P.K. MEHTA, A.M. U.S. DHUSIA, J.M. V. BALASUBRAMANIAN, VICE PRESIDENT Order cross-appeals of Revenue and assessee in respect of order of ITO under s. 1 7 1 of IT Act, 19 6 1 ('the Act'), for asst. yr. 19 7 1 - 72 are conveniently considered together and disposed of by common order. 2 . assessee-HUF had claimed partition in respect of immovable properties w.e.f. 1 st July, 19 70 as per partition deed, dt. 1 7th Nov., 19 70. Another claim of partition was made in respect of sum of Rs. 1 ,25,000 out of capital which was accepted by ITO and with which we are not concerned in these appeals. claim of partition of immovable properties was rejected by ITO in first instance and matter came up to Tribunal. Tribunal by its order, dt. 24th Aug., 19 77 directed fresh enquiry to be made by ITO mainly in respect of property styled as Amritsar Cotton Mills (ACM) and set aside order of ITO. fresh order has been passed after order of Tribunal with which we are concerned now. ITO in para 46 has stated that assessee's claim of partition of amount of Rs. 1 ,25,000 and all with effect from other immovable properties except ACM is accepted 1 7th Nov., 19 70. He rejected claim of partition of property of ACM. assessee went in appeal to AAC and he has passed somewhat peculiar order with which both sides are aggrieved and both have come in appeal. In brief, his conclusion in last para of his order is as follows and we quote relevant extract : "Keeping in view above observation and discussion, I am of opinion that at time of partition, HUF styled as Sobha Singh Jairam Singh was owning 2/ 1 6 share and HUF styled as Sobha Singh Harbhajan Singh was owning 5/ 1 6 share in property of firm. remaining share was held by individual partners. In absence of clear demarcation of shares in dissolution deed, judicial interpretation will be taken that property belonging to various partners of firm in ratio of shares being held by such partners in partnership firm. ITO, is, therefore, directed to pass partition order to extent of 2/ 1 6 share in respect of Sobha Singh Jairam Singh and to extent of 5/ 1 6 share in case of Sobha Singh Harbhajan Singh (HUF)." 3. We may now set out certain relevant facts for resolving one controversy in hand and these are taken from either statement of facts submitted by assessee's counsel before us or from order under s. 1 7 1 of ITO. property styled as ACM was sold in year 19 47 in equal shares to two persons, namely Amritsar Rayon and Silk Mills, Amritsar, and Shri Balkishan Dass Munjal. However, sale of half share to Shri Balkishan Dass Munjal did not materialize and that half share reverted back to following persons : 1 . 5 annas share to assessee-HUF, Sobha Singh Jairam Singh. 2. 5 annas share to other HUF styled Sobha Singh Harbhajan Singh. 3. 6 annas share to S. Hardyal Singh Babbar. It was explained by assessee's counsel, Shri K.S. Bajaj, that this happened somewhere in 19 50 or so but ITO in para 1 2 of his order says that it happened in 19 53 and property, when it reverted, was received by three persons in accordance with partition arrangement made in 19 35. S. Hardyal Singh sold his 6 annas share as per sale deeds executed in favour of S. Joginder Singh and S. Kirpal Singh. family tree is given in para 8 of order of ITO and in para 1 , it is stated that somewhere in 19 35 partition had taken place in family, according to which branch of S. Sunder Singh got 6 annas share in ACM and that of Sobha Singh share of 1annas but that partition deed was not available. In para 11 ITO has mentioned that after death of Sobha Singh, complete partition took place between his two sons, Shri Jairam Singh and Shri Harbhajan Singh, and Smt. Bishan Kaur in April 19 43. copy of partition deed dt. 6th April, 19 43 had been filed before ITO which showed that each of two brothers took half share in 1annas shares of ACM property. ITO in para 1 3 has referred to fact of S. Hardyal Singh, son of S. Jairam Singh, and S. Kirpal Singh, son of S. Harbhajan Singh, for consideration paid of Rs. 33,000 by each. In para 1 4 ITO has noted that after all these transactions, ACM property which reverted back finally to two HUFs and its two members, became joint property of following co- owners : 1 . S. Harbhajan Singh representing HUF Sobha 5 Singh Harbhajan Singh annas share 2. S. Jairam Singh representing HUF Sobha 5 Singh Jairam Singh annas share 3 3. S. Joginder Singh annas share 3 4. S. Kirpal Singh annas share ITO has recorded that Joginder Singh and Kirpal Singh owned their shares independently of their HUFs and this was proved from fact that in all later years they have admitted their interests to be separate from HUFs. 4 . In statement of facts of assessee, it is pointed out that property of ACM repurchased from Shri Balkishan Dass Munjal comprised of total land measuring 43,000 sq. yds. out of which 2,200 sq. yds. was covered by roads and pavements. It is also stated that there were 19 6 quarters, 25 sheds and 1 3 shops which were mainly rented out at what we will call today as very small rent ranging from Rs. 2 per month onwards to Rs. 50, and in some cases to Rs. 1 50, Rs. 400 and Rs. 550, etc. 5 . partnership business of cotton ginning mill came into existence in year 19 53 with following constitution : 1 . S. 5 annas share (representing HUF of Sobha Harbhajan Singh Singh Harbhajan Singh) 2. S. Jairam 5 annas share (representing HUF Sobha Singh Singh Jairam Singh) 3. S. Kirpal 3 annas share in individual capacity Singh 4. S. 4. S. 3 annas share in individual capacity. Joginder Singh On 2nd July, 19 54, there was change in partnership and one more partner, S. Mohan Singh son of S. Jairam Singh, came in (it may be stated that in para 20 of order of ITO, date of subsequent deed of partnership has been wrongly mentioned as 2nd July, 19 74 instead of correct date 2nd July, 19 54). profit-sharing ratio of S. Jairam Singh representing his HUF was reduced to 2 annas and fifth partner, S. Mohan Singh, was given share of 3 annas. It appears that for income-tax assessment purposes, S. Mohan Singh's share was also got taxed in individual status. constitution of partnership evidenced by partnership deed, dt. 2nd July, 19 54 remained unchanged till 20th Nov., 19 68 when S. Harbhajan Singh died and in his place S. Kirpal Singh stepped in as stated by ITO in para 2 1 of his order and he came to have 5 annas share in capacity of Karta of HUF, Sobha Singh Harbhajan Singh, and 3 annas share in his individual capacity. It is stated in statement of facts of assessee that business of cotton ginning mills was discontinued on 30th June, 19 70 and thereafter no ginning business was at all done and, thus, t h i s partnership was dissolved. In succeeding para in assessee's statement of facts, it is mentioned that whereas S. Harbhajan Singh died on 20th Nov., 19 68, dissolution deed was executed on 3 1 st Aug., 19 73. There is controversy about point of time when it can be said that firm was dissolved. 6. Another important aspect about this partnership business is whether whole of property of ACM was thrown as initial capital by partners in partnership business. It is undisputed that following entries were passed in books of account about introduction of machinery and building by partners "Machinery Rs. account 5,00,000 Building Rs. account 5,00,000 Rs. 1 Rs. 1 By credit to : ,00,000 Rs. Harbhajan 3 1 Singh ,250 3 1 Jairam Singh ,250 Joginder 1 Singh 8,750 1 Kirpal Singh 8,750" It is also not in dispute as is clear from what is written in assessee's statement of facts that 'it was brought to notice of ITO that it was notional value which was put with regard to two sheds and machinery to bring about partnership into existence'. controversy here is that, according to assessee, it was only two sheds and machinery, with which ginning business was carried on, which had been brought into partnership business. But ITO, on other hand, holds that entire property of ACM was partnership asset. In support of ITO's conclusion, relevant paragraphs are paras 22 to 24, which are quoted below : "22. firm is claimed to have dissolved on death of Harbhajan Singh. However, deed of dissolution was drawn on 3 1 st Aug., 19 73 five years after. All while and even till today, books of ACM continue in which rental income and ancillary expenses are recorded and net income is divided. 23. building account in books of ACM which started with debit of Rs. 5,000 in 19 53 swelled to Rs. 2,05,356 as on 30th June, 19 70. During period of seventeen years, expenses excluding sales of material amounted to more than Rs. one lakh fifty-five thousand. On 30th June, 19 70, debit balance of above mentioned amount in this account was written off equally to accounts of Sobha Singh Harbhajan Singh partner No. 1 above and Sobha Singh Jairam Singh partner No. 2. 24. All along entire income of above property has been accounted for in books of ACM and divided along with other income, amongst partners in their profit-sharing ratio mentioned above. It is to be noted that property income was never equally divided between two HUFs, headed by Harbhajan Singh and Jairam Singh but between five partners in their profit- sharing ratio. This continued up to 30th June, 19 70." In statement of facts, assessee has partly accepted position, but we find that what is stated by ITO is more correct and we will deal with this aspect later. 