Law: Wealth Tax Act, 1957

Section: 27(3),2(e)(2)

Wealth tax--- ----Assets---Firm---Partner bequeathing his right, title and interest in firm and amounts outstanding to his credit to a. minor---Death of partner--­Subsequent agreement between guardian of minor and firm---Firm agreeing to pay- monthly sum to minor---Minor acquired assets consisting of right, title and interest and share of partner in firm on his death---Subsequent agreement between guardian of minor and firm was not relevant---Indian Wealth Tax Act, 1957. The assessee was the legal heir under the will of one G, who was one of the partners in a firm and who passed away on October 10,1967, bequeathing the right, title and interest that he had in the said firm and the amount outstanding to his credit with the said firm, as also his share in the property of the firm to the assessee, who was the son of his niece and who was a minor. After the death of G, a fresh lease deed was executed on January 1,1968, in which it was recited that the father of the assessee, who was his natural guardian, had agreed that the minor assessee would not exercise his rights and instead would allow the goodwill and other assets representing the share of 15 percent. of G to remain in the firm, on the firm agreeing to paying certain periodical sum to the minor. In his return of wealth for the assessment year 1969-70, the assessee valued the goodwill at Rs.36,000 and Rs.1,884, contending that the amount should not be added in the net wealth of the assessee. The Wealth Tax Officer did not accept this contention on the ground that the assessee had inherited the value of goodwill as on October 10,1967, when G passed away. In the returns filed by the assessee for the years 1970-71 to 1973-74 also the assessee contended that the value of Rs.37,884 which was shown, should not be included in his wealth, but the same was not accepted. The Tribunal held that the assessee had no interest in the partnership firm except to receive Rs.2,500 per month under the agreement, dated January 1,1968. On a reference: Held, that the assessee acquired the asset consisting of the right, title and interest and the share of the deceased G when it devolved on him on October 10,1967 which he was…

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