This appeal by assessee is directed against order of Commissioner (Appeals) and relates to assessment year 1980-81. 2. assessee is assessed in status of HUF. Besides share income in firm, assessee owned part of property which was situated at 21, Barakhamaba Road, New Delhi. property in question belonged to larger HUF and after partition of this family, assessee acquired one-fifth share i n five-eighth part of property as per decree by Delhi High Court. According to assessee, he wanted to start business of real estates in name of Ashok Kapur & Co. and he, therefore, shifted from this property and on 6-11-1979 made declaration stating that he was converting his share in property into stock-in-trade of new business to be started in name of Ashok Kapur & Co. As on 6-11-1979, assessee valued his right in this property at Rs. 5,58,000. It was on basis of rates fixed by Land and Development Officer. This amount was shown as capital of business of Ashok Kapur & Co. 3. assessee entered into agreement with Ansals Properties & Industries (P.) Ltd. on 19-11-1979 for construction of multi-storeyed building on Barakhamba Road and arrangement in brief was that Ansal Properties & Industries (P.) Ltd. (Builders) was to construct this multi-storeyed building after demolishing all structure at 21, Barakhamba Road, and all investment in construction was to be made by builder. After construction of building, 50 per cent of space made available to assessee's share was to be handed over to builder and 50 per cent of constructed portion was to be retained by assessee. builders had to pay security of Rs. 10 lakhs to assessee, which had actually been paid in this year. questions for consideration which arise in present case are: 1. Whether as result of conversion of assessee's share in property into assessee's stock-in-trade on 6-11-1979, there has been 'transfer' and it has resulted in transfer of capital asset which resulted in some taxable capital gain? 2. Whether action of assessee in entering into agreement with builder has resulted in transfer of assessee's share in property to partnership or to joint venture and whether as result of it some capital gain arises in hands of assessee? 4. In respect of first action, ITO referred to decision of Supreme Court in case of CIT v. Bai Shirinbai K. Kooka [1962] 46 ITR 86. ITO held that there was transfer of capital asset when assessee converted property belonging to him into stock-in-trade of his businesses. ITO observed that in case before Supreme Court, there was assumption that there was difference between cost to assessee and cost to business. Taking these to be two separate identities, ITO held that there was transfer from one indentity to another. According to ITO, therefore, at point of conversion itself, it can be held that some capital gains arose to assessee and it has to be brought to tax. 5. ITO further held that besides action of conversion, assessee had entered into agreement with Ansal Properties & Industries (P.) Ltd. on 19-11-1979. According to his reading of this agreement, absolute ownership of assessee over property was exchange for right to receive 50 per cent to building to be constructed on that land and, thus, there was transfer at that stage as well. As he found that value of assessees shares as on 1-1-1964 was shown at Rs. 50,000 he valued there property as on 1-1-1964 at Rs. 50,000 and proceeded to work out capital gains, accordingly. 6. IAC agreed with conclusion arrive at by ITO but he was of t h e view that capital gains arose not as result of conversion of assessee's assets into stock-in-trade but by virtue of entering into joint venture with Ansal Properties & Industries (P.) Ltd. According to him, whole business was like partnership business. He observed that assessee contributed his land, whereas Ansal Properties & Industries s (P.) Ltd. had to incur expenses on construction of mulit-storeyed building. He also referred to fact that 50 per cent of constructed area was to go to Ansal Properties & Industries (P.) Ltd. and other 50 per cent was to be retained by assessee. According to him, joint venture was in nature of partnership and assessee was contributing his immovable property in shape of land has transferred this property to partnership and this has resulted in capital gain to assessee. In this connection, reference was made to decision of A. Abdul Rahim, Travancore Confectionery Works v. CIT [1977] 110 ITR 595 (Ker.) (FB) and decision of Karnataka High Court in case of Addl. CIT v. M.A.J. Vasanaik [1979] 116 ITR 110. According to IAC, right of assessee in land had extinguished and this right now belonged to partnership or to joint venture. He referred to fact that assessee had no right to sell or gift away in any other manner said land after date of agreement. reference was also made to decision of Gujarat High Court in case of CIT v. Kartikey v. Sarabhai [1981] 131 ITR 42. In this case, it was held that transaction of introduction of capital asset by person in firm, of which he is partner, could constitute transfer within meaning of section 45, read with section 2(47) of Income-tax Act, 1961 (the Act'), so as to render capital gains liable to tax. 7. When matter came before Commissioner (Appeals), he was of view that claim of conversion of property into stock-in-trade was got-up evidence and assertion so made was merely make-believe. Commissioner (Appeals) found that there were no activities