7 . It may be mentioned that history of events is not fully documented and facts have been presented in jumbled fashion, though in great bulk. In preceding paras, we have tried to record certain relevant facts. 8. objections of assessee against rejection of its claim for partition before us were same as were raised before ITO. ITO has dealt with them in paras 27 to 42 of his order. In para 43 there was another objection whether property was capable of physical demarcation and division but with that it may not be necessary for us to deal with. assessee has recounted these objections in its written statement of facts, particularly paras 11 to 1 6. On behalf of Revenue, following additional ground was moved by learned Departmental Representative with approval of CIT(A). "That learned AAC erred in holding that written agreement between partners was not required and that entries in books of account of firm Amritsar Cotton Mills, made on 30th June, 19 70, were sufficient to transfer title of immovable properties of firm to partners so as to enable partner HUFs to partition immovable properties on 1 st July, 19 70." additional ground being purely legal and relevant facts in respect of its being already on record was admitted. In support of proposition raised through additional ground, Departmental Representative relied on three authorities of High Courts and decision of Amritsar Bench of Tribunal and these were Ram Narain & Bros. vs. CIT ( 19 6 9 ) 73 ITR 423 (All), CIT vs. Bharani Pictures ( 19 8 1 ) 1 2 9 ITR 244 (Mad) and K.D. Pandey vs. CWT ( 19 77) 1 8 ITR 2 1 4 (All) and decision of Amritsar Bench of Tribunal in case of ITO vs. Bharati Engg. Corpn. (IT Appeal No. 4 1 7 (Asr) of 19 80, dt. 7th Nov., 19 8 1 ) to which one of us, Judicial Member, was party. We do feel that once it is found that entire ACM property had been brought in firm by partners as their capital contribution, real issue will be, which is pinpointed by Revenue by moving additional ground. 9 . Now we will take up question about property contributed as capital by partners. assessee had claimed that immovable ACM property consisting of land and building was always owned by two HUFs Sobha Singh Harbhajan Singh and Sobha Singh Jairam Singh in equal shares. Further, it was claimed that only two sheds were given to firm for carrying on its ginning business and rest of property was never assigned to it. On considering submissions of both sides, we find that ITO was justified to reject both of them by considering totality of circumstances. Para 26 of his order appears to have little factual inaccuracy. He wanted to refer to 8 annas share being held by each HUF and in that context went on to recount repurchase of ACM property. In para 1 2, ITO has stated that half share of ACM, which was sold to Seth Balkishan Dass Munjal for consideration of Rs. 1lakhs, was mortgaged for unpaid consideration and eventually he could not buy property and resold his share in 19 53 for Rs. 2,50,000 to three sellers, namely ( 1 ) branch of Hardyal Singh 6 annas share, (2) Sobha Singh Harbhajan Singh, HUF, through Shri Harbhajan Singh--5 annas share, (3) Sobha Singh Jairam Singh, through Jairam Singh--5 annas share. It is not in dispute that soon after Hardyal Singh sold his 6 annas share to Joginder Singh, son of Jairam Singh, and Kirpal Singh, son of Harbhajan Singh, in equal share. ITO in paras 1 6 and 28 has pointed out that both these persons acquired three annas share each from S. Hardyal Singh in their individual capacity and not on behalf of their HUFs and they had declared income accordingly and assessed on that basis. This clearly shows that right after repurchase two assessed on that basis. This clearly shows that right after repurchase two HUFs were not owners of 8 annas share each in property of ACM. 6 annas share in property repurchased had gone out of fold of two HUFs and gone to members of HUFs in their individual capacity. This claim of assessee totally ignored facts which have obtained for large number of years and assessments have been courted by persons concerned on that basis. It may be relevant to show that Joginder Singh and Kirpal Singh were representing their respective HUFs, Sobha Singh Jairam Singh and Sobha Singh Harbhajan Singh, and had used funds of those HUFs. 9 . 1 Similar is position, qua conduct and evidence in respect of second claim of assessee that only two sheds were given to firm. ITO has clearly pointed out in para 3 1 that there was no evidence produced to show what exactly was comprised in properties, put as capital in firm and valued at Rs. 50,000. In this connection, it will be useful to refer to book entries passed which are given in para 6 above and to statement made in statement of facts noted therein. It is admitted position, according to that statement, that Rs. 50,000 was notional value though it is stated that it was in respect of two sheds. assessee by no evidence either before ITO or up to this stage has backed claim about real cost of two sheds and what is meant by notional valuation made. When position is not clearly brought out by exact data, true position has to be found out by looking into two circumstances including conduct of parties. In this respect, ITO's paras 22 to 24 and 3 1 to 35 are relevant. ITO has taken note of fact that rental income all along of entire property has been accounted for in books of firm and divided in profit-sharing ratio. result of this manner and treatment has been that all partners have courted assessments on that footing and not on basis that barring two sheds, income of rest of property was to be assessed differently. In fact when we keep in mind position that property purchased from branch of S. Hardyal Singh was acquired by two members of two families in their individual capacity, real ratio to divide property income will be same as is reflected by profit-sharing ratio of firm. Further, ITO has also relied on fact that expenditure on property was dealt with again through firm and entire debit balance in account in respect of whole property was only divided half and half on 30th June, 19 70 when assessee was set for dividing ACM property through partition. These are weighty circumstances and in law partners have obtained benefit by getting themselves taxed on rental income by showing position different from what is now sought to be set up about ownership of property. In this connection, it will be relevant to point o u t contradictory approach of assessee insofar as wealth-tax assessments were concerned. In para 36, ITO has noted this contention of assessee. It was claimed that in wealth-tax assessments, two HUFs were disclosing half share of value of entire property. This action is incorrect factually, insofar as it does not at least exclude value of two sheds given to firm. conduct in showing entire property brings out that parties concerned were thinking in terms of entire property and not by excluding two sheds. Secondly, it is deliberate act where assessee Courts assessment under WT Act, 19 57 ('the 19 57 Act') on one pattern and under 19 6 1 Act on another pattern. This kind of conduct reduces credibility of assessee. It would appear that income-tax assessments started earlier than wealth-tax assessments, WT Act being enacted only in 19 57 and, in our view, it will be correct to hold that position reflected for income-tax purposes was correct. We may point out another factual error that whereas after repurchase of property from Seth Balkishan Das Munjal and S. Hardyal Singh half share of property in fact could not belong to each of two HUFs. This also shows that position disclosed in wealth-tax assessments was based on wrong appraisal of situation. About all no evidence has been led to show that what was done in income-tax was wrong or what was done in wealth-tax is right. real question was from whom funds proceeded and evidence in respect thereof. That evidence is not available nor produced and matter merely rests on oral submissions. One is left wondering about manner in which arguments and stands are taken to suit convenience from time to time. 9 .2 Taking totality of circumstances and what was represented before IT authorities by partners for income-tax assessments, we are inclined to hold that entire ACM property was brought into firm. At this stage another relevant fact has been pointed out by ITO in para 3 9 that property always stood in name of firm and not in name of partners. This will also show along with other facts pointed out above that property belonged to firm. If there was any contrary intention then at time of repurchase, property could be got registered in name of HUFs. 1 . Now we take up second aspect which is pointedly raised through additional ground quoted above moved by Revenue, namely, whether property belonging to firm could be transferred only through instrument in writing and whether that should be registered also. We have also pointed out above that property stood in name of firm but apart from that aspect, it is also held that in reality entire property was introduced as capital contribution by partners and, therefore, it was property of firm. On this issue, relevant case law is Ram Narain & Bros.' case (supra) and two Supreme Court decisions