1988 (4) TMI 131 - AT - Wealth-tax

Summary

Issues: Valuation of interest in a partnership firm for wealth tax assessment.

The judgment by the Appellate Tribunal ITAT Nagpur involved the valuation of an individual's interest in a partnership firm for wealth tax assessment. The assessee had contributed shares to a newly formed partnership firm, and the Wealth-tax Officer added the appreciation in the value of these shares to the assessee's net wealth. The Commissioner of Wealth-tax (Appeals) upheld this addition, stating that the market value of the interest in the firm should be considered. The assessee argued that the shares transferred to the partnership firm were no longer his property based on a Supreme Court decision. The Tribunal noted a similar case decision by the Bombay Bench 'B' and followed the same view, emphasizing that the interest in a partnership firm is an asset to be included in the net wealth of each partner. The valuation date for the interest in the firm was determined as per the provisions of the Wealth-tax Act, and the value was to be based on the market value of the assets of the firm. The Tribunal concluded that the valuation should be done based on the market value, even if it resulted in a lower value than the credit balance in the assessee's account in the firm's books. Therefore, the appeal was dismissed, affirming the valuation of the interest in the partnership firm for wealth tax assessment.