Law: Wealth Tax Act, 1957

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

Law: Wealth Tax Rules, 1957

Section: 2

Wealth tax-----Exemption---House property---Firm---Minor---Minor admitted to benefits of partnership---House property owned by firm---Minor entitled to exemption under S.5(1)(iv) in respect of his share in such house property--­Indian Wealth Tax Act, 1957, S.5---Indian Wealth Tax Rules, 1957, R.2. If for the purpose of computation of the firm's wealth under rule 2 of the Wealth Tax Rules, 1957, and the interest of the partner therein, the assets specified 'in section 5(1) of the Wealth Tax Act, 1957, cannot be excluded, a fortiori, such assets cannot be excluded while adopting the valuation on general principles de hors rule 2: Thus, whether the partner's interest in the firm is evaluated and subjected to tax under section 4(1)(b) read with rule 2 or on general principles based on the concept of net wealth, the result would be the same. There is no question of deducting exemptible assets under section 5(1)(iv) while evaluating his interest in the firm and therefore, on the principle laid down by the Supreme Court in CWT v. T.S. Sundaram (1999) 237 ITR 61, he can avail of that exemption in his hands, although the exemptible asset relates to the firm. The law laid down in CWT v. Narendra Ranjalker (1981) 129 ITR 203 (AP) and reiterated in C.W.T. v. B. Chandrasekhara Rao (1989) 175 ITR 66 (AP) no longer holds good. The deduction or exemption, under section 5(1)(iv) cannot be granted while evaluating the firm's wealth for the purpose of ascertaining the interest of the partner or a member of the firm. The exemption under section 5(1)(iv) is available irrespective of the fact that the assessee associated with the firm is a minor. CWT v. T.S. Sundaram (1999) 237 ITR 61 (SC) applied. CWT v. Narendra Ranjalker (1981) 129 ITR 203 (AP) and CWT v. B. Chandrasekhara Rao (1989) 175 ITR 66 (AP) held no longer good law. C.W.T. v. Mrs. Christine Cardoza (1978) 114 ITR 532 (Kar.) ref. JUDGMENT P. VENKATARAMA REDDI, J.---Doubting the correctness of the view expressed in CWT v. B. Chandrasekhara Rao (1989) 175 ITR 66, a Division Bench of this Court has referred this R.C. for consideration of the Full Bench. The R.C. arises out of the references application filed by the…

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