COMMISSIONER OF INCOME TAX Vs. MURUGAPPA CHETTIAR S

JUDGEMENT

(1.) "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is the owner of the assets of Sree Muruga Tile Works, Pudukkad and not the partnership firm 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in allowing depreciation in respect of the assets of Sree Muruga Tile Works, Pudukkad in the hands of the assessee as claimed by him for the two assessment years 197576 and 197677 -.

(2.) Facts relevant for the disposal of the case can briefly be stated thus: The years of assessment are 1975-76 and 1976-77. Till the accounting year relevant to the assessment year 1972-73, the assessee was the proprietor of the business Sree Muruga Tile Works, Chittur. While so the assessee took his son in the business as a partner. Thus from the assessment year 1973-74 onwards the business was run by the firm. This is evidenced by the partnership deed dated 17th May 1972. In the partnership deed there is a clause specifying that the assets of the business of the tile factory would continue to be the exclusive property of the assessee and the other partner will have no manner of right over the same. Nonetheless in the books of accounts of the partnership based on which the Balance Sheet has been prepared, all the assets and liabilities of the assessee in the business as the proprietor were treated as assets and liabilities of the firm. Not only that, the assessee had been given full credit for Rs. 1,52,560 in his capital accounts which was a figure brought forward from the books of the business carried as proprietary concern. These assets consisted of buildings, machineries, press, etc., which had been taken over by the firm at book value from the proprietary concern.

(3.) That the Tribunal had rejected the case of the assessee, that though these assets had been shown in the books of account of the firm as the assets of the firm, they must be deemed to be the exclusive property of the assessee by virtue of the aforesaid clause in the partnership agreement, while confirming the orders of assessment for the assessment years 1973-74 and 1974-75, is beyond, dispute. This aspect of the case, this court, however refused to consider when the following question arising from the order of the Tribunal was considered and disposed of, on the ground that no specific question in that regard had been raised by the assessee.