namely Addanki Narayanappa vs. Bhaskara Krishnappa AIR 19 66 SC 1 300 and Ratan Lal Sharma vs. Purshottam Harit AIR 19 74 SC 1 66. Allahabad High Court in case of Ram Narain & Bros's case (supra) has clearly held that item of immovable property belonging to firm can be converted into personal property of partners only by means of instrument in writing and that entries in account books of firm do not have effect of converting property of firm into personal property of partners. It is also observed at p. 430 that such instrument may also require registration under s. 1 7 of Indian Registration Act, 19 8. Supreme Court decision in Addanki Narayanappa's case (supra) has not been referred to by Allahabad High Court but effect of that decision has been considered in subsequent Supreme Court decision in Ratan Lal Sharma's case, (supra) and we quote four relevant paragraphs from that judgment : "4. It is well settled now that share of partner in assets of partnership which has also immovable properties is movable property and assignment of share does not require registration under s. 1 7, Registration Act. (See Ajudhia Pershad Ram Pershad vs. Sham Sunder AIR 19 47 Lahore 1 3 at p. 20 (FB), Narayanappa vs. Bhaskara Krishnappa ( 19 66) 3 SCR 400 at pp. 406 and 407 and CIT vs. Juggilal Kamlapat ( 19 67) 1 SCR 784 at p. 7 9 ). But award with which we are concerned does not seek to assign share of respondent to appellant either in express words or by necessary implication . . . . 5. word 'not' is slip here. parties conceded before learned Single Judge that award deals with immovable property worth above Rs. 1 0. So if it is found by us that award purports to create rights in appellant over immovable property, it would require registration under s. 1 7, Registration Act. (See Satish Kumar vs. Surinder Kumar, ( 19 6 9 ) 2 SCR 244 at pp. 25 1 - 252). On dissolution of partnership or with retirement of partner from partnership share of partner in partnership assets is equal to value of his share in net partnership assets after deduction of all liabilities and prior charges. Even during subsistence of partnership, be may assign his share to another partner. In that event assignee partner would get only right to receive share of profits of assignor. (See Narayanappa's case (supra) at p. 407 (of 19 66 3 SCR 400)). 6. Now award does not transfer share of respondent, interpreted in aforesaid sense, to appellant in express words. Nor such is t h e necessary intendment of award. It expressly makes exclusive allotment of partnership assets including factory and liabilities to appellant. It goes further and makes him 'absolutely entitled to same'. In consideration of sum of Rs. 1 7,000 (see cl. 4) plus half of amount of Rs. 1 , 9 24.88 to respondent and appellant's renouncement of right to share in amounts already received by respondent. So, in express words it purports to create rights in immovable property worth above Rs. 1in favour of appellant. It would accordingly require registration under s. 1 7, Registration Act. As it is unregistered, Court could not took into it. If Court could not, as we hold, look into it, Court could not pronounce judgment in accordance with it. Sec. 1 7, Arbitration Act presupposes award which can be validly looked into by Court. appellant cannot successfully invoke s. 1 7. 7. award is inseparable tangle of several clases.and cannot be enforced as to part not dealing with immovable property. As already stated, various other relevant clases constitute consideration for cl. 1 , that is, for creation of absolute rights in factory and other properties in favour of appellant. This is perfectly clear from note of arbitrators appended to award as cl. 8. appellant is not given right to run factory unless he has paid awarded consideration to respondent." (p. 1 67) It is clear from reading of above four paragraphs that where exclusive allotment of immovable property of firm is to be made to partner, instrument in writing will also require registration. We may also refer to Madras High Court decision in case of Bharani Pictures (supra) which stresses execution of instrument in writing when immovable property of firm is to be transferred to partner and considers Addanki Narayanappa's case (supra) but High Court did not go further into aspect of registration. High Court has analysed position of two Supreme Court authorities at pp. 252 and 253 of its decision which can be usefully referred to. It may further be stated that following Allahabad High Court decision in Ram Narain & Bros's case (supra) Amritsar Bench of which one of us, Judicial Member was party took same view in case of Bharati Engg. Corpn (supra). 11 . From above discussion, legal position that emerges is that instrument in writing will be required and it will also need registration as immovable properties of firm have been allotted to two of partners, namely, two HUFs. When confronted with this position, argument of assessee's counsel was that dissolution deed, dt. 3 1 st Aug., 19 73 was that instrument in writing though it is undisputed that it was not registered document. In our view, this dissolution deed is neither right document when it is closely examined nor can it advance assessee's case. relevant cls. 1 to 6 are reproduced below : " 1 . That partnership firm styled as 'Amritsar Cotton Mills', GT Road, Amritsar has been dissolved as from date of death of S. Harbhajan Singh Babbar in 19 68. 2. That capital of dissolved firm has already been withdrawn by said partners and there is no asset worth name of defunct firm at present, except that Old Ginning Mills machinery, in shape of scrap. 3. That thus immovable property in which ginning mills business w s carried on and all godowns, etc., belonged to said two Hindu undivided families equally. 4. That S. Jairam Singh, Karta of family, partially partitioned his half share in said immovable properties of 'Amritsar Cotton Mills' in 19 70. 5. And similarly, there took place partial partition between coparceners of family of S. Kirpal Singh Babbar and his brothers. 6. That now this deed of dissolution is executed as memorandum of dissolution which automatically took place on death of S. Harbhajan Singh Babbar." 11 . 1 Before dealing with what is stated in dissolution deed clauses, it may be pointed out that instrument in writing, which is contemplated for purpose of transfer of immovable property from firm to partner, has to be executed before property can move from firm to partners. dissolution deed written on 3 1 st Aug., 19 73 cannot be that instrument which will transfer property to HUFs on 30th June, 19 70 and those HUFs then can subject it to partition on different points of time. This appears to be fundamental objection. 11 .2 Now dealing with dissolution deed for, whatever, it is worth as per cl. (6), it is memorandum of dissolution which automatically took place on death of S. Harbhajan Singh Babbar in 19 68. It by itself does not purport to do anything and wants to record something which has happened. Such document cannot be that instrument in writing. Again it states in cl. (3) that immovable property in which ginning mills business was carried on and all godowns, etc., belonged to said two HUFs equally. It nowhere talks of transferring of any property from firm to two HUFs and merely wants to assert that properties belonged to two HUFs equally. Here it is also significant to note that entire ACM property is being referred in dissolution deed of firm. This may be another clue in support of our conclusion reached above that entire property belonged to firms Clause (4) again refers to action of S. Jairam Singh to partially partition his half share in ACM property in 19 70. We do not get impression that property was transferred at all through this deed. Finally, dissolution deed is undisputedly not registered document under Registration Act. 1 2 . We will also like to refer to another interesting aspect which arises from assessee's stand that only two sheds were contributed as capital to firm. It will be worth remembering that on this footing too, it will be necessary to have instrument in writing which will have to be registered. That having not been done partition claimed for this property on that footing also will fail. 1 3 . Of course once it is held as per discussion above that ACM property has not been transferred in eye of law to two partner HUFs, partition deed becomes fruitless, insofar as this property is concerned. Consequently, it has to be held that ITO was justified in rejecting partition claimed in respect of ACM property. We uphold his order and reverse order of AAC and allow appeal of Revenue. 1 4. We may mention that it is unnecessary after reaching this conclusion to go into further question of nature of property from angle of its physical partition. 