UNIVERSAL RADIATORS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee, Universal Radiators Limited, Coimbatore filed the above appeal against the order of the Income-tax Appellate Tribunal dated 19. 11. 1998 raising the following substantial questions of law:-"1. Whether the Income-tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income-tax, Coimbatore passed under section 263 of the Income-tax, directing the Assessing Officer to withdraw the depreciation granted to the appellant on properties allotted to it on the dissolution of the partnership firm, Universal Real Estate Agency on 30. 3. 1976? 2. Whether on the facts and in the circumstances of the case, the tribunal was right in holding that allotment of properties to the partners on the dissolution of the firm result in transfer requiring registration under section 17 of the Registration Act, 1908, totally ignoring the principles to the contrary laid down by the Hon'ble Supreme Court in the case reported in 212 ITR 592? 3. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the Commissioner of Income-tax, Coimbatore was right in holding that the appellant was not the owner of the property allotted to it in the dissolution of the partnership firm Universal Real estate Agency?"

(2.) THE assessment year is 1986-87. The appellant is a company carrying on the business of manufacturing automobile radiators. The appellant entered into a partnership agreement with Madras Radiators and pressing Pvt. Ltd. , another company and two other individuals namely, A. P. Madhavan and P. Sharada with effect from 1. 4. 1975. Under the said agreement, the individuals Madhavan and Sharada brought into the firm the property situated at Sanganur village consisting of factory buildings and agricultural land owned by them, whereas the two Companies made their contribution in cash. The firm was so formed in the name of Universal Real Estate Agency with effect from 1. 4. 1975 and the same was subsequently dissolved with effect from 30. 3. 1976.

(3.) ON the said dissolution, the properties in Mettupalayam road, Sanganur village, Coimbatore belonging to the firm, consisting of factory building and agricultural land, were allotted to the appellantuniversal Radiators Ltd. , who were running their factory in the building allotted to them, consequent to the aforesaid dissolution and claiming depreciation right from the assessment year 1977-78 and the same was allowed by the respondent. For the assessment year 1986-87, the appellant claimed depreciation in respect of the factory buildings and the same was allowed by the Deputy Commissioner of Income Tax, Special Range I, Coimbatore under Section 143 (3) of the Income-tax Act, by an order dated 23. 3. 1989.