but assessee, which were associated with such business. There was no advertisement and publicity regarding flats. He pointed out that books maintained by HUF were also after-thought and in this connection, he referred to assessee not showing any business income from business of Ashok Kapur & Co. and when he filed estimate of income for purpose of advance tax on 14-3- 1980. He pointed out that if assessee was carrying on business, he would not have shown interest income under head 'Income from other sources'. He also referred to fact that while putting value of that property, only land was taken into consideration and not structure. He also referred to fact that assessee had no experience of business in real estates n d there was no evidence of carrying on of that business. property in dispute was ancestral property which was used as self-residence. Commissioner (Appeals) further observed that onus that business was started on 6-11-1979 was on assessee, and this onus had not been discharged. Commissioner (Appeals) further observed that alleged conversion was merely method of evading tax and, according to him, this did not accord with human probability that whole lot of co-owners would have turned overnight real estate dealers and builders of apartments. He also points doubt to fact that assessee had under fined share in specific property as it had not been physically partitioned as yet, and with such underfined property, no business could be carried on. He, therefore, held that action of assessee in valuing proper at Rs. 5,58,000 was infructuous and had no sequence in context of determining quantum of capital gains arising from transfer. 8. Commissioner (Appeals) then proceeded to consider question of capital gains as result of agreement with Ansal Properties & Industries (P.) Ltd. on 19-11-1979. He noted different clauses of agreement dated 19- 11-1979 and held that it was single project or venture entered into by both assessee and builders. He observed that scheme was that assessee was to contribute his share in and builders were to construct property at their cost and after whole project was acquired out, space created was to be shared by them half and half. He also referred to clauses referring to further management of new building to be constructed and service organization, which was to continue business. He pointed out that under agreement, not only space was to be transferred but 50 per cent of interest in plot was also to be transferred to builders after completion of building. According to him, agreement envisaged common possession of land, its common exploitation for commercial construction and common possession and enjoyment of completed building. Thus, according to him, there was form of partnership which came into existence. According to him, builders acted as agent of assessee, who was like sleeping partner in partnership business. According to Commissioner (Appeals), joint venture would come to end after building was completed and two parties obtained their shares. sale of flats was not to be jointly undertaken. Commissioner (Appeals) held that though there was no sharing of profits, there was sharing of stock-in-trade and in way it was sharing of profits and well. Commissioner (Appeals) came to conclusion that assessee transferred his share in property to partnership business. This has resulted income capital gains in his hands. As quantum of capital gains was not in dispute, he upheld same. 9. Before we proceed to consider rival submission, we may not some specific clauses of agreement, dated 19-11-1979: "...Whereas builder is proposing to build composite multi-storeyed commercial building not entire premises No. 21, Barakhamba Road, New Delhi, and has offered in connection therewith to owner dealer to erect part of said proposed multi-storeyed commercial building on one-fifth share of owner dealer in said property (which amount to one-eighth share in said premises No. 21, Barakhamba Road, News Delhi ) after demolition of existing structures, at builder own cost and expenses and with builder's own resources and to pay in respect thereof commercialisation charges in consideration of owner dealer allocations to builder 50 per cent of owner dealer's share, as hereinafter defined, in said multi-storeyed commercial building, in manner and subject to and on terms and conditions hereinafter contained. 6. That builder shall not be entitled to occupy and use, in any manner whatsoever, any part of existing buildings and structures including servant quarter and there annexure on plot or demolish same till: (i) Approvals have been obtained from Land and Development Officer and; (ii) All building and other requisite plans for project building have been approved by appropriate municipal, statutory, Government and local authorities; and (iii) Owner dealer has granted approval in writing for such occupation or demolition after obtaining of approvals referred to in (i) and (ii) hereinabove. 7 to 9. ** ** ** 10. owner dealer shall render to builder all assistance necessary to enable builder to prepare and pursue application referred in clause 7(a) and (b) hereinabove and/or obtain redevelopment permission for plot, provided that all costs, charges and expenses and responsibility for pursuing same and obtaining all permissions shall be to account to builder. 