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TMI Blog1985 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... alth-tax Act? The material facts are these. The assessee, as an individual, declared his taxable wealth at Rs. 64,245 and claimed exemption in respect of house valued at Rs. 44,000, for the assessment year 1976-77. The Wealthtax Officer rejected the claim for exemption on the ground that the house did not belong to the assessee but to a partnership firm, M/s. National Soap Industries, Jabalpur, of which the assessee was a partner and thus added Rs. 44,000 to the net wealth of the assessee. In the appeal preferred by the assessee before the Appellate Assistant Commissioner, his contention with regard to the aforesaid exemption was negatived. Further appeal to the Income-tax Appellate Tribunal by the assessee also failed. The Tribunal held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm. It was further submitted that the house in question undisputedly belonged to the partnership firm and, as such, the assessee in the instant case could not claim exemption under section 5(1)(iv) of the Wealth-tax Act. Reliance was placed on Purushothamdas Gocooldas v. CWT [1976] 104 ITR 608 (Mad). Having heard the arguments advanced on behalf of the parties on either side and perused the material on record, in our opinion, the question referred to us for our decision has to be answered in favour of the assessee and against the Department. A similar question, is has been referred to us in this reference, came up for decision in this court in Narsibhai Patel v. CWT [1981] 127 ITR 633, with respect to exemption claimed by a partner of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such agreement, in the proportion in which the partners are entitled to share profits. The sum total of the amounts so allocated to a partner is to be treated as the value of the interest of that partner in the firm. The question before us is whether in calculating the net wealth of the firm tinder r. 2, the exemption allowable under s. 5(1)(xxvi) should be deducted treating the firm as an assessee or whether this exemption cannot be allowed at this stage and has to be allowed at later stage, when the net wealth of each individual partner is determined. Rule 2 directs the determination of the not wealth of the firm and then allocation of that net wealth to the individual partners. The expression 'net wealth' as used in r. 2 has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that net wealth to each partner. Under the Indian law, a partnership is not a legal entity. The firm name is only a compendious way of describing the partners collectively. Although we generally speak of the property of a firm, the property is really the property of its partners... As already stated, a partnership or firm is not a legal person and so it cannot hold property. But the property brought in by the partners for the partnership business cannot be without any owner. Such a property really vests in the partners collectively in proportion to their share although the right of ownership of each partner in respect of that property is restricted by the contract of partnership and the very nature and character of the collective busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is equally applicable with full force for the purposes of exemption under s. 5(1)(iv) of the Wealth-tax Act and any further discussion would be a mere repetition. In coming to the conclusion, this court followed the decisions of the Karnataka High Court in CWT v. Mrs. Christine Cardoza [1978] 114 ITR 532 and of the Patna High Court in CWT v. Nand Laljalan [1980] 122 ITR 781 and distinguished the view taken by the Madras High Court in the case of Purshothamdas Gocooldas v. CWT [1976] 104 ITR 608, which has been relied on by the learned standing counsel for the Revenue.. We see no reason to take any contrary view than the one taken by this court in Narsibhai Patel's case [1981] 127 ITR 633 and, with respect, we may add that we are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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