COMMISSIONER OF INCOME TAX Vs. VIJENDRA PAL SINGH

JUDGEMENT

(1.) BY this application under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Commissioner of Income-tax, Jaipur, seeks that this court may direct the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur to state the case and refer the following question of law arising out of its order dated February 28, 1979, to this court: --

(2.) THE assessee, Shri Vijendra Pal Singh of Ajmer, owned a petrol tanker, which he transferred to a partnership firm in which he also became one of the partners. THE value of the tanker was estimated by the assessee at Rs. 40,000 and the said amount was credited in the capital account of the firm in the name of the assessee. THE Income-tax Officer was of the view that the transaction amounted to a sale of the petrol tanker by the assessee to the partnership firm and he calculated the profit to the assessee under Section 41(2) of the Act at Rs. 10,002, which was added to the total income of the assessee. THE assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax and contended that there was no sale or transfer of any asset by the assessee and as such there was no question of any profit to the assessee within the meaning of Section 41(2) of the Act. THE Appellate Assistant Commissioner accepted the contention of the assessee and held that the transaction did not amount to a sale. He accordingly deleted the sura of Rs. 10,002, in respect of the alleged transfer of the petrol tanker in the partnership firm, from the total income of the assessee. THE order passed by the Appellate Assistant Commissioner of Income-tax was upheld on further appeal by the Income-tax Appellate Tribunal.

(3.) LINDELY in his treatise on the Law of Partnership (14th edition) has observed that partners are called collectively a firm. Dealing with the legal notion of a firm, the learned author has observed as under (at pp. 29 & 30) :--