11. It is agreed and understood by and between parties hereto that owner dealer alone shall be entitled to all compensation payable in respect of acquisition, if any, by any Government or local or statutory authority of any part of plot and builder shall have no right, title or interest whatsoever therein. 12 to 21. ** ** ** 22. builder is allowed to agree to sell area comprised in builder's allocation his portion of 50 per cent area to prospecting flat buyers at builder's own risk and responsibility even prior to sanctioning of building plans and approval of project building by concerned authorities or commencement of construction. builder shall be entitled to sell to any third person whole or part of salable floor space, basement space and parking space forming part of builder's allocation, provided that such transfer shall be registered only after builder has completed project building in all respects and has obtained occupation certificates, and owner dealer had allocated 50 per cent interest in his one-eights hare in plot to builder or his nominees at builder's cost, i.e., builder or his nominees paying stamp duty and registration charges in respect thereof., such transfer being part of consideration pursuant to and in accordance with this agreement. ** ** ** 24. It is agreed and declared that builder has no right, title or interest in any area other than that allocated by owner dealer to builder and builder shall not be entitled to deal in respect of same areas other than builder's allocation in any manner whatsoever. 25 to 32. ** ** ** 33. owner dealer and builder shall meet and establish service organization as soon as possible after completion of building and consisting of one representatives each of owner dealer and builder with consisting of one representatives each of owner dealer and builder with equal powers of management. Such organisation may be limited liability company or in any such form as may by mutually agreed between owner dealer and builder. Immediately, on formation of such service organisation, both owner dealer and builder as also transfers of their respective allocations, whether on whole or part, shall transfer at such service organisation's cost all their right, title and interest in plot to service organisation. 34 to 38. ** ** ** 39. builder shall act as independent contractor in constructing project building on plot and builder shall indemnify and keep owner dealer indemnified harmless from and against all third party claims and actions arising out of any act or omission of builder in relation to construction of project building or by reason of builder in relation to construction of project building or by reason of builder's obligations hereunder: 40. builder shall deposit sum of Rs. 10 (ten) lakhs as mentioned in clause 5 free of interest as security for due and faithful performance of builder's obligation under this agreement. 41. In event that building plans are not approved by New Delhi Municipal Committee and others within 36 months of signing of this agreement, this agreement shall be renewed for another period of 36 months provided builder has given further deposit of Rs. 5 lakhs (Rupees five lakhs only) free of interest before expiry of first 36 months' period. In event of builder failing to make deposit within stipulated period as aforesaid or extended period expiring, as case may be, without building plans being approved by concerned authorities, this agreement shall become void and owner dealer shall refund to builder money deposited by builder as security deposit after deducting monies which may have been paid out by owner dealer on account of builder, i.e., monies payment of which is obligation of builder under provisions of this agreement, and builder has refunded all monies received by him from prospective occupiers of any salable area in project building and further builder will hand over vacant possession of building and plot of land to owner dealer as was handed over to him. This agreement may further be extended by mutual agreement. ** ** ** 43. Miscellaneous: (i) owner dealer and builder have entered into this agreement on principal-to-principal basis only and nothing contained herein shall be deemed or construed as constituting partnership between builder and owner dealer, or as joint venture or joint adventure between owner dealer and builder, nor shall builder and owner dealer in any manner constitute association of persons. Each shall be strictly responsible for his/her or its own tax liability and shall keep other party hereto indemnified from against same. ** ** ** (iii) Any notice required to be given by owner dealer/builder shall, without prejudice to any other mode of service available, be deemed to have been sufficiently served on owner dealer/builders if delivered by hand and receipt obtained or sent by prepaid registered post to last known address of owner dealer/builder. (iv) Nothing in these presents shall be construed as demise or assignment or conveyance in law of plot or any part thereof to builder or as creating any right, title or interest in respect thereof in builder." [Emphasis supplied] 10. learned counsel for assessee referred to relevant clauses o f agreement and submitted that agreement has not resulted in partnership and what has come into existence could not be equated with partnership business. He clarified that assessee was one of persons who owned part of property at 21, Barakhamba Road, and other parts belonged to other members of larger family. It was also