This appeal by assessee is directed against order of CIT(A) relating to asst. yr. 1978-79. first ground pertains to disallowance of Rs. 50,400 being short- term capital loss on transfer of shares. assessee firm claimed to have purchased 34,050 shares of Sree Bihar Jute Twine Mills Ltd. in names of its partners, sometimes in 1975. During previous year relevant to assessment year under appeal assessee claimed to have sold 63000 shares to its partners at rates of Rs. 2 per share s against Rs. 10 per share. assessee, therefore, claimed short term capital loss of Rs. 50,000. ITO disallowed this claim of assessee on ground so unity of identity of firm and its partners and impossibility of dealing between firm and its partners. assessee appealed to CIT(A) who confirmed action of ITO b y relying on number of decision mentioned in his order and observing as under: "In this case, in any case, loss is purely notional. shares were allotted to firm on conversion of partnership business. shares have been purported to be transferred to partners by firm at national rate, so-called sale price having been merely debited to accounts of partners in books of firm. In fact, there was neither actual sale to partner. One of contentions of assessee is that sale is not in profit sharing ration. This does not lead one anywhere. partners themselves know best why so-called sale was effected in respect of four partners only out of five partners of firm. Even as it is, four out of five partners are involved in transition. There seems to be not change in respect of 7500 shares standing in name of Sri Santosh Kr. Jhunjhanwalla. As regards, Smt. Sulochana Jhunjhunwalla, all 800 shares standing in her name are purported to be transferred to her. Out of 2500 shares in name of Shri Suresh Kumar, 2000 are stated to have been sold to him. Out of 7750 shares held by firm in name of Sri Sajjan Kumar Jhunjhunwall, 2500 are said to have been given over to him and out 7000 shares standing in name of Sri Subodh Kr. Jhunjhunwalla 1000 have been represented to transferred out of coffers of firm. Thus, it would be observed that shares were held by different partners unequally. There was no transfer as regards nominal shareholder's as shares transferred already stood in names of partners concerned. It has not been explained as to why there was unexplained phenomenon cannot be capitalised by assessee to state that it is indication of actual sale. Four partners are brother and fifth partners is wife of fifth brother. company in which shares are held is their own company. reason for not transferring all shares has also not been mentioned. firm and its partners are in apposition to pass any entry they like. entries are supposed to have been passed on last day of relevant accounting year. Thus, here there is not real loss apart from legal position that partner cannot made profit out of his transaction with firm, firm cannot make profit out of its transactions with partners, partner cannot incur loss out of transactions with firm and vice versa which rests on will recognised principle that one cannot make profit or loss out of himself. cases mentioned above also comprise situations where transactions involved have multifarious facets. It is evident, on facts and circumstances of this case, that loss incurred by firm is national and mal fide nature of transactions if palpable. In circumstances, disallowance of loss of Rs. 50,400. is upheld". Against said order CIT(A) assessee preferred present appeal before us. It was contended by ld. counsel for assessee that lower authorities were not justified in disallowing assessee's claim for short- term capital loss. He urged that assessee firm had acquire these shares out of its own funds and for all practical purposes assessee was owner of shares although they were held in names of its partners. He urged that in view of clear provisions of s. 2(47) transfer of shares by assessee firm to its partners was valid transfer. he relied on decision of Bombay High Court in case of CIT vs. W. L. Dhanukar (1959) 36 ITR 459 (Bom) where assessee contracted to purchase certain land for Rs. 41,500. He entered into partnership with another person, partnership took over land from assessee at price of Rs. 90,000, and land was conveyed to land from assessee at price of Rs. 90,000, and land was conveyed to partnership by vendor of assessee. profit that accrued to assessee on purchase of land by partnership was held to be income of firm. Reliance was placed on decision of Karnataka High Court in case of A. S. Krishna Setty & Sons vs. Addl. CIT 1975 CTR (Kar) 54: (1975) 100 ITR 587 (Kar) and that of Gujarat High Court in case of CIT vs. Kartikey