Law: Wealth Tax Act, 1957

Section: 27(1),5(1)(iv),4(1)(b),3,2

Law: Wealth Tax Rules, 1957

Section: 2

Wealth tax-- ----Exemption---House---Association of persons---Exemption must be computed in the hands of the members of the association of persons---Wealth Act 1957, Ss.2(c), 3, 4(1)(b) & 5(1)(iv)---Indian Wealth Tax Rules, 1957. The opening words of subsection (1) of section 5 of the Wealth Tax Act, 1957, make it clear that in respect of the assets mentioned in the said subsection, wealth tax is not payable by an "assessee" and that the said assets shall not be included in the net wealth of the "assessee". The word "assessee" has been defined in section 2(c) of the Act to mean a person by whom wealth tax is payable under the Act. The persons by whom wealth tax is payable under the Act have been named in section 3 of the Act which is the charging section. Under the said section, wealth tax is payable only in respect of the net wealth of every individual, Hindu undivided family and company. Accordingly, no wealth tax is payable under the Act by an association of persons and an association of persons is not an assessee as defined in section 2(c) of the Act. Since the exemption under subsection (1) of section 5 of the Act is available only to an assessee and under the express language of the said subsection the assets specifically mentioned therein are, not to be included in the net wealth of the "assessee", the exemption under subsection (1) of section 5 in respect of the assets mentioned therein has to be worked out in the hands of the individual members of the association of persons who are assessee under the Act' and not while determining the net wealth of the association of persons, which is not an assessee under the Act. This view is reinforced by the provisions in the Act and the rules for determination of the interest of an individual in an association of persons. An association of persons, unlike a company, has no legal personality of its own and the property that belongs to the association of persons actually belongs to the members of the association of persons to the extent of their respective shares or interest in the association of persons. Therefore, a house or a part of a house which is comprised in the assets of an association of persons, is to…

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