pointed out by him that there were similar agreements between those persons and builders, namely, Ansal Properties & Industries (P.) Ltd. He, however, submitted that namely, Ansal Properties & Industries (P.) Ltd. He, however, submitted that t h e assessee has never contributed land belonging to him towards capital of any partnership or any joint venture. According to him, assessee continued to be owner of property and position was to remain same till completion of construction work. All what agreement contemplated was permission to builder to construct multi-storeyed building after demolishing structure already standing on it and this was to be done at builder's own cost. assessee was to take all action so as to enable builder to get sanction for building plan and other responsibilities in respect of construction work were to be that of builder. It was pointed out that assessee had no concern with construction itself except that plan itself had to be made with his consent. It was also contended that there was no common business carried on by assessee along with builders and assessee was not to take any profit out of activities of builders. It was also submitted that other requirements of partnership agreement were not satisfied and no part of agreement contemplated that for this period when construction work is carried on, land will belong to so-called joint venture. 11. learned counsel for assessee contended that main thing to b e decided in this case was, whether there was transfer as result of agreement dated 19-11-1979. He submitted that claim of assessee regarding conversion of his capital asset into stock-in-trade was only with view to show that assessee was carrying on activity of turning plot of land into commercial asset. He submitted that Commissioner (Appeals) erred in holding that partnership existed between assessee and builder and he further erred in holding that assessee transferred his property to this partnership and capital gains arose to him as result of this transfer. According to learned counsel, agreement with builders could not be considered in isolation and it was only way of continuing business activity of family. In this connection, he referred to various clauses of deed, where it was pointed out that construction was to be carried on principal-to-principal basis and there was no agency involved in this agreement. He pointed out that there is provision in agreement for ultimate transfer at future date by assessee after construction was completed and according to this understanding, builders have to get 50 per cent of constructed space and along with that proportionate ownership in land was also to be transferred in favour of ultimate purchasers. It was also contended that clause 11 provided for all compensation payable in respect of any future acquisition to assessee and builders had no right, title or interest therein. It was also pointed out that for purpose of construction of building, assessee had to give power of attorney in favour of builders but builders or their nominees were not entitled to sign or make any application in exercise of this power without prior written consent of assessee, who has been described as owner dealer. Referring to clause 22 of agreement, it was submitted that though builder could raise funds in respect of available floor space, transfer in respect of space could be registered only after builder completed project building in all respects and after assessee is allocated 50 per cent of interest of his one-eighth share in plot to builder. Clause 39 of agreement lays down that builder had to act as independent contractor in constructing building. He further referred to clause 41 of agreement, which provided for renewal of agreement beyond three years on payment of Rs. 5 lakhs free of interest to assessee by builder and it was also provided that if builder failed to make deposit within stipulated period, without building plan being approved by concerned authorities, agreement was to become void and assessee had to refund to builder money deposited by builder as security deposit. In that situation, vacant land and building on it was to be returned to assessee, who continued to be owner. In end, reference was made to clause 43, sub-clause (i) and sub-clause (ii), which clarified that this was not partnership agreement nor was it joint venture and assessee and builder did not constitute association of persons. Each party was responsible for his own activity and tax liability. Sub-clause (v) also clarified that there was no demise or assignment or conveyance in law of plot or any part thereof to builder and builder did not get any right, title or interest in respect of that plot. 12. In end learned counsel for assessee submitted that even if any transfer was contemplated in agreement, it was to take place in future and nothing has happened in this year. At present, assessee has not relinquished any right in respect of plot of land or building thereon. learned counsel submitted that first point raised in respect of conversion of property becomes academic, if it is held that there was no transfer when agreement dated 19-11-1979 was executed. There was no dispute regarding quantum of capital gains, once it was held that such capital gain was chargeable to tax. 13. departmental representative submitted that agreement was in nature of joint venture which was also in nature of partnership. It was submitted that by agreement dated 19-11-1979, property which originally belonged to assessee-family stood transferred to assessee along with t h e builder who constituted sort of partnership for this purpose. It was submitted that agreement could not cease to be partnership agreement for agreement for joint venture merely because party's right is like that in agreement. Reliance was placed on decisions cited by learned Commissioner (Appeals) and particularly in case of Kartikey V. Sarabhai (supra). It was further contended that in case of partner bringing his asset as capital of firm, no registration was necessary and transfer takes place without such registration. 