vs. Sarabhai (1981) 24 CTR (Guj) 184: (1981) 131 ITR 42 (Guj) wherein assets transferred by firm to its partners where held to be genuine transfer. ld. counsel for assessee, therefore submitted that lower authorities should have allowed assessee's claim for short-term capital loss of Rs. 50,400. ld. departmental Representative, on other hand, highlighted elaborate reason given by CIT(A) for coming to conclusion that there was no valid transfer of shares by assessee firm to its partners. He relied of decision of Supreme Court in case of CIT vs. Hind Construction Ltd. (1972) 83 ITR 211 (SC) wherein it was held that person by handings over his goods to partnerships of which he is partner as his share of capital cannot be considered as having sold goods to partnership. Reliance was placed on decision of Supreme Court in case of CIT vs. Bankey Lal Vaihaya (1971) 79 ITR 594 (SC0 wherein it was held that arrangement between partners of firm for revaluation of assets of firm on its dissolution could not be regarded as transfer. We have heard submission of both parties and considered facts o f case. perusal of assessment order would show that ITO had admitted to effect that shares of Sree Bihar Jute Twine Mills Ltd. has been acquired by assessee firm out of its own sources. It was not in dispute that firm held those shares as its own assets. Under Partnership Act firm is entity known to law and is capable of acquiring and owing property, both movable and immovable so also under IT Act person can own property and is liable to tax on income therefrom. definition of person' under s. 3(42) of General Clauses Act, 1987 includes any company or association or body of individuals, whether incorporated or not incorporated. Therefore, firm is also person under provisions of IT Act. In instant case, it was undisputed fact that assessee firm acquired shares of Sree Bihar Jute Twine Mills Ltd. out of its own funds and shares were held by assessee firm as its own assets, although these shares were held in names of different partners. law is fairly settled that during subsistence of partnership no partner can claim any of properties belonging to firm i n which he is partner as his own property. Transfer of Property Act contemplates transfer from person to himself or to himself and one or more other living person. In instant case, firm claimed to have transferred shares belonging to it to its partners. This fact was not controverted by Revenue. In case of R. B. Lachman Das Mohanlal & Sons vs. CIT (1964) 54 ITR 315 (All) partners of firm constituted limited company with themselves as shareholder. entire assets of firm written down value of which was Rs. 5,34,185 were transferred to company for consideration o f Rs. 30 lakh. It was held by Allahabad High Court that on aforesaid transfer there arose capital gain. In view of our aforesaid discussion we are of opinion that transfer of shares by assessee firm to its partners was genuine transfer and loss arising from aforesaid transfer was allowable on short-term capital loss. next ground pertains to trading addition of Rs. 16,324. assessee firm sold 19,600 cylinders during year. commission receivable was Rs. 3.37 per cylinder. Therefore, total amount receivable worked out to Rs. 66,052. However, assessee disclosed gross profit of Rs. 49,728 only. ITO added difference of Rs. 16,324 as income of assessee. On appeal before CIT(A) it was contended on behalf of assessee that ITO should not have made trading addition of Rs. 16,324 inasmuch as assessee had incurred some expenses for earning gross income of Rs. 66,052 as well as possible loss incurred by assessee on shortage of gas due to leakage, etc. CIT(A) rejected submission made on behalf of assessee inasmuch as he found that there was not evidence to show that assessee had incurred any additional expenditure for earning of profit of Rs. 66,052. so-called expenses claimed by assessee did not find place in assessee's P & L A/c. In regard to leakage of gas from cylinders there was no evidence not could any figures be given by assessee in support thereof. He, therefore, confirmed trading addition of Rs. 16,324 made by ITO. ITO. In this further appeal before us ld. counsel for assessee reiterated same contentions as were advanced before CIT(A). He, however, could not improve his case before us by production of any further evidence in support of his contention that assessee had to incur any expenditure for earning gross profit of Rs. 36,052 or there had been any shortage of gas due to leakage etc. We, therefore, find no reason to interfere with order of CIT(A) on this point. appeal by assessee is partly allowed. *** S. K. TRADING COMPANY v. INCOME TAX OFFICER