9911796707
TMI Blog1977 (4) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Tribunal's finding to the effect that there is adequate machinery under the provisions of the Wealth-tax Act, 1957, and the rules framed thereunder to evaluate and compute such interest or share is warranted by law ? (4) If the answer to the above question No. (3) is in the affirmative, whether the Tribunal is correct in holding that such evaluation and computation is to be made under the provisions of rule 2 of the said Rules read with section 7 of the said Act ? " The learned counsel for the assessee made a statement at the bar that he had instructions not to press question No. 1. Under the circumstances, we are concerned only with questions Nos. 2, 3 and 4 adumbrated herein above. A few facts require to be stated for a proper appreciation of the questions involved. In Wealth-tax Reference No. 9/74 the assessee, Kulinsingh Manibhai, was a partner in a firm doing business in Bombay under the name and style of M/s. Rasiklal Maneklal Co. in his capacity as the karta of H.U.F. of Kulinsingh Manibhai. The assessee, at whose instance reference No. 8/74 has been made, Sudhakar Manibhai, was also a partner in the same firm representing the H.U.F. of Sudhakar Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 wherein it is provided that in computing the net wealth of an individual there shall be included as belonging to that individual the assets listed in the following clauses. It is argued that the expression " individual " has been deliberately employed by the legislature with a view to exclude an assessee who is assessed not as an individual but as a Hindu undivided family (HUF) It is then pointed out that in clause (b) the legislature has provided that where the assessee is a partner in a firm or a member of an association of persons, the value of his interest in the firm or association determined in the prescribed manner would be includible in the computation of the total wealth of the assessee concerned. Reading together the opening words of section 4(1) with clause (b) of section 4(1) (it is so argued) it would appear that the expression " assessee " in section 4(1)(b) is referable to only an individual assessee and not to an individual who is an assessee in his capacity as the karta of the HUF representing a HUF. It is submitted that in view of this circumstance when an individual is an assessee in a firm, the value of his interest in the firm can be included but when an indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate or rates specified in the Schedule." An argument was advanced on behalf of the assessee, that an interest of a person in a partnership firm was not an asset, before the Income-tax Appellate Tribunal, which contention was negatived. As observed at the commencement of this judgment, the assessee has now abandoned this contention, the assessee having no dispute that the interest of the assessee in the partnership is an asset. It is, however, argued that the said asset does not belong to the assessee. In support of this argument reliance is placed on Narayanappa v. Bhaskara Krishnappa AIR 1966 SC 1300. Our attention is called to the following passages from the aforesaid judgment : " From a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim an interest in any portion of the property belonging to the partnership as his own and inasmuch as he cannot claim an interest in any specific item of partnership property and inasmuch as all the partners would have interest in proportion to their share in the joint venture of the business of partnership and to the surplus upon dissolution, a partner cannot claim that he has interest belonging to him in the partnership assets. In our opinion, this argument is totally misconceived. What the Supreme Court had laid clown is that, during the subsistance of the partnership, a partner cannot claim that the properties belonging to the partnership belong to him or cannot claim that any particular item of the partnership properties belongs to him. The Supreme Court has not laid down that a partner has no interest in the assets of the partnership or has no interest in the partnership which is capable of being valued. It is one thing to say that the properties belong to all the partners and no individual item of the properties belongs to any individual partner. It is another to say that the partner has no interest whatsoever in the assets of the partnership or no interest which is capable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch would suggest that the expression " assessee " employed therein is employed in a different sense or in a restricted sense so as to apply it to assessees who are individuals only. If section 4(1)(b) is interpreted in the light of the definition of " assessee " it would apply to all persons by whom wealth-tax is payable under the Act and a karta of a H.U.F. is a person who is liable to pay wealth-tax on behalf of the. H.U.F. And the karta when he happens to be a partner of a firm would fall within the definition of assessee contained in section 4(1)(b). Under the circumstances, the view taken by the Tribunal cannot be sustained and the argument advanced on behalf of the assessee cannot be accepted. On a true interpretation of section 4(1)(b) there is no escape from the conclusion that it applied to an assessee meaning thereby a person who is liable to payment of wealth-tax under the Act regardless of his capacity. Whether he is an assessee in his own capacity or in his individual right or whether he is an assessee in the capacity as a karta representing his H.U.F. is immaterial. We are reinforced in the view which has commended itself to us by a decision of the Supreme Court in Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
