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TMI Blog1972 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Appellate Tribunal was right in law in holding that the assessee's share in the agricultural lands owned by the two firms was not includible in the not wealth of the assessee for the assessment year 1960-61? " The circumstances under which the reference came to be made are these : The assessee is the widow of one Ramanathan Chettiar who was a partner in two firms, (1) Valimalai Rubber Estate, and (2) Peramboocoly Coffee Estate. The assets of these firms mainly consisted of agricultural lands. Ramanathan Chettiar died on April 12, 1960, and his widow, the assessee, filed a wealth-tax return valuing the net wealth of the deceased as on the date of his death at Rs. 5,80,645. In computing the value of the net wealth the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will have to be excluded in view of section 2(e)(i) of the Wealth-tax Act which excludes agricultural lands from the definition of assets, and that it is only the net wealth of the firm after excluding the value of the agricultural lands that has to be allocated among the partners in proportion to the capital contributed by them as per rule 2. The revenue questions the correctness of the view taken by the Tribunal in this reference. The learned counsel for the revenue contends that the Tribunal has not properly appreciated the true scope of rule 2 of the Wealth-tax Rules, that the interest of a partner in a firm being an asset by itself and the firm not being an assessable entity under the Wealth-tax Act, the principle adopted for findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth on the corresponding valuation date of every individual. Hindu undivided family and company at the rate or rates specified in the Schedule. Section 4(1)(b) provides that in computing the net wealth of an individual, the value of his interest in a firm of which he is a partner or an association of which he is a member as determined in the prescribed manner shall be included. Section 5 provides for certain exemptions in respect of certain assets. Section 7(1) states that, subject to any rule made in this behalf, the value of any asset other than cash, for the purpose of the Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. Section 46 en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Rule 2(1) directs that for ascertaining the value of the interest of a partner in a firm or a member of an association the net wealth of the firm or the association on the valuation date shall first be determined and then the portion of the net wealth of the firm or association as is equal to the amount of the capital shall be allocated among the partners or members in the proportion in which the capital has been contributed by them and the residue of the net wealth of the firm or association shall be allocated among them in accordance with the agreement of partnership or of association for the distribution of assets in the event of dissolution, and in the absence of any such agreement, in the proportion in which the partners or membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation date " used with reference to the firm in that rule cannot be understood in the sense they have been defined in the definition section and that they should be understood in the normal and popular sense. We find it difficult to accept the stand taken by the revenue. As a matter of fact rule 1A(m) specifically directs that, except the words defined earlier in the various clauses in that rule, all other words and expressions used but not defined in these rules and defined in the Act shall have the meanings respectively assigned to them in the Act. Therefore, the words " net wealth " and " valuation date " not having been defined in the Wealth-tax Rules, 1957, they have to be understood in the same sense as in the Act. Even apart f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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