1 5 . In result, appeal of assessee fails and appeal of Revenue is allowed. I have read through order of learned Accountant Member but have not been persuaded that his finding can be accepted by me. His finding is mainly based on finding of ITO. I would, therefore, first examine finding of ITO. 1 7. only issue that arises for consideration in this appeal is whether there was partition of property, known as ACM property, comprising of 43,000 sq. yds. (out of which 2,200 sq. yds. is roads and pavements), 19 6 quarters, 25 sheds, 1 3 shops as result of partition effected on 1 7th Nov., 19 70. assessee, Sobha Singh Jairam Singh, who claims to be joint Hindu family and its claim as joint Hindu family has been accepted by Revenue. claim of assessee is based on provisions of partition agreement, which was duly registered. agreement brought about partition among coparceners of assessee joint family and Smt. Pukhrajwati, wife of S. Jairman Singh. Other coparceners were Joginder Singh, Mohan Singh, Harbhajan Singh and Avtar Singh. partition was effected of not only immovables, inter alia, capital of Rs. 1 ,25,000 lying in books of defunct firm, ACM, but also several immovable properties, inclusive of half share in land, building, quarters, godowns, sheds, known as ACM property situated at GT Road, Amritsar. 1 8. ITO does not assail reality or genuineness or validity of partition agreement, dt. 1 7th Nov., 19 70. He accepts that there was partition of movable and other immovable enumerated in agreement. What he objected to, was partition of ACM properties. According to him, ACM properties did not form part of estate of joint Hindu family and, for that reason, claim of partition of ACM properties having been effected, was not to be accepted. In my view, approach of ITO is not sustainable in law. It is open to him to accept document as reliable or reject it as unreliable. But it is not open to him to hold in same breath, that document was partly reliable and partly unreliable. It is not open to any one, not to ITO here, to take such position in law, in considering document. If he accepts reality, genuineness and validity of document and accepts nine-tenths of content as reliable, it is not open to him in law to disclaim about remaining one-tenth. document to be accepted as reliable is to be accepted in full or not at all. It cannot be said that document is partly reliable and partly unreliable. If document is unreliable, support for acceptable portion has to come out from other materials. unreliable document cannot be depended upon for any support. ITO has not brought out material, apart from partition agreement, which has enabled him to accept partition of movables, including capital of Rs. 1 ,25,000 and all other immovable except ACM properties. Apparently, he has relied upon partition agreement and found it reliable. Looked at from this has relied upon partition agreement and found it reliable. Looked at from this angle, he should have found support in agreement itself for partition of ACM properties. It is obvious that ITO has moved arbitrarily in matter without there being any support available in law, only on basis of his own conjectures and surmises. 1 9 . assessee, in this connection, pointed out another document in support of claim of partition of ACM properties--dissolution agreement executed on 3 1 st Aug., 19 73. I would like to reproduce para 3, of recitals and covenant Nos. 3, 4 and 5 : "3. And whereas, this firm has been showing income from property, in fact, this property belonged to two Hindu undivided families, headed by S. Jairam Singh Babbar, S. Mohan Singh Babbar and S. Joginder Singh Babbar (parties of first, second and third parts) on one hand and late Harbhajan Singh (which, on his death) succeeded by S. Kirpal Singh Babbar, as Karta on other hand." "iii. That thus immovable property, in which ginning mills business was carried on, and all godowns, etc., belonged to said two Hindu undivided families equally. iv. That S. Jairam Singh, Karta of family, resorted to partial partition of his half share in said immovable properties of 'Amritsar Cotton Mills' in 19 70. v. And, similarly, there took place partial partition between coparceners of family of S. Kirpal Singh Babbar and his brothers." perusal of foregoing does not leave any doubt that although income of ACM properties was being shown in income of firm, property belonged to two HUFs only and not to partnership firm. dissolution deed was executed on 3 1 st Aug., 19 73 with view to reduce to writing fact of dissolution of firm, which, as articles 1 and 6, reproduced below, indicate, had taken place on death of one of partners, Shri Harbhajan Singh Babbar : " 1 . That partnership firm styled as Amritsar Cotton Mills, GT Road, Amritsar, has been dissolved as from date of death of S. Harbhajan Singh Babbar in 19 68. 6. That now this deed of dissolution is executed as memorandum of dissolution which automatically took place on death of S. Harbhajan Singh Babbar." 2 0 . ITO did not assail validity of correctness of deed of dissolution, but could not appreciate how deed, having been executed on 3 1 st Aug., 19 73, could bring about dissolution of firm in 19 68. ITO, in my view, committed error in taking view that dissolution was brought about by execution of deed. deed had not brought about dissolution as ITO had mistakenly assumed. deed had only recorded factum of dissolution which had taken place on cessation of ginning business and on death of one of partners, Shri Harbhajan Singh, in year 19 68. deed of dissolution not having brought about dissolution, but only recorded fact, consideration of its retrospectivity was uncalled for and misconceived. deed of dissolution has specifically recorded that ACM property did not belong to firm and that its ownership vested in two HUFs. There could not be better evidence of fact than voice of partners, expressing through dissolution deed, that ACM property did not belong to it. 2 1 . It was for this reason that when Harbhajan Singh died, value of his coparcenary interest was shown in estate duty returns and was, accordingly, assessed as part of his estate by ACED as will appear from following : "5. HALF SHARE IN AMRITSAR COTTON MILLS, ASR family owned one-half share in factory building and lands appurtenant thereto belonging to Amritsar Cotton Mills, Amritsar. This firm is being assessed to income-tax in respect of property income. scrutiny of valuation report revealed that approved valuer has estimated total value of property at Rs. 2,4 9 ,500 but he excluded agricultural land measuring 2,500 sq. yards. agricultural land is also subject to estate duty." 22. order of ACED was made on 27th Feb., 19 7 1 , long before issue of order under s. 1 7 1 had arisen before ITO. But before this had happened, question of ownership had been considered both by ITO and WTO. I refer to appellate order passed on 3 1 st Oct., 19 73 for asst. yrs. s 19 70-7 1 , 19 7 1 -72 and 19 72-73. I reproduce two passages to show position of ACM properties vis-a-vis firm : "2. It was contended by authorised representative that appellant had filed returns of income in all these three years in status of firm and had shown nil income. In fact, this firm, which was being assessed up to 19 6 9 - 70, discontinued its business activities by end of that assessment year and firm was also dissolved. Now only source of income was income from property for which there could be no question of existence of firm. It is true that ITO has not raised any demand in these cases though assessments were completed in status of AOP but authorised representative's objection in this regard is that assessments cannot be made in status of AOP when returns were filed in status of firm as, admittedly, there is no business income of firm. Since returns have been filed in status of firm there will be no income assessable in these cases and, therefore, incomes should be taken t nil for all three assessment years in status of firm as per returns filed." Similar view was taken by ITO for asst. yr. 19 73-74 as appears from perusal of following passage in appellate order for asst. yr. 19 73-74 : "The ITO, while framing assessment, observed that status of firm was not acceptable on ground that firm was dissolved on 20th Oct., 19 68 and as such group of persons owned property which was let out on hire and their shares being definite, property was to be assessed in hands of owners separately. This observation was based on direction of my predecessor in case of appellant for earlier years wherein same issue was raised for decision. However, income was computed and status was adopted as association of persons. appellant has agitated against status and computation of income made by ITO. After carefully considering contentions of appellant's counsel and facts of case, I agree with ITO that where persons join together to acquire, hold and manage property, they fall to be charged as association of persons. But this general rule must be read subject to provisions of s. 26 which provides that where house property is owned by two or more persons and their respective shares are definite and ascertainable, such persons should not in respect of such property be assessed as association of persons, but each of them should be individually assessed in respect of his share in income from property." AAC accepted view of ITO and dismissed appeal of assessee against making assessments of property income in hands of AOP of co-owners of property. 