JUDGMENT JUDGMENT judgment of court was delivered by DWARKA PRASAD J. - By this application under section 256(2) of Income-tax Act, 1961 (hereinafter referred to as "the Act"), Commissioner of Income-tax, Jaipur, seeks that this court may direct Income-tax Appellate Tribunal, Jaipur Bench, Jaipur to state case and refer following question of law arising out of its order dated February 28, 1979, to this court:-- " Whether, on facts and in circumstances of case, transfer of petrol tanker from individual business to partnership firm in which such individual also became partner amounted to transfer in terms of section 2(47) and difference between written down value and amount received by individual from firm was profit assessable under section 41(2) of Income -tax Act?" assessee, Shri Vijendra Pal Singh of Ajmer, owned petrol tanker, which he transferred to partnership firm in which he also became one of partners. value of tanker was estimated by assessee at Rs. 40,000 and said amount was credited in capital account of firm in name of assessee. Income.-tax Officer was of view that transaction amounted to sale of petrol tanker by assessee to partnership firm and he calculated profit to assessee Linder section 41(2) of Act at Rs. 10,002, which was added to total income of assessee. assessee filed appeal before Appellate Assistant Commissioner of Income-tax and contended that there was no sale or transfer of any asset by assessee and as such there was no question of any profit to assessee within meaning of section 41(2) of Act. Appellate Assistant Commissioner accepted contention of assessee and held that transaction did not amount to sale. He accordingly deleted sum of Ps. 10,002, in respect of alleged transfer of petrol tanker in partnership firm, from total income of assessee. order passed by Appellate Assistant Commissioner of Income-tax was upheld on further appeal by Income-tax Appellate Tribunal. Commissioner of Income-tax filed application under section 256(1) of Act before Appellate Tribunal, but Tribunal refused to make reference to this court on ground that point as to whether there was sale or transfer of asset by assessee to partnership firm, on account of his bringing petrol tanker into assets of firm, was already decided by decisions of Supreme Court and no useful purpose would be served by making reference to High Court. In this application under section 256(2) of Act, learned counsel appearing for Revenue made same submission which was advanced before Income-tax Appellate Tribunal on behalf of Department, namely, that transaction of assessee bringing petrol tanker into assets of partnership firm amounted to transfer within meaning of section 2(47) of Income-tax Act and as said asset was sold by assessee to partnership firm, profit received by assessee was assessable as income of assessee under section 41(2) of Act. On other hand, Mr. Maloo, appearing for assessee, has supported order passed by Income-tax Appellate Tribunal. Section 2 (47) of Act defines "transfer" as under:-- "'transfer', in relation to capital asset, includes sale, exchange or relinquishment of asset or extinguishment of any rights therein or compulsory acquisition thereof under any law." In order to constitute profit chargeable to tax within meaning of section 41(2) of Act, asset owned by assessee and which was used by him for purposes of business or profession should be sold, discarded, demolished or destroyed and money received in respect thereof should exceed its written down value, then so much of amount as would represent difference between actual cost and written down value would be chargeable to income-tax as income of assessee from business or profession of previous year in which money payable for asset in question became due. Thus, in order to attract provisions of section 41(2) of Act, building, machinery, plant or furniture should be sold, discarded demolished or destroyed. In present case, assertion on behalf of Revenue is that petrol tanker was sold by assessee to partnership firms, if sale has taken place, when asset belonging to assessee was brought by him into partnership firm of which assessee himself was one of partners, then only section 41(2) of Act would be attracted and income calculated in manner specified in section would be chargeable to tax. We may observe that when partner transfers his asset to partnership firm of which he himself is partner, there is no element of sale involved in such transaction, because partnership firm is not separate legal entity, but it is merely compendious name of all partners including partner who has placed asset at disposal of partnership firm. Lindely in his treatise on Low of Partnership (14th edition) has observed that partners are called collectively firm. Dealing with legal notion of firm, learned author has observed as under (at pp. 29 & 30):-- " firm is not recognised by English lawyers as distinct from members composing it. In taking partnership accounts and in administering partnership assets, courts have to some extent adopted mercantile view, and actions may now, speaking generally, be brought by or against partners in name of their firm; further, tax assessments are made, in first instance, against partnership, but speaking generally, firm as such has no legal recognition, e.g., firm as such cannot be tenant, and thus cannot claim benefit of protection under Landlord and Tenant Act, 1954, Part II. law, ignoring firm, looks to partners composing it; any change amongst them destroys identity of firm; what is called property of