14. We have considered rival submissions and we have gone through agreement and other relevant documents. Though ITO had first charged capital gains on assessee converting immovable property into stock-in- trade by valuing it at market rate, assessment was also made with reference to transfer, which, according to ITO, took place by agreement dated 19-11-1979. Commissioner (Appeals) held that assessee did not commence any business in real estate on 6-11-1979 and there was no occasion for treating property as assessee's stock-in-trade by valuing property on some basis. learned Commissioner (Appeals) has proceeded to consider question of capital gains only with reference to agreement dated 19-11- 1979. Though we will consider decision of learned Commissioner (Appeals), we may briefly deal with conclusion of ITO that on 6-11-1979 when there was conversion of property into stock-in-trade, there was transfer resulting in capital gain. Firstly, we find that there is no material to show that assessee started business on 6-11-1979 and only thing which show that assessee started business on 6-11-1979 and only thing which is there was declaration made by assessee, which was clearly from point of view of taxation. We agree with reasoning given by Commissioner (Appeals) on this aspect of matter. Though we need not consider all small facts mentioned by him, we agree that on 6-11-1979 there was no conversion of capital asset into stock-in-trade and such action, which was taken for starting venture, came only later when agreement dated 19- 11-1979 was executed. It may also be mentioned that there is no justification for view that such conversion of capital asset into stock-in-trade results in transfer. Transfer contemplates two parties, namely, transferor and transferee. observation of ITO that assessee and his business are two separate identities is not relevant for purpose of finding whether there has been transfer. transfer has to be by one person to another person and not by one account of person to another account of same person. inspiration for all this exercise has come up as result of decision of Supreme Court in case of Bai Shirinbai K. Kooka (supra), which has been referred to above. In that case question for consideration was, as to what would be business profit on transaction where stock-in-trade has been converted from non-business asset. Certain shares, which were held on investment account, were to be dealt with commercially and assessee had claimed that on date when he decided to deal with those shares in market and not to hold such investment, he revalued shares and continued his business in respect of those shares from that date. Ultimately, when business profit was to be considered, value of opening stock was to be taken on basis of market value on date of its conversion. Thus, relevance of this action was for purpose of computation of business income of person. In present case, there is no assessment of business income of assessee and ITO has further held that capital asset itself was transferred when agreement was entered into on 19-11-1979 and in fact capital gain itself has been included in hands of assessee. This position has continued before Commissioner (Appeals). In this view of matter, there is no relevance of this exercise of valuing so-called stock- in-trade by assessee. It may also be mentioned that as under law, as it stood, such conversion could not be considered to be 'transfer'. law has been amended by Taxation Laws (Amendment) Act, 1984, providing that such conversion could be covered under meaning of word 'transfer. This amendment was not clarificatory but would make provision for such situation and it was intended to bring into taxation net gain arising to person from such conversion. opinion of ITO, therefore, that such conversion results in capital gain is without any basis. We have already mentioned that Commissioner (Appeals) has not proceeded on above basis. 15. Now we come to consideration of second limb of assessment, which is in fact main question remaining to be decided after order of Commissioner (Appeals). reasoning of revenue is that agreement with builder on 19-11-1979 resulted in partnership or joint venture, which was in nature of partnership. revenue has proceeded to argue that as assessee, as owner of land, has come forward and agreed to let builder construct multi-storeyed building on his land and then ultimately to share constructed space, it was case of partnership. It has further been case of revenue that as result of this action, land was contributed as capital to this partnership and as market value of this property was at particular figure, differences between cost of acquisition and market value represented capital gains in hands of assessee. In other words, according to revenue, when partner brings his capital asset as his capital contribution in firm and values it at particular figure, there can be capital gain in hands of such assessee. 