BHANDAKI, J. - (1.) THE following question has been referred by the Income -tax Appellate Tribunal, Delhi Bench 'A', New Delhi (hereinafter called ' the Tribunal '), for the opinion of this court under Section 66(1) of the Indian Income -tax Act, 1922 (hereinafter called 'the Act'). ' Whether, on the facts and in the circumstances of the case, the assessee was entitled to depreciation under Section 10(2)(vi) of the Indian Income -tax Act, 1922, in respect of the building known as Rambagh Palace ? '
(2.) IN paragraph 3 of the statement of the case, it has been stated that Messrs. Amber Corporation, Jaipur, the assessee, was a partnership firm which carried on a hotel business at Rambagh Palace (at Jaipur) and land appurtenant thereto was valued at Rs. 25,00,000. The four sons of Maharaja Man Singh brought in the building (Rambagh Palace) as their contribution of capital along with a cash of Rs. 25,000 each. The Maharaja contributed his share in the form of furniture and cash amounting to Rs. 1,71,388. In its returns for the assessment years 1959 -60 and 1960 -61, the. firm claimed depreciation on that building. The claim of the assessee was that the Rambagh Palace was capital contributed by the four partners of the firm and as such it was entitled to claim depreciation under Section 10(2) of the Act. This contention was rejected by the Income -tax Officer on the basis of a stipulation in the partnership deed under which on the dissolution of the firm, the Maharaja would have no share in the said building, Rambagh Palace, where the business of the said partnership firm was being carried on, but the same would be taken over by the other partners. The Income -tax Officer was of the view that because of this stipulation the firm could not be held to be the owner of the said building. The assessee then preferred appeals before the Appellate Assistant Commissioner, 'A' Range, Jaipur. The Appellate Assistant Commissioner accepted the contention of the assessee in both the appeals. On appeals filed by the Income -tax Officer, 'A' Ward, Jaipur, before the Tribunal, it held that on a harmonious construction of the terms of the partnership deed, the decision of the Appellate Assistant Commissioner was correct. On the applications by the Commissioner of Income -tax, Delhi (Central and Rajas -than) under Section 66(1) of the Act, the above -mentioned question has been referred to this court for its opinion. The terms of the partnership deed which are relevant for answering this question are contained in clauses 5, 6, 7 and 8 which are quoted herein below verbatim: ' 5. The capital of the partnership shall consist of the RambaghPalace and a sum of Rs. 25,000 to be brought in by each of them, the parties of the second, third and fourth parts and the said minor. Whateveradditional capital required for the purpose of the partnership shall bebrought in by the party of the first part. 6. The net profits of the partnership shall be divided between the partners in the shares following: MaharajaShri Sawai Mansinghji Saheb 24 cents Capt.Maharaj Kumar Bhawani Singhji 19 ' MaharajKumar Jaisinghji 19 ' MaharajKumar Prithviraji 19 ' Minor admitted to the benefits of thepartnership 19 In the event of loss the same shall be divided between the parties in the proportion of 25 cents each. 7. The death of any partner shall not dissolve the partnership. 8. On the dissolution of the firm, the said party of the first part shall have no share in the said building, Rambagh Palace, where the business of the said partnership firm has been carried on. It is further agreed that, on such dissolution, the said building shall not be valued, but the same shall be taken over by the parties hereto of the second, third and fourth parts, and the said minor in equal shares at its written' down value as appearing in the books of account of the partnership.'
(3.) IT is clear from Clause 5 that Rambagh Palace which belonged to the four sons of the Maharaja of Jaipur was contributed by them as part of the capital of the partnership. Prima facie, this capital became the partnership property. Lindley on Partnership, at page 357, has observed : ' By the capital of a partnership is meant the aggregate of the sums contributed by its members for the purpose of commencing or carrying on .the partnership business, and intended to be risked by them in that business.' ;