COMMISSIONER OF INCOME TAX Vs. AMBER CORPORATION

JUDGEMENT

(1.) THE following question has been referred by the Income -tax Appellate Tribunal, Delhi Bench 'A', New Delhi (hereinafter called ' the Tribunal '), for the opinion of this court under Section 66(1) of the Indian Income -tax Act, 1922 (hereinafter called 'the Act').

(2.) IN paragraph 3 of the statement of the case, it has been stated that Messrs. Amber Corporation, Jaipur, the assessee, was a partnership firm which carried on a hotel business at Rambagh Palace (at Jaipur) and land appurtenant thereto was valued at Rs. 25,00,000. The four sons of Maharaja Man Singh brought in the building (Rambagh Palace) as their contribution of capital along with a cash of Rs. 25,000 each. The Maharaja contributed his share in the form of furniture and cash amounting to Rs. 1,71,388. In its returns for the assessment years 1959 -60 and 1960 -61, the. firm claimed depreciation on that building. The claim of the assessee was that the Rambagh Palace was capital contributed by the four partners of the firm and as such it was entitled to claim depreciation under Section 10(2) of the Act. This contention was rejected by the Income -tax Officer on the basis of a stipulation in the partnership deed under which on the dissolution of the firm, the Maharaja would have no share in the said building, Rambagh Palace, where the business of the said partnership firm was being carried on, but the same would be taken over by the other partners. The Income -tax Officer was of the view that because of this stipulation the firm could not be held to be the owner of the said building.

(3.) IT is clear from Clause 5 that Rambagh Palace which belonged to the four sons of the Maharaja of Jaipur was contributed by them as part of the capital of the partnership. Prima facie, this capital became the partnership property. Lindley on Partnership, at page 357, has observed :