16. first question, therefore, arises as to what was nature of agreement between assessee and builders whether this agreement brought into existence any partnership or anything akin to partnership so that what would apply in case of partnership should also apply to present case. essentials of partnership are that there should be two or more persons who should come forward and agree to carry on any business and to further agree to share its profits or losses. There is further requirement that partners should be agent to each other. Section 6 of Indian Partnership Act, 1932, provides that in determining whether person is or is not partner in firm, regard should be had to real relations between parties, as shown by all relevant facts taken together. sharing of profits of gross returns arising from property by persons holding joint or common interest in that property does not by itself make such persons partners. In instant case, agreement is for two persons coming together with common object of sharing constructed space in multi-storeyed building. One party was owner of land and other party was to fully contribute towards construction. agreement was that after construction was completed, 50 per cent of space would come to assessee and other 50 per cent would be given to builder in consideration of investment made by him in construction of building. builder was independent in his business and activity and assessee had no right or responsibility in respect of builder's activity. All investments had to be made by builder and expenses had to be incurred by him. It is true that as far as assessee was concerned, he had agreed to sign all applications and necessary papers as land belonged to him. In construction activity and later on in sale of space allocated to builder, whatever profit or loss arose to builder was of no concern to assessee. Similarly, whatever profit assessee was to make by sale of constructed space, was no concern of builder. Reading agreement as whole, one cannot deny that activity as whole was business venture. But elements of partnership were not present in agreement. activity of each person was different and they were responsible for their own activity and results of such activity. learned Commissioner (Appeals) has also observed that there is no sharing of ultimate profits in present case, though there is sharing of space to be constructed. In activity of construction, whole responsibility was of builder though formal permission has to be given by assessee and wherever local authorities were concerned, papers have to be signed either by him or by his attorney holder. agreement does not indicate that there was any agency involved in it and each person was to operate in his own sphere. Though legal effect cannot be determined merely by what is written in deed, one cannot ignore terms of agreement without there being any reason for same. parties had agreed to jointly maintain building and common facilities till service organization came into existence. Thus, activity was no doubt activity in nature of some business but other two elements of sharing of profits and of agency was not indicated by agreement. parties have clearly stated that there was no partnership between them and they were to act on principal-to- principal basis and each was to be strictly responsible for his own sphere builder of activity and liabilities. agreement had also made it clear that there was no understanding to assign or convey plot of land to builder and at least till completion of construction, assessee was to continue to be sole owner of land and interest in such land. builder under agreement has got right to carry on construction work but while work was being carried on by him, ownership in land continues to be of assessee. 17. Thus, though to some extent common venture was involved, no partnership as such has come into existence in present case. question for further consideration is that, whether assessee, by agreeing with builder to let him to construct multi-storeyed building, has transferred his property to builder or to alleged partnership or joint venture. In our opinion, agreement is very clear on this question as there is no other material on basis of which it could be held that there has been any intention on part of assessee to relinquish any right in his property in favour of builder or any other person. We have to consider whether there has been transfer and that too in this year. It is agreed position that building had not been constructed and consequential action to be taken had not been taken. In this situation, it cannot be held that assessee brought land as his capital in so-called partnership. It is only where asset belonging to assessee is brought in or introduced by him into firm in which he is partner, property in question can be said to belong to firm after such introduction. Once partner does it, he would no longer have any power to dispose of whole or any part of it or any interest therein as his property. There can be case of partnership where partner does not introduce his asset into partnership as capital but lets firm use it for certain consideration. person owning building or house can let firm to carry on business in those premises without, in any way, transferring his ownership in that property. He may even charge rent or may give it without rent to firm but ownership could not be affected. Only in case where partner introduces particular asset as his capital in firm, question of transfer to firm arises and can be considered on facts of particular case. As we have pointed out in present case, there is nothing to show that plot of land was introduced by assessee in so-called joint venture or partnership and throughout period of agreement, it was made clear that assessee was to continue to be legal and factual owner of property. 