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TMI Blog1981 (1) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ith equal shares owns agricultural lands worth Rs. 15,47,600 Sec. 5 (1) (iva) of the WT Act provides that Wealth- tax shall not be payable by the assessee in respect of agricultural lands belonging to the assessee subject to a maximum of Rs. 1,50,000 and that shall not be included in the net wealth of the assessee. So the assessee worked out the value of the net wealth of the firm at Rs. 12,28,906. This included the full value of the agricultural lands to the extent of Rs. 15,47,600. Then half share of the assessee was worked out at Rs. 6,14,453. That was the value of the interest in the firm determined in the prescribed manner. The assessee then claimed u/s 5 (1) of the WT Act, exemption of the value of the agricultural lands to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deptl. Rep. pointed out that this questions is already covered by the judgment of the Madras High Court in the case of Purushothamdas Gocooldas and Ors. 1976 CTR (Mad) 361 : (1976) 104 ITR 608 (Mad) cited supra. There, a partner in a firm which owned a house claimed exemption to the extent of 1 lakh on the reason that the house belonged to the assessee. The law as it stood then required that the house must not only belong to the assessee but should also have been exclusively used by him for residential purposes. The High Court, on the basis of the Supreme Court Judgment in 1966 AIR SC 1300 (Addanki Narayanappa vs. Bhaskara Krishnappa) held that the house belongs only to the firm and not to the assessee. The question whether it was exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act, 1961 which is as follows: "85. Dividend from new industrial undertaking or hotel business or ship : Subject to any rules that may be made by the Board in this behalf, income-tax shall not be payable by a shareholder in respect of so much of any dividend paid or deemed to be paid to him out of the profits and gains derived by a company from an industrial undertaking or the business of a hotel or a ship to which section 84 applies as is attributable to that part of such profits and gains on which income-tax is not payable by the company under section 84." 9. There the shares were held by the firm. But, the partners claimed relief. The High Court after referring to the Supreme Court judgment in the case of Addanki Narayanappa v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kalinga Tubes Ltd." 10. The High Court has of course in this unreported judgment not referred to its earlier decision in Purushothamdas Gocooldas & Ors. 1976 CTR (Mad) 361 : (1976) 104 ITR 608 (Mad) where they had taken a view that if a property belongs to the firm it cannot be said to belong to the partners. The assessee, therefore, argued that the real controversy involved in these two appeals and also in the case of Purushothamdas Gocooldas is about the effect and meaning of the Supreme Court judgment in the case of Addanki Narayanappa vs. Bhaskara Krishnappa 1966 AIR SC 1300 and that when the Madras High Court itself has in a subsequent decision explained the Supreme Court judgment in a manner beneficial to the assessee, the Tribunal c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1300. When the Madras High Court has in a subsequent case interpreted that in a way different from that contained in the case of Purushothamdas Gocooldas 1976 CTR (Mad) 361 : (1976) 104 ITR 608 (Mad) (though without expressly referring to it), we can follow that interpretation in the latest judgment particularly when three other High Courts have also understood the Supreme Court judgment in the same manner as was done in the subsequent unreported decision of the Madras High Court. 12. The Deptl. Rep. of course argued before us that as there is no reference of the case of Purushothamdas Gocooldas in the subsequent decision, the Tribunal should follow only the decision of 104 ITR 608 (Purushothamdas Gocooldas) and not the subsequent decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decision after that unreported decision discussed supra and without referring to the unreported judgment. In this latest case, it is held that the sale by a firm to its partner is liable to capital gains and s. 41(2) of the IT Act applies. There also the High Court referred to the Supreme Court judgment in the case of Addanki Narayanappa vs. Bhaskara Krishnappa. But, this judgment has no relevancy to these appeals. In this judgment, the decision proceeded on the principle reasoning that for income-tax purpose, firm and partner are distinct assessable entities. The question whether when a firm owns a property whether it can be said that it is owned by the partner was not the subject matter of decision not was it gone into. So this decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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