Law:

Section:

Section 5(1)(xxxii) of the Wealth-tax Act, 1957, read with rule 2(1) of the Wealth-tax Rules, 1957 - Exemption - Value of interest of assessee in assets belonging to firm of which assessee is partner - Assessees were partners in a firm owning an industrial undertaking - Whether value of assessee-partners' interest in 'firm owning an industrial undertaking to be excluded from their total wealth under section 5(1)(xxxii) should include value of land and buildings forming part of assets of said firm - Held, yes Words and phrases - Expression 'referred to in any other clause of this sub-section' occurring in section 5(1)(xxxii) of the Wealth-tax Act, 1957 Facts The assessees were partners in a firm owning an industrial undertaking. In computing the exemption under section 5(1)(xxxii), read with rule 2(1), in respect of the assessees' interest as partners in the industrial undertaking, the WTO deducted the value of the land and building belonging to the firm. The AAC upheld the WTO's order. On further appeal, the Tribunal set aside the AAC's order. On reference, the revenue contended that the expression 'referred to in any other clause of this sub-section' in section 5(1)(xxxii) qualified the words 'any asset' while the assessees contended that the aforesaid expression qualified the words 'any land or building or any rights in any land or building'. Held A close scrutiny of the various clauses in sub-section (1) of section 5 indicates that there are no clauses referring only to rights in any particular land or building though there are clauses referring to land and building. Perhaps, the Legislature wanted to exclude not only the value of the land or building where the assessees had full ownership right (because a partner could allow a property owned by him to be used by a firm) but also those rights in lands or buildings which were less than full ownership rights. For this purpose not only a particular asset that is land or building has been specifically mentioned but also the value of the rights in the land or buildings. In the case of other assets, the rights in such assets are not to be excluded but only the value of the assets themselves. In this view, the…

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