23. Similar approach was adopted by WTO, who assessed ACM property in net wealth of two joint Hindu families. We refer to following extract from first appellate order dt. 19 th Dec., 19 75 in appeal against refusal of ITO to recognize partition under s. 1 7 1 : ". . . Here, it may be mentioned that all along these years, value of property, namely, Amritsar Cotton Mills, has always been shown by two HUFs in their own wealth-tax returns and same have been accepted by WTO till date assessments have been finalised. . ." "On carefully considering authorised representative's contention and foregoing facts, I am inclined to agree with assessee's counsel. It is clear that property owned by two HUFs was never transferred to 'the firm though part of it was used by it for purposes of carrying on business. At no time did it become property of firm. As regards investment in firm, in form of repair and reconstruction done from funds of firm, same were transferred to accounts of both HUFs. This was also done before date of partition. On date when partition was effected, Shri Jairam Singh and Shri Harbhajan Singh owned half of Amritsar Cotton Mills. This is further confirmed from fact that property has been shown in wealth- tax returns of both assessees, which has also been accepted by WTO . . ." When ITO passed first order under s. 1 7 1 on 22nd Nov., 19 73, refusing to accept partition, one of objections of ITO was that, although assessee had executed registered partition deed, it has found that properties have not been transferred in municipal records in name of receivers. As necessary mutation had not been effected, partition of various immovable properties was not complete, according to ITO, and could not, therefore, be accepted. AAC, in disposing of appeal on 19 th Dec., 19 75, noted in submission of appellant that mutation of properties in municipal records had been effected. 24. Therefore, on facts, it cannot be held that ACM properties, claimed to have been partitioned, vide partition agreement, dt. 1 7th Nov., 19 80, was not vested in assessee-HUF, but was vested in partnership. There was overwhelming evidence for fact that said property belonged to two joint HUFs, which, by partition effected in year 19 70, was partitioned. There was nowhere whisper in favour of ITO's claim in any of documents or materials, to which I have drawn attention above, that property belonged to partnership firm. That is why AAC, who heard appeal against first order under s. 1 7 1 , made following finding : "It is clear that property owned by two HUFs was never transferred to firm, though part of it was used by it for purposes of carrying on business. At no time did it become property of firm." ITO who passed second order under s. 1 7 1 on 2 9 th March, 19 7 8 had, in addition, benefit of considering issue in light of developments taking place after he had passed first order. He could not, not only rely on documents, referred to above, from treatment given by ITO, WTO, estate duty and municipal authorities but also from deed of partition, deed of dissolution and also from subsequent conduct of parties. ITO has not brought any material, whatsoever, except his surmises to show that position claimed and asserted by HUF was contradicted or denied by any conflict arising between coparceners concerned or members of erstwhile partnership firm. Absence of any conflict or contrary claim, made by parties, supports claim of assessee that ACM properties, which never belonged to partnership firm and on contrary belonged to HUFs, were partitioned away in 19 70. ITO had advantage, as compared to his predecessors, to reach finding on issue in light of settled position. If there had been any error or exaggeration in claim of assessee, regarding partition, same would have surfaced or had been highlighted in these 1 3 years since partition was effected, Law of adverse possession begins to operate after twelfth year. Law does not favour unsettled position regarding property to continue for more than 1 2 years. Dejure owner of property must pose challenge to de facto owner only with this period. If he fails, he loses right to claim his title to property. If position stated in partition agreement had been at variance with facts, there would have emerged in this period some challenge to arrangement brought about by partition agreement as valid and effective. Revenue does not operate in air, but in real world, peopled with actual claimants and rivals, who have conflicting interests and desires and who never miss opportunity to pose challenge if some one transgresses his lawful boundary. 2 5 . ITO, however, did not proceed on basis of above overwhelming material facts on record and realities of situation, but proceeded in his own way, on basis of his surmises and conjectures to refuse partition of ACM properties. As these have been relied upon by learned Accountant Member in his order, it is imperative that I deal with them also. 26. According to ITO, ACM properties have been contributed as capital, in ownership of partnership and, therefore, belonged to firm. If it belonged to partnership, it could not have belonged to two HUFs. Therefore, how could it be partitioned amongst coparceners of two HUFs. There was no evidence of transfer from partnership which could only be effected by registered or unregistered instrument of conveyance. As there was no transfer effected by means of instrument of conveyance, claim of no transfer effected by means of instrument of conveyance, claim of assessee for partition of ACM properties, according to ITO, failed. I examine his first proposition that ACM properties were transferred as capital to partnership. ITO depends upon entry of capital as under : Rs. Rs. "Machinery Account 50,000 1 Building Account 50,000 ,00,000 By credit to Harbhajan 3 1 ,250 Singh Jairam 3 1 Singh ,250 Jogender 3 1 Singh ,250 3 1 Kirpal Singh ,250" According to ITO, this entry unmistakably showed that ACM properties were transferred to partnership as capital. In this connection, reference is made to para 1 2 of first order, passed under s. 1 7 1 , where sale to Amritsar Rayon and Silk Mills and Seth Balkishan Dass Munjal for consideration of Rs. 1 ,00,000 is referred to this sale was negotiated in year 19 47. partnership firm came into existence in year 19 53. Can person, in his senses, possibly suggest that businessman known for their shrewdness, would evaluate entire property at Rs. 50,000 only, which 7/8 years before, same property had been negotiated for sale at Rs. 1 ,00,000 and thus exposes same to threads of attachment by creditors of firms in respect of unpaid bills and advances. ITO did not once consider magnitude and variety of this property when he made aforesaid finding. property comprises of vast area of vacant land not less than 43,000 sq. yards, 19 3 quarters, 1 3 shops and 25 sheds. reflection on magnitude of this property, if properly considered by ITO, would have deterred him from making this finding that entire ACM property was transferred as capital by partners. There appears more sense in claim of assessee that Rs. 50,000 represented value of building, i.e., 2 sheds placed at disposal o f firm for carrying on ginning business rather than entire ACM properties for which ITO had no corroborating evidence. Therefore, one has to disabuse his mind of this finding of ITO that entire ACM properties were placed at disposal of firm, which on facts and in circumstances of case, suggests proposition, which cannot be sustained o n serious reflection, on basis of this entry. If ACM property in entirety was not transferred to firm, could it be held in alternative, that part of ACM property was transferred to firm. entry refers to building only, which, as has been explained by assessee and had been accepted by IT and WT authorities, should be considered as confined only to structure standing on land. I am not prepared to accept, after consideration of amount of Rs. 50,000, that term 'building' with two sheds should be considered to include also land on which they stood. For any contrary view that land should also be included, there should be some material to support view. firm never approached municipal authorities for bringing about any mutation in municipal records. As rule, in balance sheet, land and building are separately referred to. ITO has not been able to derive any support either from instrument of partnership or from balance sheet of firm, prepared year after year in this respect. ITO could not even refer to P&L account prepared every year and show that assessee ever made claim on depreciation on building in two sheds. ITO, no doubt, referred to rent receipts considered as income of firm and also to expenditure incurred on repairs and reconstruction debited to property account in books of firm. As entry of capital of Rs. 50,000 cannot show that ACM properties except for two sheds minus land on which they stood, belonged to firm, inclusion of rental income in income of firm is by no means conclusive or even inconclusive evidence in establishing that ACM property was made over to partnership in view of overwhelming support from other materials available for contrary view discussed earlier, which showed that title to property continued to remain vested with two HUFs after partnership came into being. There can be 11 reasons for showing rental income in hands of firm. One such reason can be desire of assessee to reduce incidence of tax. Showing rental income in hands of firm had enabled assessee and its partners to get its assessments in hands of five partners instead of two HUFs. It is