18. In this connection, we may again refer to agreement. agreement refers to assessee's share in property and intention of builder to construct multi-storeyed building on that property. agreement does make reference to declaration dated 6-11-1979 and says that assessee's share in property was contributed as proprietor's capital for purpose of carrying on business. so-called partnership, however, does not take note of value of property at any particular figure and fact that value of property was Rs. 5,58,000, as per assessee's valuation, was n o t mentioned and was in fact irrelevant for purpose of this agreement. Therefore, as far as this agreement is concerned, question of any capital gains arising as result of valuation of property at Rs. 5,58,000 does not arise. We have already mentioned above that there was provision in agreement that if building plans were not ultimately approved, this agreement was to become void and assessee had to refund security deposit and property belonging to assessee was to be handed over to assessee who continued to be owner. This clause makes it clear that there was in fact no transfer of property in favour of builder or so-called partnership. question of assessee's contribution of land at particular value would have become relevant, if firm had any responsibility of returning that amount of money to assessee in case of agreement falling thereon. Here we have case where property belonging to assessee is valued at notional figure and builder agrees to construct on it without any reference to its market or investment value. For period of agreement, property was to be under ownership of assessee and after that half of property, along with constructed space, was to belong to assessee and other half was to go to builder in consideration of investments made by him. builder or joint venture had nothing to do with market value of land, as neither builder nor joint venture had themselves any right to sell property and two parties had separately got rights as given in agreement. 19. Now we may note certain case laws on point, though we may mention in beginning that according to our finding, firstly, there was no partnership and secondly, there was no introduction of property into so- called firm. In view of this finding, further question of there being any transfer for purpose of charging capital gains could not arise. However, briefly, we may mention case laws relied upon by parties. Supreme Court in CIT v. Hind Construction Ltd. [1972] 83 ITR 211 had observed that person by handing over his goods to partnership, of which he is partner, cannot be taken to have sole goods to partnership. This case, however, related to Indian Income-tax Act, 1922, and it was not considering scope of term 'transfer' as given in section 2(47) of 1961 Act. When partner introduces his property as his capital in partnership and his account is credited for estimated value of such property, it cannot be said that there was any sale or exchange. This question has been considered by Gujarat High Court in case of Kartikey V. Sarabhai (supra). After considering various legal provisions, High Court held that there is extinguishment of right of person in such capital asset and this comes under term 'transfer' as defined in section 2(47). It is also held in that case that after partner contributes such capital asset as his capital in firm, property itself cannot be considered as his asset for purposes of wealth-tax and it is not possible to argue that person continues to be owner of property introduced by him in firm of which he is partner. According to their Lordships, legal position is that exclusive property of person who brought it in, ceased to be exclusive proprietor and it becomes asset of partnership in which all partners would have interest in proportion to their shares. partner cannot exercise his right in respect of that property even to extent of his share. In this decision, reliance was placed on decision of Full Bench of Kerala High Court in case of A. Abdul Rahim, Travancore Confectionery Works (supra), wherein it was held that there is transfer when person as partner brings his capital asset in firm. Similar view was taken by Karnataka High Court in case of M.A.J. Vasanaik (supra). In latter case, it was also held that there is virtually transfer of rights in property by partners to firm. Their Lordships also referred to one decision has not considered provisions of section 2(47). Their Lordships also clarified that such situation need not be confused with another situation, when firm is dissolved or its assets are distributed among partners. 