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TMI Blog1999 (12) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... right in directing the Wealth-tax Officer to grant exemption under section 5(1)(iv) separately for a minor ?" Before we proceed to state the facts, we would like to extract the relevant provisions including those adverted to in the questions framed. "4. (1) In computing the net wealth of an individual, there shall be included, as belonging to that individual--...... (b) where the assessee is a partner in a firm or a member of an association of persons (not being a co-operative housing society), the value of his interest in the firm or association determined in the prescribed manner. 5. (1) Subject to the provisions of sub-section (1A) wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee--... (iv) one house or part of a house belonging to the assessee Provided that, where the value of such house or part exceeds one hundred thousand rupees, the amount that shall not be included in the net wealth of the assessee under this clause shall be one hundred thousand rupees ;" Section 2(m) defines "net wealth" as follows: " 'net wealth' means the amount by which the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loomed large before the Appellate Assistant Commissioner and the Appellate Tribunal was whether the assessee can claim exemption under section 5(1)(iv) subject to the ceiling of Rs. 1,00,000 to the extent of his share in the value of the house property of the firm. That is the indication we get from the statement of the case and the Appellate Assistant Commissioner's order. It is also seen from the order of the first appellate authority that the claim of the appellant was that he should be given the benefit of exemption under section 5(1)(iv) in respect of the house property of the firm after computing his share of interest in the firm. For putting forward such claim, the decision in CWT v. Narendra Ranjalker [1981] 129 ITR 203 (AP) came in his way. It was held in that case as follows : "The net wealth of the firm in which the assessee has a share has to be computed under rule 2 by excluding the bank deposits held by the firm under section 5(1)(xxvi) read with section 5(1A) up to the limit of Rs. 1,50,000 and the share of the assessee in the assets of the firm has to be ascertained. The assessee will not thereafter be entitled to exemption under section 5(1)(xxvi) in regard to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WTO [1982] 30 CTR (Trib) 10 (Hyd). Unfortunately, a copy of it was not filed by the Department. Notwithstanding the order of the Tribunal supporting the assessee's contention, the Appellate Assistant Commissioner held that a minor admitted to the benefits of the partnership and a major partner are both entitled to the same treatment and therefore, applying the spirit of the judgment in CWT v. Narendra Ranjalker [1981] 129 ITR 203 (AP), the assessee's contention was liable to be rejected. Accordingly, the appeal was dismissed. On further appeal by the assessee, the Appellate Tribunal with out any discussion followed its earlier order in W. T. A. No. 238 of 1981 which, as already stated, was the appeal relating to the same assessee and allowed the appeal. The order of the Tribunal in W.T.A. Nos. 237 and 238 of 1981 which suffered an eclipse by reason of the decision in CWT v. B. Chandrasekhara Rao [1989] 175 ITR 66 (AP), has gained back its force and vigour in the light of the Supreme Court's view in the case of CWT v. T. S. Sundaram [1999] 237 ITR 61. Though the Tribunal approached the question from a different premise, the conclusion (extracted above) accords with the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Assistant Commissioner is no longer good law. The question of deducting the value of the exemptible asset under section 5(1) at the time of or for the purpose of computing the net wealth of the firm as a prelude to the ascertainment of the interest of the partner does not arise and the deduction could only be given in the hands of the individual partners. Thus, as already noted, the view taken by the Supreme Court is in line with the conclusion reached by the Tribunal in W. T. A. Nos. 237 and 238 of 1981 (followed by the Tribunal in the instant case) though the process of reasoning may be different. It is true that the law laid down by the Supreme Court was in the context of assessment of a major partner of the firm. Whether it would make any difference if the assessee is a minor admitted to the benefits of the partnership and who in a strict legal sense is not a full-fledged partner, is the question. It is not the case of the Revenue that a different principle will apply in the case of a minor assessee admitted to the benefits of the partnership. On the other hand, the basis of the decision of the Appellate Assistant Commissioner who took the decision in favour of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle laid down by the Supreme Court in CWT v. T. S. Sundaram [1999] 237 ITR 61, he can avail of that exemption in his hands, although the exemptible asset relates to the firm. The main reason for reference to this Full Bench is that the learned judges of the Division Bench doubted the correctness of the decision in CWT v. B. Chandrasekhara Rao [1989] 175 ITR 66 (AP). That reference arose out of the Tribunal's order in W. T. A. Nos. 237 and 238 of 1981, which has been followed by the Tribunal in the appeal which gives rise to the present reference. In B. Chandrasekhara Rao's case [1989] 175 ITR 66 (AP), which relates to the very same assessee, the learned judges merely followed the earlier decision in CWT v. Narendra Ranjalker [1981] 129 ITR 203 (AP), though the answer given therein was not accurately extracted. The Division Bench which referred the matter to the Full Bench was of the view that the principle laid down in CWT v. B. Chandrasekhara Rao [1989] 175 ITR 66 (AP), that the assessee being a minor is not a partner and therefore deduction under section 5(1)(iv) cannot be given in his individual assessment, requires reconsideration. But, with respect, so much cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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