true that it was perhaps example of unconscionable and unethical practice and should not only be discredited but also visited with deterrent punishment. I would suggest to Revenue to see that assessee is adequately penalised but penalty to be inflicted cannot be that entire property should be considered as property of firm. 27. Regarding vesting of title of immovable property in person, natural or legal, one has to refer to provisions of Transfer of Property Act, 1 882. claim of Revenue that ACM properties should be considered as transferred to partnership because income derived from it was allowed to be clubbed with other income of firm, will not find any support on fact in civil law from provisions of Transfer of Property Act. Revenue has not realized that clinging to this view would put property beyond its reach. Neither two HUFs, alleged to be transferors, nor partnership firm, alleged to be transferee, accept this claim. No title or right vests in dead person natural, legal or semi-legal. In appeal, filed by partnership firm for asst. yr. 19 73-74, AAC had correctly endorsed finding of ITO that property which was let on hire, i.e., two sheds, was also to be assessed in hands of HUFs as owners. I reproduce part of her observation as under : "The ITO, while framing assessment, observed that status of firm was not acceptable on ground that firm was dissolved on 20th Oct., 19 68 and as such group of persons owned property, which was let out on hire and their shares being defined, property was to be assessed in hands of owners separately. This observation was based on direction of my predecessor in case of appellant for earlier years, wherein same issue was raised for decision . . . ." "After carefully considering contention of appellant's counsel and facts of case, I agree with ITO that where persons are joining together to acquire, hold and manage property jointly for purpose of producing income, they fall to be charged as association of persons. But this general rule must be read subject to provisions which provide that where house property is owned by two or more persons and their respective shares are defined and ascertainable, such shares should not, in respect of such property, be assessed as association of persons, but each of them should be individually assessed in respect of his share in property." I am not in doubt that, in this background, Revenue will not be able to endorse its finding contained in order under s. 1 7 1 , as upheld by learned Accountant Member. finding is against facts on record and also against realities of situation. 28. ITO has referred not only to inclusion of rental income in that of firm, but also to expenses incurred in relation to property in dispute. He has dealt with this in para 33 of his order. He has found that debits made to property account year after year. In para 34, ITO, relying on pattern of expenses, made finding that expenses were incurred on extension and reconstruction. He discounted suggestion that these expenses could not be revenue expenses, which could be debited to P&L account of firm. In finding that these were debited to property account, in para 23 of order under s. 1 7 1 , ITO referred to fact that debit balance in property account as on 30th June 19 70 was written off equally between account of two HUFs, i.e., those of Sobha Singh, Harbhajan Singh and Sobha Singh Jairam Singh. ITO, however, could not, from this fact, derive only correct finding that two sheds allowed to be hired by firm from year 19 56, when partnership was constituted, reverted back to original owners. It was natural that capital expenses incurred in past amounted to Rs. 2,06,356 should be transferred to two HUFs only and not to all five partners of firm. Therefore, fair and reasonable consideration of income derived from property or from expenses for making extension and construction together with other facts does not support case of ITO that ACM property should, either in full or in part, belong to firm and not to two HUFs and, for that reason, could not be partitioned among coparceners of two HUFs. If property had belonged to firm, coparceners of two HUFs. If property had belonged to firm, expenses would have been apportioned in hands of five partners and not in hands of two HUFs only. If any conclusive evidence was wanted in favour of claim, that property belonged to two joint families, here was one based on entries of accounts on which ITO himself had relied. ITO carried away by his zeal referred to this aspect, but missed to appreciate correct impact of entry. 2 9 . Another feature, which has been taken note of by ITO, is that even after partition, income derived from rent had continued to be accounted for in books of ACM. It is not appreciated by me what is aimed at by ITO by taking note of this fact. Does he mean to suggest that firm ACM has not been dissolved and that partnership continued owning ACM property. This finding could be, however, at complete variance with finding of ITO, who made assessment of firm for asst. yrs. s 19 70-7 1 , 19 7 1 -72, 19 72-73 and 19 73-74 onwards, which had already been referred to. Therefore, no point can be made out by stressing fact that co-owners of property have continued to use same books of account for entering receipts and disbursements. From this fact, no support can be drawn for finding of ITO that firm has continued to be owner of property after it had been dissolved in year 19 68. 30. Another plea, which had been vehemently raised by Departmental Representative, who went to extent of claiming as additional ground, which we allowed to be admitted, that case of Revenue should be allowed to fail or succeed on consideration 'of this plea only. This plea was based on decision of Allahabad High Court in case of Ram Narain & Bros. (supra), which had laid down that property could be transferred from firm only by means of instrument in writing. As I have already brought out that ACM properties, except for two sheds, which did not include land, did not belong to firm. question of its retransfer does not arise at all. Therefore, reliance on this case by Departmental Representative, for support, is misconceived. If ACM property was not transferred to firm, question of retransfer of property from it did not arise. 3 1 . One of pleas raised by ITO is contained in paras 36 to 38 of his order. According to him, principle of res judicata did not apply to IT proceedings. For this reason, he felt, he was not bound by finding arrived at in WT proceedings, where ACM property had been assessed equally in hands of two HUFs. ITO felt that he was not bound by this finding made by WTO. Under provisions of 19 57 Act, ITO having jurisdiction over tax payer was also to have jurisdiction over latter under 19 57 Act. This resulted in same person being ITO and WTO. It surpasses my understanding how could ITO, dealing with s. 1 7 1 order, hold that he was not bound by finding of Asstt. CED, who had made assessment of estate left by late Shri Harbhajan Singh. He ignored not only finding of WTO and Asstt. CED, but also finding of AAC of income-tax and also ITO, whose finding for asst. yr. 19 73-74, we have extracted. It is true that ITO is required to reach finding independently, but, at same time, it is imperative for him to see that issue which arises for consideration in several proceedings, leads to finding which is consistent with findings arrived at in other proceedings of Revenue. 32. There is yet another plea advanced by ITO in para 43 of his order, which he relied to reject claim of partition. According to him, ACM properties were not partitioned by metes and bounds. In this connection, I am to note that ITO did not go through earlier records on subject at all. If he had gone into those records, he would have noticed findings recorded by AAC, in his order dt. 9 th Dec., 19 75, which had been set aside by Tribunal, but to which ITO was himself party. I reproduce passage as below : "Another stand, which was taken by ITO during course of appellate proceedings, was that though rest of properties were divided physically, ACM property was not divided by metes and bounds, and as such claim of assessee for acceptance of partition as regards said property fails. authorised representative's reply to said objection was that property is incapable of physical division and as such could not be divided. In order to verify contention of assessee, said property was visited by me along with ITO, Shri M. J. Mujamdhar. On inspection, it was found that nature of property is such that it is not capable of physical division either horizontally or vertically. It consists of innumerable units, which are occupied horizontally or vertically. It consists of innumerable units, which are occupied more for residential and commercial purposes. So, even in division in terms of unit-wise rent is also not practicable, as it is bound to be unequitable. Thus, in view of Expln. (ii) to s. 1 7 1 of Act, said property was divided in way which it admitted of. Accordingly, objection of ITO in this respect also does not hold good." No doubt, orders of AAC and ITO had been set aside by Tribunal, but that did not mean that findings already recorded had to be completely ignored and not considered even if ITO had no better reason to differ. It will appear that ITO in his haste to repeat his earlier finding lost sight of fact of inspection of site by him and AAC and consequent finding made on issue. Having lost sight of same, he was carried away by his conjectures and surmises. According to him, half of property was sold to Amritsar Rayon & Silk Mills, while other half, sold to Balkishan Dass Munjal, reverted to vendors. On analogy of this sale, he claimed that remaining property should have been partitioned away by metes and bounds. He lost sight of fact that sale of Amritsar Rayon Mills had taken place in year 19 45. It was long long after in year 19 75, that remaining property had been physically inspected by him and AAC during course of appellate proceedings. Where was then scope for him to raise plea on basis of sale made in year 19 45 after finding had been recorded during appellate proceedings in year 19 75 as result of inspection made by him and AAC. 33. This disposes of all pleas of ITO on basis of which he proceeded to discredit claim of assessee for partition of ACM properties. I may now refer to findings of learned Accountant Member which has endorsed findings of ITO to reject appeal of assessee and allow appeal of Revenue. Although it is not strictly required after I have examined pleas of ITO, I would still refer to it to pinpoint few aspects. 