firm is their property, and what are called debts and liabilities of firm are their debts and their liabilities. In point of law, partner may be debtor or creditor of Ms co-partners, but he cannot be either debtor or creditor of firm of which he is himself member, nor can he be employed by his firm, for man cannot be his own employer. member of ordinary partnership fills double character; he is both principal and agent." It has been noticed that non-recognition of firm as legal entity is one of most marked differences between partnerships and incorporated companies. Again in Chapter 18, at page 444, learned author has observed as under: "The expressions partnership property, partnership stock, partnership assets, joint stock, and joint estate, are used indiscriminately to denote everything to which firm, or in other words all partners composing it, can be considered to be entitled as such." Further, in regard to nature of share of partner in firm, learned author makes following statement (at p. 462): " In absence of special agreement to that effect, all members of ordinary partnership are interested in whole of partnership property on basis of equality between them, but it is not always clear in relation to any particular item of partnership property whether they are interested therein as tenants in common, or as joint tenants without benefit of survivorship, so far as beneficial interest is concerned. It follows from this community of interest that no partner has right to take any portion of partnership property and to say that it is his exclusively. No partner has any such right, either during existence of partnership or (in absence of agreement) after it has been dissolved. " After referring to provisions of Indian Partnership Act, 1932, their Lordships of Supreme Court in Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, brought out nature of partnership clearly in following words (at p. 1303): " From perusal of these provisions, it would be abundantly clear that whatever may be character of property which is brought in by partners when partnership is formed or which may be acquired in course of business of partnership, it becomes property of firm and what partner is entitled to is his share of profits, if any, accruing to partnership from realisation of this property, and upon dissolution of partnership to share in money representing value of property. No doubt, since firm has no legal existence, partnership property will vest in all partners and in that sense every partner has interest in property of partnership. During subsistence of partnership, however, no partner can deal with any portion of property as his own. Nor can he assign his interest in specific item of partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon dissolution of firm to share in assets of firm which remain after satisfying liabilities........" In CIT v. Hind Construction Ltd [1972] 83 ITR 211, their Lordships of Supreme Court while dealing with question of transfer of assets by assessee to partnership as assessee's share of capital, observed that such transfer did not amount to sale. Their Lordships held as under in aforesaid case (at p. 214): "No one can sell his goods to himself. sale contemplates seller and purchaser. If person revalues his goods and shows higher value for them in his books, he cannot be considered as having sold these goods and made profits therefrom. Nor can person by handing over his goods to partnership of which he is partner and that as his share of capital be considered as having sold goods to partnership. It is difficult to appreciate arguments advanced on behalf of department that there was sale either at time when assessee showed inflated price of machinery that fell to its share at division or when that machinery was used as capital of new firm of which he was partner. " In Malabar Fisheries Co. v. CIT [1979] 120 ITR 49 their Lordships of Supreme Court quoted with approval observations of Lindley on Partnership, extracted above, and their Lordships have observed as under (at p. 59): "...... it seems to us clear that partnership firm under Indian Partnership Act, 1932, is not distinct legal entity apart from partners constituting it and equally in law, firm as such has no separate rights of its own in partnership assets and when one talks of firm's property or firm's assets all that is meant is property or assets in which all partners have joint or common interest." Thus, from aforesaid discussion, it is apparent that question in respect of which reference is sought on behalf of Revenue stands concluded by aforesaid decisions of Supreme Court and it has been held that in case of transfer of asset by assessee to partnership firm in which assessee is himself partner, there is no element of sale involved, as partnership firm is composite body consisting of partner himself along with other partners and person could not transfer or sell property to himself. As such, neither is there transfer nor sale when partner places asset belonging to him at disposal of partnership firm of which he himself is partner and value of asset is credited to account of assessee to constitute capital of firm. In our view, Appellate Tribunal was perfectly justified in refusing to make reference, as there is no arguable question which needs to be referred to this court and point sought to be raised stands concluded by decisions of Supreme Court, referred to above. application for reference is dismissed without any order as to costs. *** COMMISSIONER OF INCOME TAX v. VIJENDRA PAL SINGH