Law:

Section:

Section 35 of the Wealth-tax Act, 1957 - Rectification of mistakes - Apparent from record - Assessment year 1977-78 - Assessee was a partner of a partnership firm having one-third share in partnership - Partnership was dissolved by an agreement on 30-9-1976 - Following dissolution, assessee declared one-third of value of assets of partnership - However, exercising powers under section 35, assessee was held to be full owner of assets of partnership - Assessee contended that he had become full owner only after expiry of valuation date - Whether question as to whether assessee was full owner of assets of partnership firm throughout last day of valuation date was a debatable point - Held, yes FACTS The assessee was a partner of a partnership firm having one-third share in the partnership. The partnership was dissolved by an agreement on 30-9-1996. Total assets of the firm were valued at Rs. 40 lakhs. The assessee, for the relevant assessment year, declared only one-third of the value of the estate to the extent of his share in the partnership firm. However, the authority exercising the powers under section 35, assessed the net value of the firm to an extent of Rs. 40 lakhs as liable for assessment. On appeal, the assessee contended that he had become full owner only after expiry of the valuation date, i.e., 30-9-1976. The Tribunal allowed the assessee's claim holding that it was a debatable point and as such, exercise of power under section 35 was not proper. On reference : HELD In the instant case, the dissolution was effective from 30-9-1976. The assessee became full owner of the property under the deed of dissolution, but whether he had become the full owner of the assets of the partnership firm throughout the last day of valuation date was a debatable point. To attract the liability, the assessee should be the full owner of the property throughout the last day of the valuation date. In other words, he should be full owner of the property in question throughout the date corresponding to the valuation date. In the instant case, under the deed, the dissolution was effective by the end of 30-9-1976 or subsequent thereto investing the assessee with full ownership…

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