34. learned Accountant Member, on basis of findings of ITO, proceeded to hold that ACM property belonged to firm. basis of his finding was partly original entry relating to introduction of capital by partners joining to carry on ginning business as partnership firm and partly consideration of rental income having been included in income of firm. These were two grounds on which ITO had proceeded to hold that entire ACM property belonged to partnership firm. I have already dealt with nature and purport of entry as also aspect of matter arising from assessment of rental income in hands of firm. It is needless to repeat them again. In this connection, I again pinpoint aspect arising from division of expenses amounting to Rs. 2,06,356 in property account in hands of two joint families and not in hands of five partners. It is pertinent to note that learned Accountant Member did not notice ITO could not support his finding by referring to assets in balance sheet of partnership firm for any of years during which partnership continued. Since ACM properties was not included in balance sheet of firm, it was natural that ITO did not refer to this aspect of matter at all. Nothing was called for in situation then to pinpoint fact that ACM properties were included in assets of partnership firm and shown in balance sheet. 35. Another aspect, which has been dealt with by learned Accountant Member, is absence of any registered instrument by which ACM property could be transferred to two HUFs. I have dealt with this aspect also. It was pointed out that ACM property, except of course of two sheds, not having been transferred to firm, question of transferring these from partnership to two HUFs did not arise at all. It was also pointed out that no instrument was needed for vesting property in two sheds transferred to firm because what had been transferred by two HUFs was only building and not land. 36. On facts and in circumstances of case, I have no doubt that claim of assessee for partition of ACM property was well-founded both on facts and in law and should be allowed. 37. learned Accountant Member observed in para 7 as under : "It may be mentioned that history of events is not fully documented and facts have been presented in jumbled fashion though in great bulk." 38. His observation was based from his reliance on findings of facts by ITO, who shut his eyes to facts and material brought on record and allowed his surmises and conjectures to have free play. Therefore, in my opinion, case of assessee is well-founded in law and facts and should, therefore, be allowed. 3 9 . In result, appeal of Revenue is dismissed and appeal of assessee is allowed. THIRD MEMBER ORDER IT Appeal Nos. 53 and 9(Asr) of 19 82 deal with order of ITO under s. 1 7 1 for asst. yr. 19 7 1 -72. other appeals are consequential orders. Since there was difference of opinion between Accountant Member and Judicial Member in respect of appeals in IT Appeal Nos. 53 and 9(Asr) of 1 9 82, matter was referred to me as Third Member for resolution of dispute. consequential orders also involving difference of opinion between two members, these appeals were also referred to me as Third Member. 2 . Before dealing with matter, it requires to be mentioned that assessee's appeal relating to order under s. 1 7 1 creates peculiar situation. assessee applied for order under s. 1 7 1 claiming partial partition of certain assets. ITO accepted partition with regard to certain assets but held that one of assets did not belong to assessee-HUF. appeal of assessee before CIT(A) relates to this asset and in effect is prayer for declaration that this asset belongs to assessee and has been partitioned in partial partition. As far as I can see, neither CIT(A) nor Tribunal is authority competent to declare 'ownership' of any asset. If this be not so, I can see no grievance which assessee could have against order of ITO under s. 1 7 1 . If ITO considers certain assets as not belonging to assessee-HUF--in fact he may consider all other assets not covered by this order as not belonging to assessee--the inevitable corollary would be that he may not include income therefrom or value of assets as net wealth in income-tax or wealth-tax assessments of assessee. By excluding, therefore, these assets from order under s. 1 7 1 , perhaps ITO disables himself from levying tax on this asset rather than creating liability for assessee. assessee thus has no grievance at all in respect of order under s. 1 7 1 . Where there is no grievance, no appeal under s. 246 of Act to CIT(A) can lie. It would be proper perhaps to dismiss this appeal on this simple ground. It would be equally correct for me not to decide point of difference on this appeal since it would be purely abstract proposition. Tribunal, has, therefore, admitted appeal. I, therefore, proceed to decide issue. 3. assessee-HUF claimed partition w.e.f. 1 st July, 19 70 based on partition deed, dt. 1 7th Nov., 19 70. There was another claim of partition in respect of sum of Rs. 1 ,25,000 stated to be out of capital of HUF. assessee's application for recognition of partition of immovable property as per deed, dt. 1 7th Nov., 19 70 was rejected in first instance by ITO as result of which matter came up for consideration before Tribunal. By its order, dt. 24th Aug., 19 77, Tribunal directed that fresh enquiry be made in respect of property styled as ACM. ITO accepted claim of partition with regard to all assets other than ACM w.e.f. 1 7th Nov., 19 70 acting in pursuance of Tribunal's directions. There being grievance with regard to partition of ACM, matter came up before Tribunal. learned Judicial and Accountant Members passed separate orders. 4 . property styled as ACM was sold in 19 47 in equal shares to two persons, namely, Amritsar Rayon and Silk Mills and Shri Balkishan Dass Munjal. Subsequently, following some changes, property found its way into hands of firm consisting of five partners, Harbhajan Singh and Jairam Singh HUFs and three others, Kirpal Singh, Joginder Singh and Mohan Singh. This firm continued till 20th Nov., 19 68 on which date Harbhajan Singh died. firm is stated to have been dissolved on death of above partner but memorandum of dissolution expressing it was stated to be drawn up on 3 1 st June, 19 7 1 . In connection with claim for partition and order under s. 1 7 1 , ITO considered position of ACM. According to him books of ACM continued in which rental income and ancillary expenses were recorded and net income divided. building account in books, which started with net income divided. building account in books, which started with debit balance of Rs. 50,000 in 19 53, came up to Rs. 2,05,356 as on 30th June, 19 70 on which date, according to ITO, debit balance in account was written off equally to accounts of Sobha Singh Harbhajan Singh and Sobha Singh Jairam Singh, two of partners. 5. ITO also found that income of property had been accounted for in books against partners in their profit-sharing ratio right up to 30th June, 19 70. No instrument in writing was drawn on 30th June, 19 70 on which date property was claimed to have been transferred in equal shares to Harbhajan Singh and Jairam Singh but only book entries were passed. From above facts, ITO came to conclusion that even if property was personal property of partners earlier, it became property of firm during its existence. There was no transfer of this property to HUF partners by properly written up registered instrument. ITO, therefore, held that assessee-HUF as well as other HUF partner, to each of whom half share of property was stated to be transferred, were not owners of alleged respective shares. partition as regards above share was, therefore, invalid and claim in this behalf was rejected by ITO. It is on this point, after matter was decided by CIT(A), that dispute came before Tribunal. 