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TMI Blog1977 (8) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, the Appellate Tribunal was justified in allowing the deduction of ₹ 91,400 in respect of the exempted assets held by the firm in which the assessee was a partner in computing his net wealth ? Assessee is a partner in three firms, two of which are Immidisetti Ramakrishniah Sons, Anakapalle, and Immidisetti Ramakrishniah Sons, Berhampur. The relevant assessment year is 1972-73 and the valuation date is March 31, 1972. In computing the net wealth, the assessee worked out his 11 per cent. share in the exempted assets such as bank deposits, Government securities, T.D.S. Bonds et cetra held by the firm, M/s. I.R.K. Sons, Anakapalle, at ₹ 91,400 and he deducted the same from the sum of ₹ 2,54,581 which represented h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable in respect of the value of assets of the exempted variety in the hands of the assessee, irrespective of whether the assessee held the deposits in his own name or as his share in the name of a firm; the limit prescribed under s. 5(1A) of the Act was to be applied at that stage and not at the stage of computing the assets in the hands of the firm. Accordingly, the claim of the assessee to a deduction of ₹ 91,400 by way of exemption was admitted. The reference has been made at the instance of the revenue in these circumstances. A firm is not an assessable entity under the Act as would appear from s. 3 thereof. Asset has been defined in s. 2(e) of the Act and s. 5(1) provides for exemption in respect of certain assets. The rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the firm or association, or, in the absence of such agreement, in the proportion in which the partners or members are entitled to share-profits. The sum total of the amounts so allocated to a partner or member shall be treated as the value of the interest of that partner or member in the firm or association. There is no dispute that the partner is entitled to the benefit of the exemption provided under s. 5(1)(xxvi) of the Act. The dispute is as to the stage at which the exemption has to be given effect to. By one process, e exemption to which the assessee is entitled works out at ₹ 91,400 as claimed by the assessee and by the other it works out at ₹ 16,500 as maintained by the revenue. The WTO gave the following reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee carries on business for which the accounts have been maintained by him regularly, the Wealth- tax Officer instead of determining separately the value of each asset may determine the net value of the assets of the business as a whole having regard to the balance-sheet of such business as on the 'Valuation date' and make such adjustments therein as may be prescribed. We are concerned in this appeal as to the valuation of interest of the assessee in a partnership concern. The Wealth-tax Officer valued these assets with reference to the assessee's share of capital in the firm less the exemption of ₹ 16,500. Hence, it is evident that the valuation of the assets was made with reference to the net value of the assets of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm. The court came to hold relying on a decision of the Supreme Court in the case of Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, that in a house belonging to the firm which had not been dissolved it was not possible for any partner to indicate with exactitude as to what his share was. We agree with Mr. Mohanty for the assessee that the special mode provided for under the scheme of the W.T. Act to work out a valuation of the asset on a deemed dissolution has been lost sight of and the ratio of the Supreme Court decision which has only application in the case of any partnership property has been relied upon by ignoring the special scheme contained in the statute. That apart, s. 5(1)(iv), on its own terms, would not have appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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