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Commissioner of Income-tax Vs. Royal Amber Resorts - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Income-tax Reference Application No. 4 of 1982
Judge
Reported in[1987]164ITR311(Raj)
ActsIncome Tax Act, 1961 - Sections 256(2)
AppellantCommissioner of Income-tax
RespondentRoyal Amber Resorts
Appellant Advocate R.N. Surolia, Adv.
Respondent Advocate B.P. Agarwal, Adv.
Cases ReferredAddanki Narayanappa v. Bhaskara Krishnappa
Excerpt:
- .....one of the partners. both these questions stand concluded by the decision of this court in cit v. amber corporation and cit v. amber corporation , following the decision of their lordships of the supreme court in addanki narayanappa v. bhaskara krishnappa : [1966]3scr400 .3. in narayanappa's case : [1966]3scr400 , their lordships of the supreme court after a consideration of all the relevant provisions of the indian partnership act laid down the law as under (paragraph 5 at page 1304):'the whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. once that is done, whatever is brought in would cease to be the exclusive property of the person who brought it in. it would be the trading.....
Judgment:

1. We are of the view that the Income-tax Appellate Tribunal, Delhi Bench-E, Delhi, was right in holding that no question of law referable to this court arises in the present case.

2. The assessee is a registered firm. It claimed depreciation in respect of certain immovable properties which were contributed by one of the partners as his share of the capital in the firm. The question arose as to whether the immovable properties brought in by one of the partners as his share of capital in the firm did not require registration and as to whether the firm was entitled to depreciation in respect of immovable property contributed to its capital by one of the partners. Both these questions stand concluded by the decision of this court in CIT v. Amber Corporation and CIT v. Amber Corporation , following the decision of their Lordships of the Supreme Court in Addanki Narayanappa v. Bhaskara Krishnappa : [1966]3SCR400 .

3. In Narayanappa's case : [1966]3SCR400 , their Lordships of the Supreme Court after a consideration of all the relevant provisions of the Indian Partnership Act laid down the law as under (paragraph 5 at page 1304):

'The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done, whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership.'

4. It was held in the subsequent Amber Corporation's case , by the Bench of this court that when immovable property being admittedly of a value of more than Rs. 100 was brought in by a partner of the firm as his contribution towards the assets of the partnership firm, there was no transfer at all within the meaning of the Transfer of Property Act and that there was no provision under the Partnership Act or under the Indian Registration Act, which requires such bringing in of the property by the partner into the assets of the firm as requiring registration. It was observed that even if a property contributed by one partner be an immovable property, no document, registered or otherwise, is required for transferring the property to the partnership.

5. On the second question, it was held in the earlier Amber Corporation's case , that when property was brought in by a partner as his contribution towards the capital of the partnership firm, the building was partnership property and the assessee-firm was entitled to claim depreciation in respect of the building. The same view was affirmed in the later Amber Corporation's case [1984] 127 ITR 29 . It may be observed that the special leave petition filed on behalf of the Revenue before the Supreme Court against the second Amber Corporation's case [1984] 127 ITR 29 was dismissed by order dated April 18, 1983. In this view of the matter, the questions in respect of which reference is sought by the Revenue stand concluded by the decisions of this court and the Supreme Court.

6. As no referable question of law arises, there is no force in thisapplication and the same is dismissed.


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