6 . Going through facts learned Accountant Member held that entire property of ACM was brought into firm. legal position was that instrument would be required and it would require registration also if immovable property of firm was to be allotted to two partner HUFs. He also held that dissolution deed written on 3 1 st Aug., 19 73 could not be instrument transferring property to HUFs on 30th June, 19 73. learned Accountant Member, therefore, held that property comprised in ACM had not been legally transferred to partner HUFs and as corollary as far as this property was concerned, partition was ineffective. 7 . learned Judicial Member, however, held analysing facts that it could not be held that ACM property, claimed to have been partitioned on 1 7th Oct., 19 70, was not vested in HUF but in partnership. There was overwhelming evidence for fact that said property belonged to two joint HUFs which by partition effect in year 19 70 was partitioned. learned Judicial Member held that half share of ACM property belonged to HUFs after stipulated date and deed of partition had really effected partition of this property also. assessee's claim, therefore, is accepted. On above difference of opinion between Members, following point was referred to me as Third Member : "(i) Whether half share of assessee-HUF in property known as Amritsar Cotton Mills is validly partitioned as per partition deed, dt. 1 7th Nov., 19 70 ? (ii) In accordance with decision on question of partition, question of inclusion of income or wealth, as case may be, in quantum assessments will have to be decided." 8. parties were heard. Before me points and arguments advanced before Tribunal earlier and CIT(A) were elaborated. learned Departmental Representative pointed out that property even though originally belonged to two HUFs became property of firm, income therefrom was considered in firm and even thereafter it was divided among five partners. statement of assessee, therefore, based on extracts in alleged dissolution deed that this property, namely, ACM, was equally divided between two HUF partners, was neither factually correct nor legally valid. According to learned counsel, other partners had their shares and this has been ignored. Reference was also made to income-tax, wealth-tax assessments and conduct of partners to indicate that there was no transfer of property from firm to two HUFs. Even claim of assessee that only portion of extensive immovable properties was transferred to ACM and that continued to be that of HUF partners was not substantiated by facts. It is settled, according to learned counsel, that even when firm transfers immovable property to partner, that has to be done by registered deed. Decisions were cited in this regard. Merely because HUFs claimed that they had received half share of properties and that they have divided it among members of families at time of partition, this could not be accepted as fact or supported in law. 9 . For assessee going through details of formation of partnership, dissolution of partnership, distribution of assets, book entries, etc., it is pointed out that there was no transfer of any immovable property involved in present case. On dissolution of firm, assets were distributed. dissolution though evidenced by deed of 19 73 had taken place earlier and fact has not been proved to be wrong or incorrect. Against above background, it is claimed that even for transfer of property to HUFs no registration was necessary. 1 . According to me, it is not necessary to go into much of details extracted at length in orders of learned Members such as origin of property, manner in which income was dealt in for income-tax, wealth- tax, etc. facts relevant for decision of these appeals lie in short compass. There was firm of five partners, two HUFs and three others. On 20th Nov., 19 68, Harbhajan Singh died. firm came to end on this date. property known as ACM was asset of this firm. Both immovable properties and other movable properties constituted assets of this firm. Neither ITO nor other authorities including two learned Members of Tribunal have questioned and perhaps can question factum of dissolution of firm on death of partner. As correctly stated, memorandum drawn up in 19 73 does not dissolve partnership but it certainly narrates events and fact of dissolution. dissolution itself has been accepted by Department and so is recorded in orders of CIT(A) as well as two learned Members of Tribunal. All we have, therefore, to see is position of partnership on last day of its existence and position of five partners including two HUFs, whose claim of partition is considered in these appeals. According to accounts of firm and extracts from books, capital accounts of f i v e partners stood at certain figures on liability side balanced by corresponding assets on asset side. balance sheet as on 30th June, 19 6 9 , i.e., last balance sheet after date of death of partner showed building account at Rs. 1 ,6 9 ,584 as asset of firm. capital of two HUFs stood at Rs. 4 9 ,300--Harbhajan Singh and Rs. 43,558--Jairam Singh. capitals of other three partners were also found recorded in balance sheet. It was clear from this factual position that HUF was partner in firm with capital account on one hand and ACM represented by building account was asset in partnership. deed of dissolution of 19 73 generally lays down that : "The capital of dissolved firm has already been withdrawn by said partners and there is no asset worth name of defunct firm at present, except that old Ginning Mills Machinery, in shape of scrap. 3. That thus immovable property in which ginning-mills business w s carried on and all godowns, etc., belonged to said two HUFs equally." accounts support above narration in deed. building account has been transferred to two HUF members, Harbhajan Singh and Jairam Singh, to extent of Rs. 1 ,02,678, respectively, which takes into account sum of Rs. 1 ,65,585 in balance sheet. accounts of other three partners have been closed in books of firm by transferring credit balances in their accounts to other accounts of Sobha Singh Harbhajan Singh and Sobha Singh Jairam Singh. effect of these transactions is that dissolution of firm has been followed by transfer of these assets to two partners, and closing accounts of other three partners. subsequent statement of affairs of firm as on 30th June, 19 70 shows accounts of Harbhajan Singh and Jairam Singh credited with amount of Rs. 1 5, 9 70 and Rs. 20,2 1 3, respectively, as capital corresponding to remaining assets of dissolved firm totalling to Rs. 42, 199 . still further balance sheet of dissolved firm shows all partners being paid off and total of balance sheet on either side of Rs. 20,842. These entries clearly indicate that after dissolution of firm, there was dissolution of assets of erstwhile firm in specie. two HUFs took over immovable properties involved in present appeals under head 'ACM'. other three partners were paid off their dues as per their capital account. two HUF partners continued to collect outstanding assets, etc., from year to year until we came to last balance sheet referred to above. accounts, in my opinion, undisputedly, therefore, bear out what is mentioned in memorandum of dissolution of 19 73. Here is clearly distribution of assets of firm on dissolution in specie to partners. 1 1 . Consequent to above, legal position to be analysed is as to whether when immovable properties have been distributed to partners on dissolution of firm in specie, is there need for registered instrument in writing for effectivating purpose. clear answer to this obtains in decisions of Supreme Court in CIT vs. Dewas Cine Corpn. ( 19 68) 68 ITR 240 (SC) and CIT vs. Juggilal Kamalapat ( 19 67) 63 ITR 2 9 2 (SC). matter gets support also from decision of Supreme Court in CIT vs. Hind Construction Ltd. 19 74 CTR (SC) 1 57 : ( 19 72) 83 ITR 2 11 (SC). law is clearly settled that where on dissolution of firm assets of firm are distributed in specie to partners, even if they are immovable properties, there is no 'transfer' from one entity to another requiring registration under s. 1 70 of Registration Act. In my opinion, authorities below have gone on basis that there was 'transfer' of certain immovable properties from firm to partners. question whether such transfer requires registration, instrument in writing, etc., was considered. As above would clearly indicate in present case, there is no 'transfer' of property at all from firm to partners. Registration, therefore, is not necessary for vesting ownership of ACM in two HUFs as they have claimed. These properties, therefore, constituted assets of HUFs and since they have been partitioned by partition deed, dt. 1 7th Nov., 19 70, effect has to be given to this. Though not, therefore, for reasons mentioned by learned Judicial Member, I agree with him for above reasons that relevant portion of property known as ACM should be treated as asset of assessee-HUF and partition of same recorded in order under s. 1 7 1 . assessee's appeal on this point should, therefore, succeed. matter should go back to original Bench which heard appeal for proper disposal of same. 1 2. All other appeals deal with matters consequential to finding as to ownership of ACM. point of difference referred to me in these appeals would also be decided in accordance with opinion expressed above. *** INCOME TAX OFFICER v. SOBHA SINGH JAIRAM SINGH