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Section 5 of the Wealth-tax Act, 1957 - Exemption - Position prior to 1-4-1993 - Assessment year 1964-65 - Whether in case of partnership asset no partner could claim to have any specific interest exclusively apart from his interest as partner in firm as such - Held, yes - Whether where assessees were partners in firm owning house, they could not claim to be entitled to any portion of that house property as exclusively belonging to them and, therefore, were not entitled to claim exemption under section 5(1)(iv) in respect of that house - Held, yes FACTS The assessee's wealth included properties, shares in companies and interest in a firm. One of the assets of the partnership was a house in which the partners were residing. In their return, each of these assessees valued their share in this house separately and claimed deduction under section 5(1)(iv). The WTO rejected this claim on the ground that the property was not owned by the individual assessees, but it was an asset of the partnership firm and that the assessees individually were not also using the property exclusively for residential purposes. The AAC allowed the assessee's claim but the Tribunal set aside the order of the AAC and restored the order of the WTO. On reference : HELD It was not in dispute that the house in question was partnership asset at relevant date. If that was so, individual partners could not claim any specified right in this specified immovable property as belonging to them. In the case of partnership asset it is well settled that no partner could claim to have any specific interest exclusively apart from his interest as a partner in the firm as such. His interest in the partnership cannot also be considered as immovable property as his right is only to a share in the division of the partnership assets on dissolution. Therefore, the assessee in the instant case, could not claim to be entitled to any portion of this house property as exclusively belonging to them. Therefore, the Tribunal was right in its conclusion that the assessee were not entitled to claim exemption under section 5(1)(iv) in respect of house. Note : The case was decided against the assessee. CASES REFERRED TO…

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