2003 (2) TMI 29 - HC - Wealth-tax

Whether, Tribunal was legally correct in allowing deduction under section 5(1)(iv) of the Wealth tax Act, 1957? - It has been mentioned in section 3 of the Wealth-tax Act, which is the charging section, that wealth-tax is levied on individual, Hindu undivided family and a company. Thus, wealth-tax cannot be levied on a firm under the Wealth-tax Act. - Since the house in question, which is said to belong to the firm, in reality belongs to the partners and since the assessee is one of the co-owners of the house property, in our opinion, the value of his share in the house property has to be deducted from the net wealth for the purposes of wealth-tax. - We, therefore, answer the question in the affirmative, that is, in favour of the assessee and against the Department.

Summary

The High Court of Allahabad ruled in favor of the assessee, allowing deduction under section 5(1)(iv) of the Wealth-tax Act for a house property owned by a firm. The court clarified that a firm is not a distinct legal entity, and wealth-tax cannot be levied on a firm. Therefore, the value of the assessee's share in the house property should be deducted from the net wealth for wealth-tax purposes.