1989 (6) TMI 90 - AT - Wealth-tax

Summary

Issues:
- Appeal against wealth-tax assessments for assessment years 1984-85 and 1985-86.
- Entitlement to exemption under sec. 5(1)(xxxii) of the Wealth-tax Act.

Analysis:
1. The appeals were filed by the assessee challenging wealth-tax assessments for the years 1984-85 and 1985-86. The dispute revolved around the claim for exemption under sec. 5(1)(xxxii) of the Wealth-tax Act.

2. The assessee claimed exemption based on her alleged interest in a partnership firm, M/s Kishan Flour Mills, which owned an industrial undertaking. The AAC initially allowed the exemption, but later withdrew it, leading to the appeal before the tribunal.

3. The core issue was whether the assessee, who was a partner in another firm, could claim exemption for the industrial undertaking owned by a firm in which she was not a partner. The tribunal noted that the industrial undertaking belonged to M/s Kishan Flour Mills, where the assessee was not a partner.

4. The assessee argued that since a partner of M/s Sumat Prasad Jain & Co. was also a partner in Kishan Flour Mills, the exemption should apply. However, the tribunal rejected this argument, citing various legal precedents that emphasized the distinction between sub-partnerships and main partnerships.

5. Referring to legal cases, the tribunal highlighted that the rights and obligations of partners in a sub-partnership do not automatically extend to the main partnership. It reiterated that sec. 5(1)(xxxii) grants exemption only to partners of the firm owning the industrial undertaking.

6. Relying on Supreme Court judgments, the tribunal clarified that even if a partner represents other individuals or entities, the partnership rights are personal and do not automatically transfer to the represented parties. Therefore, the assessee was not entitled to exemption under sec. 5(1)(xxxii).

7. Consequently, the tribunal dismissed the appeals, as the assessee failed to establish her entitlement to exemption under the Wealth-tax Act. The issue of quantification of the exemption amount became irrelevant due to the main issue being decided against the assessee.