9911796707
TMI Blog1983 (7) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted a mistake inasmuch as he did not include in the assets the value of the goodwill of the firm in which he was a partner, with result that the assessee's share in the said goodwill remained to be taxed. The value of an asset not disclosed in the balance-sheet is includible in the wealth of the assessee as provided under r. 2C(d) of the WT Rules, 1957. It is further seen that M/s C.J. Patel Co., Nadiad in which the assessee is a partner owned, inter alia, agricultural lands. While computing the net wealth of the firm, the WTO has given deduction in respect of the said land. Under s. 5(1)(iva), agricultural land belonging to the assessee is exempt. In the instant case, the said land belongs to the firm and the firm is not an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net wealth of the assessee and as the WTO has not included the same in the net wealth, he has committed a mistake which is prejudicial to the interest of revenue. The decision of the Supreme Court as referred to by the counsel in the case of CIT vs. B.C. Srinivas Setty (1981) 21 CTR (SC) 38 : (1981) 128 ITR 294 (SC) is not at all applicable as the same related to capital gains and not wealth tax. 6. Insofar as exclusion of the assets being agricultural land is concerned, it is an admitted fact that the said asset is the property of the firm of which the assessee is one of the partners. Sec. 4(1)(b) of the WT Act provides for inclusion of the partners' interest in the firm determined in the prescribed manner. Rule 2(1) of the WT Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm in the present case cannot be said to represent, in part, the value of immovable asset viz. agricultural lands owned by the firm. It is clear, therefore, that the exemption allowed under s. 5(1)(iva), was an error and the order under consideration is prejudicial to the interest of revenue. 9. Since the assessment as farmed by the WTO is erroneous insofar as it is prejudicial to the interest of revenue, it is hereby set aside and the WTO is directed to pass fresh order in accordance with law". 4. Being aggrieved by the order of the CWT the assessee has come up in appeal before us. The learned counsel for the assessee submitted that in view of sub-r. (b) of r. 2C of the WT Rules, 1957, which reads as under: "2C. The value of an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment, on the other hand, strongly supported the order of the CWT and justified his action. Inviting our attention to sub-r. (b) of r. 2C of the WT Rules, 1957, the learned representative for the Department submitted that the provisions of that sub-rule will be applicable only in a case where a goodwill has been purchased by the assessee for a price. Since in the instant case, the goodwill has not been purchased for a price, the provisions of the said sub-rule would not be attracted. According to the learned representative for the Department, in the case like the one before us, the provisions of sub-r. (d) of r. 2C have to be applied inasmuch as the market value of the goodwill in question on the relevant valuation date has to be determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on a relevant valuation date. The expression 'asset' is defined under s. 2(e) of the Act to include property of every description movable or immovable with certain exceptions mentioned therein with which we are not concerned in the present appeal. Sec. 7 of the Act lay down the procedure to determine the value of assets. Rules 2 to 2G of the WT Rules, 1957 contain provisions in respect of valuation of interest of a partner in a firm. Rule 2C contains provisions regarding the adjustment in the value of an asset not disclosed in the balance-sheet of a partnership concerned. Sub-r. (b) of r. 2C provides that where a goodwill is purchased by the assessee for a price its market value or the price actually paid by the assessee, whicheve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether an asset is a self generated asset or not. As stated above, the provisions of sub-r. (b) of r. 2C would come into play only when the goodwill is purchased for a price. Otherwise, the provisions of sub-r. (d) of r. 2C would be attracted. For all these reasons we would uphold the order of the CWT on this point. 8. As regards the assessee's claim for exemption under s. 5(1)(iva) of the WT Act, we find force in the submissions made on behalf of the assessee in view of the decision of the Hon'ble Karnataka High Court in the case of Christine Cardoza. Further the decision of the Hon'ble Patna High Court in the case of CWT vs. Nand Lal Jalan (1980) 14 CTR (Pat) 181 : (1980) 122 ITR 781 (Pat), of the Hon'ble Madhya Pradesh High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
