1976 (5) TMI 34 - AT - Wealth-tax

Summary

Issues:
1. Entitlement to exemption under section 5(1)(iv) of the Wealth Tax Act, 1957.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Gauhati involved the question of whether the assessee would be entitled to exemption as per section 5(1)(iv) of the Wealth Tax Act, 1957. The assessee, a member of an Association of Persons (AOP), claimed exemption of Rs. 54,459 in respect of his share in an immovable property owned by the AOP. The Wealth Tax Officer (WTO) included this amount in the net wealth of the assessee without granting the claimed exemption. The assessee contended that the AOP is not an assessable entity under the Act, and therefore, the provisions of section 5 of the Act should be considered only for individual members of the AOP. The assessee argued that the exemption under section 5(1)(iv) should be granted to the individual members and not to the AOP itself.

The Appellate Tribunal considered the submissions of both parties and found merit in the assessee's argument. It was observed that the value of the assessee's share in the AOP should be determined without taking into account the provisions of section 5 of the Act. The Tribunal emphasized that exemption under section 5(1)(iv) is only accorded to individuals who are assessable entities liable to pay wealth tax, not to the AOP as a whole. Referring to decisions of Madras and Allahabad High Courts, the Tribunal agreed with the assessee's position that the exemption should be granted to individual members of the AOP. Therefore, the Tribunal held that the assessee's claim for exemption under section 5(1)(iv) of the Act in respect of his share in the property was valid and directed the WTO to modify the assessment accordingly.

In conclusion, the appeal was allowed in favor of the assessee, emphasizing that the exemption under section 5(1)(iv) of the Wealth Tax Act should be granted to individual members of an AOP and not to the AOP as a whole. The Tribunal's decision highlighted the distinction between the assessable entity and individual members when considering exemptions under the Act.