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Dispute over deduction under s. 4(1)(iv) of the WT Act for partners of a firm owning house property. Conflict in opinions regarding partners' entitlement to deduction under s. 5. Conflicting decisions by different High Courts and Tribunals on the matter. Analysis: The judgment addresses the dispute concerning partners' claim for deduction under s. 4(1)(iv) of the WT Act for owning house property through a firm. The assessees contended that their interest in the property should be computed after deducting the exemption provided under s. 5(1)(iv). The WTO denied this claim based on a previous Tribunal decision. The issue revolves around partners' entitlement to deductions under s. 5, with conflicting opinions from various High Courts. The Madras High Court held that partners cannot claim exemption for property owned by the firm, while the Karnataka High Court allowed a deduction for agricultural land owned by a partnership firm. The Tribunal also had conflicting decisions on partners' entitlement to exemptions, further complicating the matter. The judgment delves into the legislative history and relevant provisions of the WT Act to determine partners' entitlement to deductions. It emphasizes that the firm should be considered as an assessee, and deductions applicable to individual assesses should be granted to the firm first. The valuation of a partner's interest in a firm should be based on the total assets of the firm, not just the capital invested by the partner. The judgment highlights the detailed procedure for determining partners' interest in a firm under the Act and rules. Regarding conflicting decisions by the Calcutta Benches of the Tribunal, the judgment clarifies that the Calcutta High Court's decision does not apply to the WT Act. It distinguishes between the tax liability of firms and individuals, asserting that only individuals' interests in firms are included in wealth computation. The judgment also cites a Patna High Court decision and an Andhra Pradesh High Court decision supporting the approach of allowing ordinary deductions for firms but not additional deductions for individual partners. The judgment rejects the argument for separate exemptions for partners' share of firm assets, as there is no provision for such exemptions under the relevant sections of the WT Act. It explains that specific provisions exist for industrial undertakings but not for general assets owned by firms. Ultimately, the appeals are partly allowed, with the court determining that partners' interests in firms should be computed as per the rules prescribed under the WT Act, as discussed in detail in the judgment.
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