20. It is true that there are decisions to contrary also. In case of CIT v. Abdul Khader Motor & Lorry Service [1978] 112 ITR 360, it was held by Madras High Court that there was no transfer within meaning of section 2(47) when partner brought certain buses and lorries belonging to him on his contribution towards capital of firm of which he was to be partner. Though that was case for deciding application of section 41(2) of Act, it also considered question of capital gains. In view of this conflict in decisions, we will have to see as to what interpretation can be placed having regard to relevant decisions of Allahabad High Court, which would be binding in present case. We may also state that in case of Kartikey V. Sarabhai (supra), question of capital gain arising by credit of value in capital asset account was also considered and it was held that payment of cash and credit of such amount in capital account has same effect as far as charge of capital gains was concerned. 21. other aspect of case is, whether such transfer could be considered as valid transfer without registration of such transaction. learned counsel for assessee had drawn our attention to provisions of Indian Registration Act, 1908, which require registration of all such transactions where subject-matter of transfer is immovable property having value of more that Rs. 100. He also submitted that without such registration, no legal rights are created in respect of such property. Whether transfer of capital asset by partner to firm by way of his capital contribution requires registration, was considered by Madras High Court in case of CIT v. T.M.B. Mohamed Abdul Khadar [1984] 16 TAXMAN 413 (Mad.). In that case also, partner of firm made declaration that property will be property of firm and consideration will be Rs. 1,20,000 as against book cost of Rs. 75,000. necessary entries were made. question arose regarding charge of capital gains. Tribunal had given two reasons for holding that transaction was not liable to capital had given two reasons for holding that transaction was not liable to capital gains tax. One was that there was no valid registered document of transfer and, therefore, transaction will not attract tax on capital gains. second reason was that when individual property is covered into partnership property, no transfer is involved. Madras High Court has held that as there was no registered document transferring immovable property, there was no valid transfer of property. High Court did not express any opinion on question whether such transaction at all could be considered as 'transfer. As against this, it was held by Rajasthan High Court in CIT v. Amber Corpn. [1981] 127 ITR 29 that on reading of section 14 of Indian Partnership Act, it would be clear that even in respect of immovable property, no document, registered or otherwise, is required for transferring property from partner to partnership. Though that case related to question of allowance of depreciation, principles discussed would be applicable in present case as well. 22. Allahabad High Court in case of K.D. Pandey v. CWT [1977] 108 ITR 214 has held that partner can bring his immovable property to stock or capital of firm without registered document, and after such contribution property in question becomes property of firm. Their Lordships in this case held that decision of Supreme Court in case of Hind Construction Ltd. (supra) does not lay down proposition that partner cannot bring his immovable property as his contribution to stock or capital of firm except by way of registered instrument of transfer. In other words, where partner in his capacity as partner brings to firm some of his assets as his contribution towards capital, then it can be held that there is transfer which does not require registration. 23. We have noted above cases only because there was argument before us in this regard. We have already given finding that in present case, assessee never entered into partnership agreement and he did not contribute his property towards asset of partnership-firm and at no stage t h e so-called firm became entitled to deal with this property. assessee continued to be owner in whole of this year and even in year after, and position was to continue till completion of construction. In view of this, above case-laws lose their significance and are not applicable. 24. To summarise our conclusions, we hold that: 1. assessee's admitted conversion of his immovable property into stock-in-trade on 6-11-1979 has not resulted in any transfer within meaning of Act for purpose of charging of capital gains. Firstly, we have not accepted bona fides of such conversion and secondly, we have held that legal effect of such conversion, even if it had taken place, could not be 'transfer' for purpose of charging capital gains. 2. By entering into agreement with builders Ansal Properties & Industries (P.) Ltd., assessee did not enter into partnership agreement and two parties were to deal with each other on principal-to-principal basis. important elements of partnership were absent in this activity. 3. assessee did not bring in his immovable property as contribution towards his joint venture with builders and agreement contemplates continued ownership of assessee in respect of immovable property. 4. There has thus, been no transfer by assessee of immovable property and so-called firm or joint venture was not concerned with notional valuation of property as far as venture's accounts were concerned. addition in respect of capital gains has, therefore, to be deleted. 25. In result, appeal is allowed. *** ASHOK KAPUR (HUF) v. INCOME TAX OFFICER