly, the Madras case of C. T. Narayanan Chettiar vs. CIT (supra) was not cited before the learned Judges of the Andhra Pradesh High Court.
38. The well-settled legal position being what it is, we have no hesitation in holding that as respects the balances standing to the debit of (a) his current account, (b) CDS account, and (c) loan account, Sambasiva Rao was a debtor of the firm. It was in full satisfaction of the debt owed by him to the firm that he transferred the property in question to the firm during the subsistence of the firm. Since what was transferred by Sambasiva Rao to the firm is an immovable property, the question that then arises for consideration is whether the transfer must be evidenced by duly registered deed of conveyance.
39. The answer to the said question is available in the Madras case of CIT vs. T. M. B. Mohamed Abdul Khader (1985) 166 ITR 207 (Mad). In that case, the assessee therein was a partner in a partnership firm known as Oriental Enterprises. The assessee was the owner of a property at No. 20, G. N. Chetty Road, Madras. During the previous year relevant to the asst. yr. 1976-77, the assessee made a declaration to the effect that the said property would henceforth be the property of the firm. The consideration agreed to was Rs. 1,20,000 as against the book cost of Rs. 76,000. The declaration was followed by book entries by which the assessees account in the firm was credited with the sum of Rs. 1,20,000, while a corresponding debit entry was made in the books of the firm.
In the course of the assessment proceedings relating to the asst. yr. 1976-77 the AO brought the differential amount of Rs. 44,000 to charge on the ground that a capital gain has arisen as a result of the transaction. The first appellate authority allowed the assessees appeal on the ground that the property in question had not been conveyanced through a registered document. According to him, declaration executed by the assessee on a stamp paper of the value of Rs. 5 and the entries made in the books of account of the firm could not effectively transfer the title of the property to the firm.
40. Thereupon, the Department appealed to the Tribunal which declined to interfere in the matter for two reasons, namely - (a) there was no valid registered document of transferred; and (b) what an individual property is converted into a partnership property, no transfer is involved. The Department took up the matter before the High Court through an application under s. 256(2) of the Act. The High Court agreed with the first reason given by the Tribunal and declined to make an order for reference. Since the High Court had agreed with the first reason of the Tribunal, it did not express any opinion on the second reason given by the Tribunal.
41. As we see it, the ratio of the said case is directly and squarely applies to the case before us.
42. It may incidently be pointed out that even in cases where a reverse situation is obtaining (i.e. to say in cases where the immovable properties of partnership are given to one or more partners), the Madras High Court has held that mere entries in the books of account would not suffice and that for treating immovable property of partnership as individual property of partner, registered document is necessary - see CIT vs. Dadha & Co. (1983) 142 ITR 792 (SC). See also the Allahabad case of Ram Narain & Brothers vs. CIT (1969) 73 ITR 423 (All).
43. In view of the foregoing, therefore, we hold that on the facts and in the circumstances of the case the property in question had not been validly transferred by Sambasiva Rao to the firm. In this view of the matter, we hold further that the question of there being any deemed gift does not arise.
44. In view of the foregoing, therefore, we decline to interfere in the matter, though not for the reasons given by the CIT(A).
45. In the result, the appeal is dismissed.